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Home My WebLink AboutMINUTES - 10162001 - D.5 • BEFORE THE BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA In the Matter of the Appeal of DECLARATION OF PATRICIA BURKE IN SUPPORT OF COUNTY STAFF SEREN INNOVATIONS, INC. REPORT AND RECOMMENDATION November 6, 2001 I, Patricia Burke, declare as follows: 1. I am employed by the County of Contra Costa. My title and position is Cable TV Administrator, and have held that position at all times mentioned herein. My responsibilities include administration of cable television franchises in the unincorporated area of the County as well as supervision of Contra Costa Television operations. 2. In July and September 1999, the Cities of Concord and Walnut Creek entered cable television franchise agreements with Seren Innovations, Inc. ("Seren"). Since late 1999, the Cities of Clayton and Pleasant Hill, the Town of Danville, and the County ("Communities") have been jointly negotiating with Seren on a cable franchise, including the joint engagement of the law firm of Miller& Van Eaton ("MVE") to represent them. The Communities, together with other cities, including the Cities of Concord and Walnut Creek, are currently in the process of jointly negotiating a cable franchise with AT&T. 3. I work closely with representatives of Concord and Walnut Creek on cable TV and related issues. As of this date, Concord and Walnut Creek representatives expect to receive franchise fees on cable internet revenue, as agreed in their franchise agreements with Seren, and do not construe recent court cases as affecting this right. 4. Attached hereto and incorporated herein by this reference are true and correct copies of: Exhibit A: August 31, 2001 letter from Seren (Pete Glass) to Patricia Burke; Exhibit B: September 7, 2000 letter from MVE to Seren; Page 1 • Exhibit C: October 6, 2000 letter from MVE to Seren; Exhibit D: Seren/Walnut Creek Franchise. 5. I have reviewed the Staff Report and Recommendation to the Board regarding Seren's Appeal. I am familiar with all factual representations in the report. To the best of my knowledge, all factual representations in the report are true. I declare under penalty of perjury under the laws of the State of California the foregoing is true and correct. Executed on OU` at Martinez, California. Patricia Burke i Page 2 seren innovions, inc Corporate Headquarters 15 SOulh 5th Street Suite 500 August 31, 2000 Mirvieapotis.MN 55402 Main 800-55"= VIA OVERNIGHT MAIL Fax 612.395-35o1 www.seren.com Patricia Burke —.astound.net Cable TV Administrator Contra Costa County 10 Douglas Drive, Suite 210 Martinez, CA 94553-4079 Dear Ms. Burke: I understand our negotiations with the county are nearly complete. As a result, I would like to clarify the outstanding issues in the cable franchise negotiations so that we may proceed in the most expeditious manner possible towards the award of a cable television franchise. Form Agreement: At our last negotiation session of August 3, 2000, we concluded negotiations on the boiler plate franchise agreement. Attached is a list of minor revisions to the boilerplate provisions of the agreement. • Business Issues: According to our notes, the business terms specific to Contra Costa County are as follows: - the number of PEG access channels; - the lump sum PEG access capital payment; - the number of City I-Net sites, no additional payment for unused sites; an office which will be "convenient to subscribers in the County". Internet: With regard to the outstanding issue of franchise fees on Internet services, Seren remains committed to the position, as expressly stated by the Ninth Circuit Court of Appeals, that Internet services do not constitute cable services [AT&T v. City o� Portland, el.al., 216 F.3d 871 (9th Cir., June 22, 2000)]. As a result, Internet services fall outside the jurisdiction of the City's franchising authority and are not subject to the City's regulation through the imposition of franchise fees. To impose such fees would violate federal public policy that prohibits franchising authorities from regulating cable broadband Internet access. I mention this because, as you know, Matt Ames Esq. (of Miller& VanEaton) has proposed that Seren sign a proposed "Addendum Agreement for Provision of Non-Cable Communications Services Via Cable System." This Addendum would impose a 5% fee on all gross revenues derived from Internet and other non-cable communications services and imposes on non-cable services virtually all of the obligations contained in the Franchise Agreement. Based on the Ninth Circuit's • decision in Portland, this appears to be an impermissible attempt to regulate Internet services as if they were cable services. EXHIBIT A by Soren 140238.1 Innovations V' .� • • By extension of Seren's position, we will no longer consider any attorney fees regarding Internet services to be a part of this negotiation and will not pay any such fees. We are all aware that telecommunication technologies are evolving more rapidly than many of our institutions (including the law) can keep pace. However, Seren believes the Addendum (or any other attempt by the County to collect what is basically a cable franchise fee on Internet services) violates the holding of the Portland decision and runs contrary to the federal "hands off' policy with regard to the Internet. Seren is eager to bring to the County state-of-the-art cable and non-cable services, and, in doing so, to bring to the community the advantage of true competition in both of these markets. The motivation to do so and Seren's ability to do-so are each, in large part, dependent on the tremendous local and national support of the Internet as a free, open, competitive and evolving medium. Preservation of this support will ultimately benefit both the County and Seren. We urge the County to examine this issue and to focus on the long term advantages to its citizens if the Internet is allowed to remain free and open. As we indicated at the August 3rd meeting, we would very much like to conclude our negotiations and we stand ready to sign the cable franchise agreement as soon as possible. (As you can see from the attached list, there is little, if anything remaining to be addressed, but for the Internet issue.) If we cannot quickly resolve the Internet issue, we • do intend to contact the County's elected officials as early as next week to discuss this matter. We urge you to inform your Board of Supervisors as needed. Please feel free to contact me. We look forward to providing the residents and businesses of Contra Costa County with a choice for telecommunications services. Sincerely, Pete Glass V.P. and General Counsel Cc: Patty Friesen Keith Wietecki 140238.1 • Revisions to Franchise Agreement: 1. In Section I.T. (page 6) the reference to "Operator Innovations, Inc." should be changed to "Seren Innovations, Inc." 2. Sections impacted by Internet issue: I.G.; I.H.; I.0.4.; I.0.6; 3. Section IIIA. (page 10): delete the last 2 sentences, as this merger has already occurred. 4. Section IV.A.8 (page 13): Insert period at the end of the third sentence. 5. Section IV.D.I (page 16).: Per the agreement reached at our August 3`d meeting, the inserted reference should include the word, "actual", to read: "...the City shall obtain reimbursement for restoration, reasonable inspection, and directly applicable actual administrative costs from the Operator." 6. Section IV.D.2 (page 16): The language of the last sentence was to match that of Section IV.D.1. (page 15), to read, "Construction plans must be approved by the appropriate City department, in accordance with City permitting procedures." 7. Section IV.D.3 (page 16): The last sentence must refer to the Operator's own • facilities, to wit:: "In the event the Operator's facilities must be relocated, Operator shall do so at its own expense." 8. Section IV.E. (page 20): In the second full paragraph, second sentence, the word "operator" should be capitalized. 9. Section VI.A.4. (page 32): In the fourth sentence, insert the words, "by the City", to read: "These sites shall be designated by the City prior to completion of the design of the institutional network." 10. Section VI.E.L(page 36): As drafted by Seren, this concept of a level playing field allowed for more"players" than just the Operator and the Incumbent Operator. We want this language reinserted. In the event that another overbuilder enters the market, it would be as unfair for the"new player" to have an advantage over Seren as it would be for the Incumbent to have an advantage. l 1. Section VII1.C. (page 40): The citation reference should read: "an annual sum equal to the then applicable Household Income Limitation requirement for Universal Lifeline Telephone Service, as established by the Moore Universal Telephone Service Act(Section 871, et.seq. of the California Public Utilities Code) and the regulations and General Orders promulgated by the Public Utilities Commission of the State of California in accordance therewith." • 140199 1 • EXHIBIT B M I L L E R & V A N E A T O N • P. L. L. C. NIATTI II:W C.AMES 1 155 CONNEC'I"ICUT AVENUE, N.W. WILLIAM L. LOWERY KI:NNI:III A. BRUNEI-Tit SUITE 1000 WILLIAM R. MALONE FRI:I)I:RI('K E. ELLROD III WASHINGTON, D.C. 20036-4306 NICHOLAS P. MILLER MARCI L. FRISCIIKORN" TELEPI IONE(202)785-0600 JOSEPH VAN EATON M1.1'StIKO R. 11ERRERAt FAX(202) 785-1234 `Admitted to Practice in Virginia Only HULLER& VAN EATON,L.L.P. OF COUNSEL: tAdmitted to Practice in 44 MONTGOMERY STREET JAMES R. HOBSON California Only SUITE 3085 JOAN F. NOBLE SAN FRANCISCO,CALIFORNIA 94104-4804 Incorporating the Practice of TELEPHONE(415)477-3650 Miller& Holbrooke FAX(415)398-2208 \V W W.MILLERVANEATON.COM NOV 12000 COUNTY COUNSEL, MARTINEZ,CALIF __... .---... September 7, 2000 "RA COSi�A t;OL,:;; RECEIVED BY FEDERAL EXPRESS • Mr. Pete Glass t Vice President and General Counsel Seren Innovations, Inc. lF 15 South 5'h Street Suite 500 i Minneapolis, Minnesota 55402 Dear Mr. Glass: I write in response to your letters of August 31, 2000, to Pat Burke, Laura Hoffineister, Elizabeth Hudson and Debra Margolis regarding the status of Seren's franchise negotiations with Contra Costa County, the Cities of Clayton and Pleasant Hill, and theTown of Danville. Your letters address three sets of issues: proposed revisions to the draft documents; business terms for each proposed franchise; and the treatment of Internet service. I will leave the first two issues to later correspondence or discussions, because there is little point in addressing them until we resolve the Internet issue. Your letters correctly state that we have proposed that Seren enter into a separate agreement with each Jurisdiction, which we have denominated an"Addendum Agreement for Provisioli of Non-Cable Communications Services Via Cable System." Your letters also correctly state that the addendum would require Seren to pay a 5% franchise fee on gross revenues derived from Internet and other non-cable communications services, as well as • requiring Seren to meet most of the requirements of the proposed cable franchises. You then state that "Internet services fall outside the jurisdiction of the City's franchising authority and are EXHIBIT B MILLER& VAN EA"rON, P.L.L.C. • - 2 - not subject to the City's regulation through the imposition of franchise fees,"citing as your authority AT&T v. City oJPor•tland, 216 F.3d 871 (9'" Or. 2000). . Your reliance on Portland is misplaced. While it is true that Portland held that the term "cable service" as used in the federal Cable Act does not encompass Internet service, the case says nothing about the scope of local franchising authority. You must understand that local governments do not receive their franchising authority over cable television or any other service under federal law. They receive that authority under state law; the Cable Act merely chooses to rely on the franchising concept as a means of granting the right to build and operate a cable system. Congress recognized that the local franchise was a convenient means of ensuring that local governments received compensation for the use of their rights-of-way by cable operators, as well as a mechanism for controlling the activities of those operators in the rights-of-way. Franchising long antedates the cable television industry. In fact, in many states, local governments have the authority to franchise not only cable operators, but telephone companies and other telecommunications providers as well. Therefore, merely because the Portland court held that Internet service is not a cable service does not mean that the City of Portland cannot grant franchises for the installation of facilities used to provide Internet service. For the same reason, the Portland case alone does not—and cannot— tell us whether local governments in California can require franchises for the installation of facilities used to provide Internet service. • California happens to be one of the states that limit local franchising authority in certain respects; the trouble for Seren is that the scope of that limitation is unclear. In principle, under their home rule powers California municipalities have the power to grant franchises for the use of public property, unless state law specifically restricts that authority. California has done so, but only with respect to "telephone lines" installed by a "telephone corporation." As you know, California Public Utilities Code Section 7901 provides that "[t]elegraph or telephone corporations may construct lines of telegraph or telephone lines along and upon any public road or highway . . ." California Public Utilities Code Section 7901.1 preserves local authority over the time, place, and manner of construction, but the courts have held that Section 7901 itself prohibits a local government from requiring compensation for the use of its rights-of-way by a telephone corporation. The terms "telephone line"and "telephone corporation"are not defined in Section 7901. Both terms are defined elsewhere in the California Code, but those definitions do not apply to Section 7901. I am sure that you understand that those terms could be construed in various ways. Given the important technological differences between traditional telephone service and Internet service and further given that the Internet not only did not exist but was inconceivable at the time Section 7901 was enacted, we believe that the facilities needed to deliver Internet services are not telephone lines. Neither the California Public Utilities Commission nor the courts have ruled on that issue. Consequently, until the California legislature amends the law or the courts or the PUC address the issue, the most that can be said is that it is an open legal issue. • In fact, our view is that since the law is silent, California local governments are presumed to have the authority to franchise not only cable systems, but telecommunications facilities that are • ..r MILLER& VAN EATON, P.L.L.C:. - S - not subject to Section 7901. Furthermore, the system Seren \vishes to provide is not merely a cable system. It is not only capable of providing other services, but it is designed to provide other services. Therefore, it cannot be said that the proposed system is merely a cable system. Our proposed addendum is intended to apply only to non-cable services that fall outside the scope of Section 7901, whatever those may be. The addendum specifically provides that if the law is clarified to exclude Internet service or any other service, then Seren would not be required to pay a franchise fee. Seren is perfectly free to seek the necessary clarification. All my clients seek to do is to protect their rights by not making unnecessary concessions regarding their authority or the state of the law. In addition, although the draft does not currently provide for it, the communities are prepared to discuss revising the addendum to state that if they do not require the incumbent cable operator to pay on comparable revenues upon renewal of the incumbent's franchises, they will relieve Seren of that obligation. This would also apply to any other new operators who might be granted franchises. In addition, I must take issue with your statement that "federal public policy . . . prohibits franchising authorities from regulating cable broadband Internet access." Neither Congress nor the FCC have taken any step that prohibits local governments from franchising Internet facilities if they have the necessary authority under state law. In the wake of the Portland decision, the FCC announced that it would conduct a proceeding to examine the issue of"open access" to i cable modem platforms — but it is by no means clear that this proceeding will address, much less resolve, the question of local franchising authority over Internet facilities. That proceeding is intended primarily to address whether cable operators who provide Internet service are subject to common carrier obligations as a result of Portland. This is a very different issue. The proper treatment of Internet revenues is vitally important to my clients. Local rights- of-way are held in trust for the people, and local governments have an obligation to their residents and taxpayers to ensure that they are managed properly. The current franchising system assures that local governments will receive some measure of compensation for the use of their property and retain the ability to provide for the maintenance and repair of the streets. We believe that the added value to Seren resulting from the ability to provide Internet service in addition to cable service justifies the payment of a franchise fee on Internet service. Furthermore,as you note in your letter, telecommunications technology is evolving very rapidly,. and we do not know what the future will bring. It is very possible that in the near future Internet service will render cable service obsolete by allowing any number of video providers to make streaming video available over the Internet. In that case, demand for traditional cable service might fall to the point that Seren would no longer provide it; by the same token, my clients would then receive no compensation for the use of their property. At the very least, the growth of Internet services may lead to a sharp reduction in revenues from cable service. In either case, Please note that Danville, Pleasant Hill,and Contra Costa County are prepared to proceed on this basis. Laura Floffineister has asked me to advise you that the City of Clayton is not currently prepared to grant Seren a franchise that would allow it provide Internet services without an unconditional agreement regarding Internet revenues. 'T MILLER& VAN EATON, P.L.L.C. - 4 - it would be foolhardy under these circumstances for the County, the Cities, and the "town to grant Seren franchises for cable service without addressing the Internet issue. Indeed, for that reason,the discussion and resolution of the Internet issue is an integral part of the cable franchise negotiations. Consequently, my clients believe that in refusing to pay all costs arising out of Seren's decision to apply for a cable franchise, Seren has reneged on its original commitment. They have asked to me to inform you that the grant of any franchise will be contingent on reimbursement of all fees and costs reasonably related to that franchise, including the resolution of the.Intemet issue. Finally, my clients have asked me to request that Seren and Seren's outside counsel either direct future correspondence to me, or copy me on correspondence, as appropriate. As your letters indicate, we are very close to agreement on everything except the Internet issue, and keeping me informed will expedite matters. Please let me know if you have any questions. Let me assure you that Contra Costa County, Clayton, Danville and Pleasant Hill are eager for Seren to begin providing services to their residents. We believe we can proceed very quickly to accommodate Seren's desire to commence construction work shortly, provided that the key concerns of both sides are properly • addressed. Very truly yours, Miller& Van Eaton, P.L.L.C. By 4Matthew . Ames • • • EXHIBIT C U 2 No U a LL d a 0 ti U K ��n �?' a l�g�HX3 • • • EXHIBIT C 0 w N Zp� Op 6 LL W S W Q a w U U Q 4 M I L L E R & V A N E A T O N • P. L. L. C. MATTHEW C.AMES 1155 CONNECTICUT AVENUE,N.W. WILLIAM L.LOWERY KENNETH A. BRUNETTIt SUITE 1000 WILLIAM R.MALONE FREDERICK E.ELLROD 111 WASHINGTON,D.C.20036-4306 NICHOLAS P.MILLER MARCI L.FRISCHKORN* TELEPHONE(202)785-0600 JOSEPH VAN EATON MITSUKO R.HERRERAt FAX(202)785-1234 *Admitted to Practice in Virginia Only MILLER&VAN EATON,L.L.P. OF COUNSEL: tAdmitted to Practice in 44 MONTGOMERY STREET JAMES R. HOBSON California Only SurrE 3085 JOHN F.NOBLE SAN FRANCISCO,CALIFORNIA 94104-4804 Incorporating the Practice of TELEPHONE(415)477-3650 Miller&Holbrooke FAX(415)398-2208 W W W.M ILLERV ANEATON.COM October 6, 2000 BY TELECOPIER AND FIRST-CLASS MAIL Debra E. Keller, Esq. Shapiro Buchman Provine Patton LLP 1333 N. California.Boulevard Suite 350 Walnut Creek, California 94596 Dear Debra: As you know, in recent weeks there has been a fair amount of correspondence between Seren Innovations, Inc. ("Seren") and Contra Costa County,the Cities of Clayton and Pleasant Hill and the Town of Danville(the"Communities"). The Communities have not responded to all of the correspondence received from Seren,partly because some issues have been overtaken by events, and partly because we do not think detailed responses would necessarily be productive. A recurring theme in Seren's letters, however,has been the subject of delay in the franchise negotiations. This issue was raised in Pete Glass's letter to me of September 14, 2000, as well as in Keith Wietecki's letter to various elected officials of September 19, 2000. The Communities take issue with any assertion that they are responsible for any delay in the process to date, and I have been asked to address Seren's complaint by reviewing the chronology of events so far.' As an aside, I must mention that I was somewhat surprised by Mr. Glass's letter to me of September 21,2000, regarding the transfer of the Ponderosa franchise. Rather than take the time for a detailed rebuttal, I would just like • to note that by the time that letter was sent Seren had received a draft resolution taking a significantly different approach. In any event,as you know,subsequent events have superseded both the draft resolution in question and Mr.Glass's letter. The County looks forward to Seren's response to my letter of October 3,2000,regarding that matter. EXHIBIT C o .. a MILLER& VAN EATON, P.L.L.C. - 2 - As I understand it, Seren submitted its applications at different times in the four communities, ranging between mid-June and mid-September, 1999. There are questions about whether those applications were complete under the provisions of local ordinances,but for the sake of argument we will assume they were complete as submitted. It is important to note, however, that at the time the applications were submitted, Seren was in the early stages of negotiations with Walnut Creek and Concord, and made no effort to pursue the applications at the time. Nor did Seren propose specific franchise terms to the Communities. The Concord and Walnut Creek franchises were approved in late July 1999 and late September 1999, respectively. Some time in October, the Communities were approached by Cress Gackle of Seren, and a joint meeting of the Communities with Seren was held on November 19, 1999, to begin negotiations, approximately five months after the applications were submitted. At the meeting, Seren proposed that the franchise agreements be based on the Walnut Creek agreement. The Communities agreed in principle,but noted that they would each need to review the document, and it was likely that changes would be needed to meet local right-of-way management procedures, as well as insurance and bonding requirements. The Communities also informed Seren that this procedure might take some time, as a number of staff members would need to see it in each.case. It was also understood that adjustments to the public, educational and governmental ("PEG") access contribution and the institutional network ("I-Net") would be made on some sort of pro rata basis. Finally, it was understood that the Communities were going to try to negotiate together as much as possible. Seren did,not indicate that there was any urgency, and did not ask about setting a date for another meeting. The Communities had the sense that Seren had its hands full with Concord and Walnut Creek. At the request of the Communities, my firm immediately began work on an analysis of the Walnut Creek agreement, which was provided to the Communities in early December. We discussed the issues raised by the analysis in mid-December. That conversation raised several questions about the applications, and on December 23, 1999, I sent Cress Gackle two letters requesting additional information from Seren regarding its finances and the terms of the proposed franchises. During this period, the Communities were conducting their internal review of the Walnut Creek franchise agreement. In late January,I received a letter from Cress Gackle dated January 24, 2000, responding to our information requests, which I briefly discussed with Cress on January 28. After reviewing the additional information, the Communities completed their internal reviews and gave me their comments on the Walnut Creek agreement. During this period, as far as we can determine, neither the Communities nor I were contacted by Seren. Our firm prepared a draft incorporating their comments in early March, and I met with the Communities on March 22, 2000. After that meeting, I immediately contacted Cress Gackle to schedule another • meeting with Seren. We spoke on March 24, and I proposed various dates in April. The earliest Cress was available was April 12, and a meeting was scheduled for that day; because of the difficulty of coordinating so many schedules,we ultimately rescheduled the meeting for April MILLER& VAN EATON, P.L.L.C. • - 3 - 19. On March 31, 2000, I sent Cress a draft agreement incorporating the changes requested by the Communities. Those changes largely dealt with right-of-way management issues and were relatively minor in nature. .The draft also contained blank spaces for dealing with the PEG and 1-Net issues. The purpose of the April 19 meeting was to review the changes proposed in the draft and, if time allowed, to discuss each community's individual proposals regarding PEG access and the I-Net. Unfortunately, we spent more time than anticipated going over the right-of-way management and administrative provisions in the draft, and time did not allow us to complete all of the individual meetings. Pleasant Hill and Clayton discussed their PEG and I-Net plans.with Seren that afternoon, and Cress Gackle said he would review them and respond later. We did not set a date for another meeting, nor did Seren request such a meeting. On May 10, 2000, you sent me a letter proposing changes to the document we had reviewed at the April 19 meeting, and stating that because the communities were deviating from the Walnut Creek document in a number of respects, Seren felt that it was justified in making additional changes of its own. Your letter did not address the PEG and I-Net issues, however. • On May 18, 2000, Danville and the County met with Seren representatives in your office to discuss their individual issues. Again, Cress indicated that he would consider their proposals and would get back to us. On May 24, 1 sent the Communities a revised draft, incorporating some of your requested changes, and noting open issues for discussion. On July 6, I met with the Communities to get their comments on the revised draft. During the period of approximately May,June and July, 2000, Seren representatives met with staff in Pleasant Hill, Clayton and Danville to discuss local right-of-way.management, procedures. The only contact with the County during that period was the delivery of a revised map of Seren's proposed service area. On or about July 12 I received an urgent message from Cress Gackle, insisting that I contact him as soon as possible. He also asked that I e-mail the current draft to you, which I did, with the proviso that the Communities had not yet approved all of my changes, so the language in that version should not be considered binding. I rearranged my schedule and on the afternoon of July 12, I spoke with Cress and you about a number of the outstanding issues raised in the draft. On July 27, 2000, I received a revised draft of the agreement from you, proposing a number of changes, including a"level playing field"provision regarding the I-Net, and removing any obligation to pay franchise fees on Internet services. Rather than wait until our next meeting • to raise the issue, on July 28, 2000, I prepared and sent you a draft of an Addendum intended to MILLER& VAN EATON, P.L.L.C. • - 4 - deal with the issue of the Communities' authority to require franchises for facilities designed to provide non-cable services that are not subject to California Government Code Section 7901. On August 3, 2000, we met in Pleasant Hill and agreed on language dealing with nearly all of the outstanding right-of-way management and related issues. We did not agree,however, on how to deal with Internet revenues or the level playing field, nor did we discuss the specific PEG and I-Net provisions for the individual communities. We did not set a date for another meeting, but it was understood that we would move as quickly as possible because Seren wanted to complete the process. On August 9, 2000, I sent you a revised draft reflecting the prior week's discussions. On August 11, I sent you a draft of a letter regarding Seren's commitment to pay certain costs, also in accordance with the same.discussions. On at least two occasions in the following weeks I called your office to follow up. On each occasion, I left a voice mail message seeking to confirm that you had received the documents and asking you to call me back. My calls were not returned. On August 31, 2000, however, each of the Communities received a letter rejecting their position regarding Internet revenues, proposing minor revisions to the draft agreement and specific I-Net and PEG terms, • and refusing to pay any of the Communities' attorneys' fees related to the Internet revenue issue. This was the first written response from Seren on the specific PEG and I-Net needs of the individual communities. Mr. Glass expressed the willingness to sign the franchise agreement as soon as possible, but did not propose a date for another meeting or offer any suggestion as to the procedure for completing the negotiations. As you know, I responded to Mr. Glass on behalf of the Communities on September 7, 2000. It was in his reply to me of September 14, 2000, that he first complained of delay on the part of the Communities. Five days later Mr. Wietecki's letter went out. The foregoing chronology describes a fairly typical negotiation process. Both sides made efforts to advance the negotiations at a reasonable pace, but all the people involved are busy and as you know it can be difficult to coordinate that many schedules. The chronology does not, however, support Seren's claim that there has been unreasonable delay, at least on the part of the Communities. There is a fairly consistent pattern of meetings, followed by document preparation, followed by periods of waiting. Seren has not consistently indicated any urgency on its part. Even this summer, when the Communities and I responded very quickly to a request for a meeting in early August and immediately turned the documents around, we received no response from Seren until Pete Glass's letter arrived three weeks later. The Communities understand Seren's desire to proceed quickly at this point, and they are prepared to accommodate reasonable requests from Seren. The Communities are also committed to continuing to negotiate in good faith. We hope, however, that Seren understands the • importance of the outstanding issues to the Communities. Local government officials are MILLER& VAN EATON, P.L.L.C. • - 5 - charged with protecting the interests of their residents and taxpayers, and take their responsibilities very seriously. In particular, the Communities feel very strongly that they have the authority to franchise facilities used to provide non-cable services that are not subject to Section 7901. We understand Seren's reluctance to agree to pay franchise fees for such facilities in the face of uncertainty regarding competition and possible changes in the law. Nevertheless, we will need to reach'a mutually acceptable resolution of that point as well as the other outstanding issues. In conclusion, we understand that to follow up on our discussions of last week on the treatment of Internet revenues and the I-Net level playing field, Seren is preparing a proposal for the Communities. We look forward to hearing from you, and to moving forward promptly to conclude agreements with each community. Very truly yours, Miller & Van Eaton, P.L.L.C. 1 Y Matthew C. Ames cc: Patricia Burke Rob Ewing Lillian Fujii Laura Hoffineister Elizabeth Hudson Debra Margolis 991 G-.0 i-,1'0CA00649.DOc;z • • EXHIBIT D • CABLE FRANCHISE AGREEMENT BETWEEN THE CITY OF WALNUT CREEK,CALIFORNIA AND SEREN INNOVATIONS,INC. • September 21, 1999 • CITY OF WALNUT CREEK, CALIFORNIA Page I. DEMMONS.............................................................. ....................................2 A. Access Channel.......................................................................................................2 B. Affiliate...................................................................................................................2 C. Applicable Law.......................................................................................................2 D. Basic Cable Service................................................................................................2 E. Cable Act................................................................................................................2 F. Cable Ordinance......................................................................................................2 G. Cable Service..........................................................................................................3 H. Cable System or System......................................................................................... 3 I. Channel...................................................................................................................3 JDwelling Unit..........................................................................................................3 Kr Financial Interest ....................................................................................................3 L. Franchise...............................................:....:............................................................4 M. Franchise Agreement or Agreement.......................................................................4 N. Franchise Area..................................................................:.....................................4 O. Gross Revenues.......................................................................................................4 P. Incumbent Operator................................................................................................ 5 Q. Installation............................................................................................................... 5 R. Institutional Network or I-Net................................................................................ 5 S. Interconnect................. ........................................................................................ 6 T. Operator...................................................................................................................6 U. Person......................................................................................................................6 V. Public Facility.........................................................................................................6 W. Public Rights-of-Way.............................................................................................6 X. Section.....................................................................................................................6 Y. Service Interruption................................................................................................6 Z. Service Tier.............................................................................................................6 AA. State.........................................................................................................................6 BB. Subscriber...............................................................................................................6 . CC. Transfer....................................................................................................................6 U. GRANT OF AUTHORITY; LUMTS AND RESERVATIONS.......................7 A. Grant of Authority...................................................................................................7 B. Area Served:............................................................................................................7 C. Term........................................................................................................................7 D. Grant Not Exclusive.................:.......................................:. ..................7. . ................... E. Franchise Agreement Subject to Other Laws.........................................................8 F. Franchise Agreement Subject to Exercise of Police Powers....................................8 G. Approval and Effective Date.................................................................................. 8 H. Effect of Acceptance. .9 I. No Waiver:...................................................................... ...... .............................9 ' i J. Limitation on Liability.......................................................................................... 10 K. Incorporation by Reference.........................................:......................................... 10 M. TRANSFERS........................................................................................................ 10 A. City Council Approval Required................................:......................................... 10 B. Determination by Ci C. Transferee's Agreement........................................................................................ 12 D. Approval Does Not Constitute Waiver................................................................. 12 E. City's Processing Costs ...................:.................................................................... 12 IV. CONSTRUCTION AND MAINTENANCE..................................................... 12 A. Construction Standards:........................................................................................ 12 B. Undergrounding:................................................................................................... 14 C. Compliance with Construction Codes and Permitting Requirements................... 15 D. Conditions on Use.of the Public Rights-of--Way.................................................. 15 E. System Architectural Design Review Process...................................................... 18 F. Construction Segments......................................................................................... 18 G. Construction Manual............................................................................................. 19 H. Post-Construction Design Modifications..............................................................20 I. System Operation Test..........................................................................................20 • J. Construction Deadlines......................................................................................... 20 K. Periodic Progress Reporting .................................................................................21 L. System Tests and Inspections:..............................................................................21 M. Publicizing Proposed Construction Work.......................: NRight of Inspection.........................................................................................:......22 O. System Maintenance:............ aintenance:............... 22 P. Standard Connections.........................................:.................................................23 V. SYSTEM FACILITIES,EQUIPMENT AND SERVICES.............................23 A. System Requirements............................................................................................23 B. System Characteristics..........................................................................................24 C. Periodic Review:...................................................................................................25 D. Equipment Compatibility:............................ ........................................................26 E. Types of Service...................................................................................................27 F. Offices...................................................................................................................27 G. Leased Access Channels.......................................................................................27 H. Interconnection: ....................................................................................................28 I. Customer Service Monitoring..........................................:....................................28 J. Emergency Alert System......................................................................................28 K. Home Wiring........................................................................................................28 • L. Uses to System:.....................................................................................................29 M. Parental Control Lock. 29 N. Open Platform for Internet Services.....................................................................29 ll O. No Limitation of Streaming Video.......................................................................29 VI. CHANNELS AND FACILITIES FOR PUBLIC, EDUCATIONAL AND GOVERNMENTAL USE...................................:...............................................29 A. Access Channels:..................................................................................................29 B. Periodic PEG Access Capital Payments...............................................................32 C. Lump Sum PEG Access Capital Payment............................................................ 32 D. Cable Service to Certain Facilities:.......................................................................33 E. Institutional Network(I-Net)................................................................................ 34 F. Compliance with Federal Law............................................................................... 36 G. Additional Payments,Contributions, Support Not Franchise Fees...................... 36 VII. FRANCHISE FEE.............................................................................................. 36 A. Payment to the City............................................................................................... 36 B. Computation.........................................................................................:....:...........37 C. Supporting Information......................................................................................... 37 D. No Accord or Satisfaction.....................................................................................37 E. Interest...................................................................................................................37 F No Limitation on Taxing Authority:..................................................................... 38 VIII. RATE REGULATION....................................................................................... 38 A. All Rights Reserved:.............................................................................................. 38 B. Geographic Uniformity......................................................................................... 38 C. Senior Citizen Discount........................................................................................38 IX. INSURANCE,SURETY,AND INDEMNIFICATION................................... 39 A. Insurance Required...............................................................................................39 B. Minimum Scope of Insurance...............................................................................39 C. Minimum Limits of Insurance...............................................................................39 . D. Deductibles and Self-Insured Retentions..............................................................40 E. Other Insurance Provisions...................................................................................40 F. Acceptability of Insurers.......................................................................................41 G. Verification of Coverage.......................................................................................41 H. Failure Constitutes Material Violation: .............................. ............41 ...................... I. Indemnification:.....................................................................................................41 J. No Limit of Liability: ............................................................................................42 X. PERFORMANCE GUARANTEES AND REMEDIES..................................42 A. Performance Bond: ...............................................................................................42 B. Security Fund:............6..........................................................................................43 C. Rights Cumulative.................................................................................................44 iii D. .Letter of Credit Procedures...................................................................................44 E. Failure Constitutes Material Violation..................................................................45 F. Remedies...............................................................................................................45 G. Liquidated Damages........................................................................:....................45 H. Shortening,Revocation,or Termination of Franchise:.........................................47 XI. REPORTING AND REVIEW...........................................................................48 A. Records Required and the City's Right to Inspect................................................48 B. Annual Reports.....................................................................................................49 C. Reports available for inspection.........::...: ............................................................49 D. Operator's Expense...............................................................................................49 XII. RIGHT TO PURCHASE....................................................................................49 A. The City's Right to Purchase System...................................................................49 B. Purchase by the City Upon Expiration or Revocation...........................................49 C. Abandonment or Removal of Equipment............................................................. 50 D. Extended Operation and Continuity of Service.................................................... 51 XIII. MISCELLANEOUS PROVISIONS ................................................................. 51 • A. Conflict with and Amendment of Ordinance........................................................ 51 B. No Discrimination................................................................................................. 51 C. Unbundling........................................................................................................... 51 D. Receivership and Foreclosure............................................................................... 51 E. Franchise Renewal..............................................................................................:. 52 F. Severability................................................................... ............ 52 ............................ G. Preemption............................................................................................................ 53 H. Compliance With Federal and State Laws............................................................ 53 I. Force Majeure.......................................................................................................53 J. Notices.......................................................................... ...................... .... ... ...... ... .....53 K. Time of Essence;Maintenance of Records of Essence........................................ 54 L. Captions and References:.......................................................... .................... 54 M. Rights Reserved to the City.................................................................................. 54 N. Operator Bears Its Own Costs............................................................................... 55 O. City Bears Its Own Costs...................................................................................... 55 P. Entire Agreement........................................................:......................................... 55 Q. Adequacy and Sufficiency of Consideration........................................................ 55 R. Possessory Interest Taxation................................................................................. 55 S. Representations and Warranties of the Operator's Signatories.............:.............. 55 T. Jurisdiction of California Courts and Waiver of Diversity Jurisdiction............... 56 U. Rights of Individuals. ..................................... .........................................................56 V. Ownership of the Operator.................................................................................... 58 iv CABLE TELEVISION FRANCHISE AGREEMENT BETWEEN THE CITY OF WALNUT CREEK,CALIFORNIA AND SEREN INNOVATIONS,INC. THIS CABLE FRANCHISE AGREEMENT (the"Franchise Agreement') is entered into by and between the City of Walnut Creek, California ("City'); and Seren Innovations, Inc., a Minnesota corporation("Operator'). WHEREAS, Operator has applied to the City for a nonexclusive franchise to construct, install,maintain and operate a cable communications system in the City; and WHEREAS, the construction, installation, maintenance and operation of such a system involves the occupation of and placement of private commercial facilities in.the Public Rights- of-Way within the City; and WHEREAS, the City has considered the financial, technical and legal qualifications of Operator, and has determined whether Operator's plans for constructing, operating and maintaining its Cable System are adequate, in a full public proceeding affording due process to all parties;and WHEREAS, the City has relied on Operator's representations regarding its financial, technical and legal qualifications and its plans for constructing, operating, and maintaining its Cable System, and has considered the information that Operator has presented to it; and WHEREAS, based on Operator's representations and information, and in response to its request for a cable television franchise, the City Council has determined that, subject to the provisions of Chapter 7 of Title 6 of the Walnut Creek Municipal-Code, as amended, known as the Walnut Creek Cable Television Ordinance (the "Cable Ordinance" or"Ordinance"), and the terms and conditions set forth herein, the grant of a nonexclusive franchise on the terms and conditions herein and subject to applicable law, is consistent with the public interest; and WHEREAS, the City and Operator have reached.agreement on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the City's grant of the Operator's fi-anchise; Operator's promise to provide Cable Service to residents of the City pursuant to and consistent with the Cable Ordinance; the terms and conditions set forth herein, the promises and undertakings herein, and other good and valuable consideration, the receipt and the adequacy of which is hereby acknowledged,the signatories do hereby agree as follows: I. DEFINITIONS For the purpose of this Agreement, the following terms, phrases, words and their derivations shall have the meaning given herein. Words used in the present tense include the future, words in the plural number include the singular number, and words in the singular number include the plural number. All capitalized terms used in the definition of any other term shall have their meaning as otherwise defined in this Section. The words "shall and "will' are mandatory and ` nay" is permissive. Words not defined shall be given their common and ordinary meaning. A. Access Channel: Any Channel on the Cable System set aside under this Agreement for public, educational or governmental use. B. Affiliate: Any subsidiary of the Operator, any parent of the Operator, any Person in which the Operator has a Financial Interest of thirty percent(30%) or more, and any Person who is directly or indirectly under common control with the Operator, including, but not limited to, any Person which has a Financial Interest of thirty percent (30%) or more in the Operator and any Person in which a Person, also having a Financial Interest of thirty percent(30%) or more in the Operator, has a Financial Interest of thirty percent (30%) or more, provided that the foregoing shall not include any Person who is an electric company and who is not involved in the operation or management of the Cable System other than as a shareholder. C. Applicable Law: Any law, statute, charter, ordinance, rule, regulation, code, license, certificate, fi-anchise, permit, writ, ruling, award, executive order, directive, requirement, injunction (whether temporary, preliminary or permanent), judgment, decree or other order issued, executed, entered or deemed applicable to the City by any Governmental Authority. D. Basic Cable Service: Any Service Tier which includes the retransmission of local television broadcast signals. Basic Cable Service as defined herein shall not be inconsistent with 47 U.S.C. 543(b)(7). E. Cable Act: The Cable Communications Policy Act of 1984, Pub. L. No: 98-549, 98 Stat. 2779 (1984) (codified at 47 U.S.C. 521-611(1982 & Supp. V 1987)) as amended by the Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385 and the Telecommunications Act of 1996, Pub. L No. 104-458 and as the same may, from time to time,be amended. F. Cable Ordinance: The City of Walnut Creek Cable Ordinance, as it may be amended from time to time. 2 G. Cable Service: (1) The one-way transmission to Subscribers of (i) video programming, or(ii) other programming service; and (2) Subscriber interaction, if any, which is required for the selection or use of such video programming or other programming service. The parties agree that any internet access or internet service provided over the Cable System ("Internet Services') is, as of the Effective Date, included in this definition. However, if any(i) subsequent enactment of Federal or State statutory law, (ii) final Federal Communications Commission order or regulation which is not in the process of being challenged in court, or(iii) judicial decision of a State or Federal appellate court,which is applicable to the City, determines that such Internet Services are not a Cable Service and is retroactive in application, then such Internet Services shall be excluded from this definition, provided however, if such enactment, order or decision does not state whether it is retroactive, then either party may seek a judicial determination as to the retroactive applicability of the same. H. Cable.System or System: The facility proposed to be built by the Operator, which shall consist of a set of closed transmission paths and associated signal generation,reception, and control equipment that is designed to provide Cable Service which includes video programming, and which is provided to multiple subscribers within the City,but such term does not include(A) a facility that serves only to retransmit the television signals of 1 or more television broadcast stations; (B) a facility that serves Subscribers without using-any public right-of-way; (C) a* facility of a common carrier which is subject, in whole or in part, to the provisions of 47 U.S.C. §§ 201-226, except that such facility shall be considered a Cable System(other than for purposes of 47 U.S.C. § 541(c)) to the extent such facility is used in the transmission of video • programming directly to Subscribers, unless the extent of such use is solely to provide interaction or on-demand services under federal law; (D) an open video system that complies with 47 U.S.C. § 573; or (E) any facilities of any electric utility used solely for operating its electric utility system. I. Channel: A six Megahertz (MHz) frequency band, which is suitable for carrying either one standard video signal, a number of audio, digital or other non-video signals or some combination of such signals. J. Dwelling Unit. Residential livi4g units as distinguished from temporary lodging facilities such as hotel and motel rooms and dormitories, and including single family residential units and individual apartments, condominium units, mobile homes within mobile home parks, and other multiple family residential units. K. Financial Interest: Includes without limitation: 1. Any form of equity ownership interest, which is either (a) direct or (b) indirect through another form of Person; 2. Any form of contingent or optional ownership interest; 3. Any contract in which the Operator or any Affiliate thereof is to receive a percentage of the gross revenues and/or a.percentage of the net income of the other party to the • transaction by reason of the activities encompassed by said contract; 3 • 4. Any debt relationship in which the Operator as debtor borrows funds at a rate more advantageous than that generally available to similarly situated entities of similar creditworthiness; 5. Any debt relationship in which the Operator as creditor receives a rate of interest exceeding that which would otherwise be paid by a similarly situated debtor of similar creditworthiness; 6. Any option or warrant to purchase the stock or other equity interest in any Person which is related to a Person which generates revenues arising from or attributable to the operation of the Cable System; and 7. Any debt relationship which has conversion privileges to a form of equity of the nature described in the preceding subsection. L. Franchise: The franchise granted pursuant to this Agreement. M. Franchise Agreement or Agreement: This contract and any amendments, exhibits or appendices hereto. N. Franchise Area: The territorial confines of the'City, and any areas annexed thereto during the term of the Franchise. • O. Gross Revenues: All revenue derived directly or indirectly by the Operator, or any Affiliate of the Operator, arising from or attributable to, the operation of the Cable System to provide Cable Service. Gross Revenues shall include,but shall not be limited to: 1. Revenue from (i) payments for service, equipment, late fees, franchise fees and other charges, including without limitation all payments directly or indirectly from Subscribers; (ii) advertising carried on the Cable System or in subscriber bills; and(iii)programmers or others relating to transmissions carried on the Cable System, including but not limited to payments to carry programming and home shopping revenues. 2. All revenue directly or indirectly attributable to the Operator which is received by any Affiliate,whether or not such revenue is actually received by the Operator. 3. Revenue which is not actually received by the Operator or an Affiliate thereof. reflecting the value of services bartered or exchanged for non-monetary consideration. 4. Revenues derived from the provision by the Operator or any Affiliate thereof of Internet access,cable modems and/or other Internet-related services, including without limitation bandwidth leased to unaffiliated Internet service providers. Notwithstanding the foregoing, if any(i) subsequent enactment of Federal or State statutory law,(ii) final Federal Communications Commission order or regulation which is not in the process of being challenged in court, or(iii) judicial decision of a State or Federal appellate court,which is applicable to the City, determines either that Internet Services are not a Cable Service or that the revenues specified in this 4 • subsection (4) should not be included in the definition of Gross Revenues and is retroactive in . application, then such revenues shall be excluded from Gross Revenues, provided however, if such enactment, order or decision does not state whether it is retroactive, then either party may seek a judicial determination as to the retroactive applicability of the same. Further, notwithstanding Applicable Law, the revenues specified in this subsection (4) shall immediately be excluded from Cross Revenues in the event and to the extent that the City permits such revenues to be excluded from the calculation of Gross Revenues for Franchise Fee purposes by any other cable operator which is.operating a cable system in the City. 5. Revenue from any activity, product or service which generates revenue of any type whatsoever and which is offered to users by means of the Cable System, to the extent such revenue arises from or is attributable to the operation of the Cable System to provide Cable Service. 6. Revenue from any activity, product or service in the production or provision of which.any of the assets of the Cable System, including without limitation cable, computers, servers, production facilities and administrative facilities, are utilized, unless such revenue is expressly excluded from Gross Revenues by Applicable Law. Gross Revenues shall not include (i).the amount of any tax, fee or other assessment imposed by law upon Subscribers or others which the Operator is obligated to collect and pass on in full to the applicable taxing authority nor (ii) the amount of Periodic Access Capital Payments as • defined herein. A franchise fee is not such a tax, fee or other assessment. Moreover, revenues of both the Operator and any Affiliate which represent a transfer of funds between them shall be counted only once for purposes of determining Gross Revenues. Refunds of revenues previously received and accounted which are paid to Subscribers shall reduce Gross Revenues by the amount of the refunds received during the reporting period in which such refunds are made. P. Incumbent Operator. Either of UACC Midwest, Inc., or Televents, Inc., or such successors or affiliates thereof that are parties to any renewal of the existing franchises. Q. Installation: The connection of the System from the tap to the point of connectivity to a Subscriber's terminal for the provision of Cable Service. R. Institutional Network or I-Net: A communications system, whether physically integrated with a cable system or not,that is constructed,operated or maintained by the Operator, whose transmissions are principally available to persons other than cable television subscribers (i.e. government -agencies and affiliated non-profits, and educational institutions). The Institutional Network includes all equipment required to make the capacity available including but not limited to fiber,coaxial cable, switching,patching, electronic transmitting, receiving, and signal conversion necessary for effective use of the I-Net.. S. Interconnect: The provision by the Operator of technical, engineering, physical, financial, and all other necessary components to accomplish, complete, and adequately maintain a physical linking of the Operator's Cable System and Cable Services or any designated Channel • 5 • or signal pathway thereof, with any other designated cable system or programmer so that Cable Services of technically adequate quality may be sent to and received from such other systems. T. Operator. Serer Innovations, Inc., a Minnesota corporation, and its lawful and permitted successors,assigns,and transferees. U. Person: Any individual or any association, firm, general partnership,- limited partnership,joint stock company,joint venture, trust, corporation, limited liability company or other legally recognised entity,private or public,whether for-profit or not-for-profit. V. Public Facility: A fire station, public educational facility, police station, public library,and City department or agency within the Franchise Area which is listed on Exhibit 1. W. Public Rights-of-Way: The surface of and the space above and below and from right- of-way line to right-of-way line in each of the following which have been dedicated to the public or are hereafter dedicated to the public and maintained under public authority or by others and located within the City ,limits: streets, roadways, highways, avenues, paths, lanes, alleys, sidewalks, boulevards, easements, rights-of-way, and similar public property and areas that the City shall permit to be included within the definition of Street from time to time. X. Section: Any Section, subsection or provision of this Agreement. • Y. Service Interruption: The loss of picture or sound on one or more Cable Channels for more than sixty(60) seconds. Z. Service Tier: A category of Cable Service or other services provided by the Operator and for which a separate rate is charged by the Operator. AA. State: The State of California. BB. Subscriber: Any Person who or which lawfully elects to become a recipient of Cable Service provided by the Operator by means of or in connection with the Cable System whether or not a fee is paid for such service. CC. Transfer: Any transaction in which(i) an ownership or other interest in the Operator, its Cable System, or any Person that is an operator of the Cable System is transferred from one Person or group of Persons to another Person or group of Persons so that control of the Operator is transferred; or (ii) the Franchise or the rights and obligations held by the Operator under the Franchise are transferred or assigned to another Person or group of Persons. The term"control," as used in this definition, means working control, in whatever manner exercised. By way of illustration, and not limitation,the addition,deletion or other change of any general partner of the Operator, or a cable operator of the Cable System is such a change of control. For purposes of this Section, an initial public offering of the Operator's common stock pursuant to a Registration Statement filed with the United States Securities and Exchange Commission on Form S-1 shall . not be deemed a "change of control," provided that this exception shall not apply if any one 6 • Person shall directly acquire thirty percent (30%) or more of the outstanding stock of the Operator directly through such an offering. U. GRANT OF AUTHORITY; LEMM AND RESERVATIONS A. Grant of Authority: Subject to the terms and conditions of this Agreement and the Cable Ordinance, the City hereby grants the Operator the right to own, install, construct, reconstruct, operate, maintain, dismantle, test, upgrade, repair, use and remove a Cable System along, under, over, above, through or across or in any manner connected with the Public Rights- of-Way within the Franchise Area, for the sole purpose of providing Cable Service. This Franchise shall grant no authority for the Operator to use the City's Public Rights-of-Way for any purposes other than the provision of Cable Service, except to the extent other services may be provided pursuant to section VI(E). No reference herein to a Public Right-of-Way shall be deemed to be a representation or guarantee by the City that its interest or other right to control the use.of such property is sufficient to permit the.Operator's use for specific purposes, and the Operator shall be deemed to gain only those rights to use that are within the City's power to convey. No privilege or power of eminent domain is bestowed by this grant or by this Agreement. B. Area Served. 1. The Franchise is granted for the Franchise Area defined herein. • The Operator shall extend its Cable System to provide service to any residence in the City upon request, in accordance with the terms of the Cable Ordinance and this Agreement. 2. The Operator shall design, construct and maintain the Cable Television System to pass every Dwelling Unit in the Franchise Area, provided that the Operator may apply to the City for a low-density exception for any specific mile of street within the Service Area, which has less than thirty-six (36) Dwelling Units fronting thereupon, measured from the closest point of connectivity to.the Operator's System,provided that the Operator's Cable System shall be designed to reach the maximum possible number of Dwelling Units and to minimize the existence of any low-density exception with the City. The Operator shall be responsible for providing sufficient information to the City to establish the existence of the low-density exception and to establish that the System's architecture is such as to minimize the occurrence of such low density exceptions. The Operator shall bear the burden of proof as to both elements. C. Term: The Franchise and this Franchise Agreement shall extend for a term of fifteen years, commencing on the date accepted below by the Operator, unless the Franchise is earlier revoked or its term shortened as provided herein or in the Cable Ordinance, or unless the Franchise is renewed or extended by mutual agreement. D. Grant Not Exclusive: The Franchise granted under this Agreement shall be nonexclusive. The City specifically reserves the right to grant, at any time, such additional • Franchises for a Cable System or any component thereof, as it deems appropriate, subject to Applicable Law. The City also specifically reserves the right to operate a municipal Cable System, or any portion thereof, pursuant to Applicable Law and shall not be required to grant a Franchise to the City for the operation of a municipal Cable System unless specifically required by Applicable Law. E. Franchise Agreement Subject to Other Laws: This Franchise Agreement is subject to and shall be governed by all applicable provisions of federal, state, and local law. F. Franchise Agreement Subject to Exercise of Police Powers: All rights and privileges granted herein are subject to the constitutional police powers of the City and its rights under Applicable Law to exercise its governmental powers to their full extent and to regulate the Operator and the construction, operation and maintenance of the Operator's Cable System, including,but not limited to, the right to adopt and enforce additional ordinances and regulations as the City shall find necessary in the exercise of its police powers,the right to adopt and enforce applicable zoning, building, permitting and safety ordinances and regulations, the right to adopt and enforce ordinances and regulations relating to equal employment opportunities, and-the right to adopt and enforce ordinances and regulations containing right-of-way, telecommunications, utility and cable television consumer protection and service standards, and rate regulation provisions. The Operator expressly acknowledges that the City has begun proceedings related to the renewal of the Incumbent Operator's franchise, and that in the course of those proceedings, the City may choose to amend the Cable Ordinance. G. Approval and Effective Date: The grant of the Franchise provided for in this • Agreement shall be effective on the date stated on the signature page (the "Effective Date"), provided that, prior to or upon the date of the City's approval of and authorization of execution of this Agreement, the Operator shall theretofore have fully executed this Agreement and submitted to the City all required submissions required hereby, including without limitation, the Security Fund and insurance certificates provided for in this Agreement. H. Effect of Acceptance: By accepting the Franchise and executing this Franchise Agreement,the Operator: 1. accepts and agrees to comply with each provision of the Cable Ordinance and this Agreement; 2. acknowledges and accepts the City's legal right to grant the Franchise, to enter this Franchise Agreement, and to enact and enforce ordinances and regulations related to.the Franchise; 3. agrees that the Franchise was granted pursuant to processes and procedures consistent with Applicable Law, and that it shall not raise any claim to'the contrary, or allege in any claim or proceeding by the Operator against the City that any provision, condition or term of _ the Cable Ordinance or this Agreement at the time of the acceptance of the Franchise was unreasonable or arbitrary, or that at the time of the acceptance of the Franchise any such provision, condition or term was void or that the City had no power or authority to make or enforce any such provision, condition or term; 8 • 4. agrees that the City retains the absolute right to terminate this Agreement in accordance with Section X(H) for any material violation by the Operator of any substantive provision of the Cable Ordinance or any term or condition hereof, which violation has not (i) been substantially corrected by Operator within sixty days of receiving written notice from the City of such violation,or(ii)in the case of a violationwhich reasonably requires more than sixty days to correct, Operator has undertaken substantive corrective action within sixty days of receiving written notice from the.City of such violation and subsequently completes any necessary corrective action in a timely manner. 5. agrees that it will not oppose intervention by the City in any proceeding affecting the Operator's Cable System within the Franchise Area; and 6. agrees that, as further provided in Section VI, the costs to the Operator associated with the provision of support for public, educational and governmental access and the Institutional Network as expressly described in this Franchise Agreement do not constitute fi-anchise fee payments within the meaning of 47 U.S.C. § 542, and fall within one or more of the exceptions to 47 U.S.C. § 542. I. No Waiver. 1. The failure of the City on one or more occasions to exercise a right or to require compliance or performance under this Franchise Agreement, the Cable Ordinance, or any other • applicable law shall not be deemed to constitute a waiver of such right or a waiver of compliance or performance by the City, nor to excuse the Operator from complying or performing, unless such right or such compliance or performance has been specifically waived in writing. 2. Waiver of a breach of this Agreement shall not be a waiver of any other breach, whether similar to or different from that waived. Neither the-granting of the Franchise, nor any provision herein, nor any action by the City hereunder shall constitute a waiver of or a bar to the exercise of any governmental right or power of the City, including without limitation of the right of eminent domain. J. Limitation on Liability: In any court proceeding involving any claim against the City or other governmental entity, or any official, member, employee, or agent of the City, arising from the regulation of Cable Service or from a decision of approval or disapproval with respect to a grant, renewal, transfer, or amendment of the Franchise, any relief; to the extent such relief is required by any other provision of federal, state, or local law, shall be limited to injunctive relief and declaratory relief. The Operator shall not apply for any waivers, exceptions, or declaratory rulings from the FCC or any other federal or state regulatory agency affecting the System or the Franchise without written notice to the City K. Incorporation by Reference: Subject to Section XIII(A), the Cable ;Ordinance shall be incorporated in and made a part of this Agreement as if fully set forth herein. • III. TRANSFERS 9 A. City Council Approval Required. No Transfer shall occur unless prior application is made by the Operator to the City and the City Council's prior written consent is obtained, pursuant to this Agreement and the Cable Ordinance, and only then upon such terms and conditions as the City Council deems necessary and proper. This shall not be deemed to be a waiver of any right of Operator to challenge any such condition imposed by the City. Any such Transfer without the prior written consent of the City Council shall be considered to impair the City's assurance of due performance, and shall be invalid. The granting of approval for a Transfer in one instance shall not render unnecessary approval of any subsequent Transfer. Notwithstanding anything contained in this Agreement, the City acknowledges that, as- of the Effective Date, Northern States Power, (NSP), sole shareholder of Operator;is in the process of merging with New Century Energies (NCE). Said merger and any reconfiguration or renaming of NSP or NCE and/or establishment"of intermediate entities (between NSP and Operator) resulting therefrom, shall not require the City's approval or consent. 1. Application. (a) The Operator shall promptly notify the City Manager of any proposed Transfer. If any Transfer should take place without prior notice to the City Manager, the Operator shall promptly notify the City that such a Transfer has occurred. At least one hundred- twenty (120) calendar days prior to the contemplated effective date of a Transfer, the Operator shall submit to the City Manager an application for approval of the Transfer. Such an application shall provide complete information on the proposed.transaction, including details of the legal, financial, technical, and other qualifications of the new controlling entity or transferee, and on the potential impact of the Transfer on Subscriber rates and service. At a minimum, the following information shall be included in the application, provided that, the Operator is not required to duplicate information that it submits to the City Manager to comply with its obligations under federal or State law: i. all information and forms required under federal law or the equivalent of such forms if no longer required by federal law; ii. all information required by the Ordinance; iii. any contracts or other documents that relate to the proposed transaction, and all documents, schedules,exhibits,or the like referred to therein; iv. any shareholder reports or filings with the Securities and Exchange Commission that discuss the transaction; V. other information necessary to provide a complete and, accurate understanding of the financial position of the Cable System before and after the proposed Transfer, vi. complete information regarding any potential impact of the Transfer on Subscriber rates and service; and 10 • vii. a brief summary of the proposed controlling entity's or transferee's plans for at least the next five (5) years regarding line extension, plant and equipment upgrades, channel capacity, expansion or elimination of services, and any other changes affecting or enhancing the performance of the Cable System. The City shall notify Operator of any insufficiency in the information provided within thirty (30) days.after receipt thereof. The failure of the City to so notify Operator of such insufficiency shall result in the information being deemed complete and adequate. For the purposes of determining whether it shall consent to a Transfer, the City or its agents may inquire imto all qualifications of the prospective controlling entity or 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 as provided under the Ordinance. The Operator and any prospective controlling entities or transferees shall assist the City in any such inquiry in any reasonable manner, and if they fail to do so, the request for approval of the Transfer may be denied. B. Determination by City. In making a determination as to whether to grant, deny, or grant subject to conditions, an application for a Transfer, the City may consider, without limitation, the legal, financial, and technical qualifications.of the proposed controlling entity or transferee to operate the Cable System; the proposed purchase price and consideration to be paid for the Franchise; any potential effects of the Transfer on Subscriber rates or services; whether the Operator is in compliance with this Agreement and the Ordinance, and, if not, the proposed controlling entity transferee's commitment to cure such noncompliance; whether the proposed. • controlling entity or transferee owns or controls any other Cable System in the City, and whether operation by such Person may eliminate or reduce competition in the delivery of Cable Service in the City; and whether operation by the proposed controlling entity or transferee or approval of the Transfer would adversely affect Subscribers, the public, or the City's interest under this Agreement,the Ordinance,or other Applicable Law. C. Transferee's Agreement: No application for a Transfer of the Franchise shall be granted unless,the proposed controlling entity or transferee agrees in writing that it will abide by and accept all terms of this Agreement and the Cable Ordinance and that it will assume the obligations, liabilities, and responsibility for all acts and omissions, known and unknown, of the previous Operator under this Agreement and the Ordinance, for all purposes, including renewal. D. Approval Does Not Constitute Waiver. Approval by the City Council of a Transfer does not constitute a waiver or release of any of the rights of the City under this Agreement or the Cable Ordinance,whether arising before or after the date of the Transfer. E. City's Processing Costs: If the Operator initiates a request for approval regarding a Transfer, the Operator shall reimburse the City for all reasonable out-of-pocket costs, including attorneys' and consultants' fees and costs, incurred by the City in connection with the City's review and processing of the Operator 's request. Nothing in the foregoing shall entitle the Operator to have any role in the selection of the City's consultants and, in order to protect the attorney-client and work product privileges, the City may delete from billings for attorneys and consultants retained by attorneys any detailed description of services performed. Payments.of such costs and expenses shall not be deemed to be"franchise fees"within the meaning of Section 11 622 of the Cable Act (47 U.S.C. §542), and such payments shall not be deemed to be (i) "payments in kind" or any involuntary payments chargeable against the Franchise Fee to be paid to the City by the Operator pursuant to this Agreement or (ii) part of the Franchise Fees to be paid to the City by the Operator pursuant to this Agreement to the extent required by Applicable Law. IV. CONSTRUCTION AND MAINTENANCE A. Construction Standards: 1. The construction, operation, maintenance, and repair of the System shall be in accordance in all material respects with all applicable sections of the Occupational Safety and Health Act of 1970, as amended;the National Electrical Safety Code and National Electric Code; Obstruction Marking and Lighting, AC 70/7460 i.e., Federal Aviation Administration; Construction, Marking and Lighting of Antenna Structures, Federal Communications Commission Rules Part 17; the Cable Ordinance; Applicant's Construction Procedures Manual; and other applicable federal, state, or local laws and regulations, all as hereafter may be amended or adopted. In the event of a conflict among codes and standards, accepted cable industry practices shall control (except insofar as such practices, if followed, would result in a Cable System that could not meet express requirements of federal, state or local law, or in instances in which such practices are expressly preempted by other standards). Consistent with the • foregoing, the City may ensure that work continues to be performed in an orderly and workmanlike manner,reflecting any changes that may occur over the Franchise term. 2. To the extent permitted by Applicable Law, the City reserves the right to.adopt and impose such technical and other standards as it may deem necessary or appropriate, after notice to Operator and opportunity for Operator to participate. It is-acknowledged, however, that 47 C.F.R 76.605 currently preempts City authority. 3. All installation of electronic equipment shall be of a permanent nature, using durable components. 4. Without limiting the foregoing, antennae and their supporting structures (towers) shall be designed in accordance.with the Uniform Building Code as amended, and shall be painted, lighted, erected, and maintained in accordance with all applicable rules and regulations of the Federal Aviation Administration and all other applicable federal, state or local laws, codes, and regulations, all as hereafter may be amended or adopted. 5. The Operator shall maintain all wires, conduits, cables, and other real and personal property and facilities comprising Operator's Cable System in good condition, order and repair. Consistent with subsection IV(a)(1) above, all safety practices required by law shall be used during construction, maintenance, and repair of Operator's Cable System. The Operator shall at all times employ ordinary care and shall install and maintain in use commonly accepted methods and devices for preventing failures and accidents. 12 6. In the event of a failure by the Operator to complete any work required for the protection or restoration of the Public Rights-of-Way, or any other work required by City law or ordinance, within the time specified by and to the reasonable satisfaction of the City, the City, following notice and an opportunity to cure, may cause such work to be done, and the City shall submit an itemized list of such costs to Operator as well as any materials reasonably requested by Operator to verify such costs. Following the Operator's receipt of such itemized list and supporting materials,the Operator shall reimburse the City the costs thereof within thirty days, or the City may recover such costs through the letter of credit provided by Operator. • 7. In the event of an emergency, or where the Operator's Cable System creates or is contributing to an imminent danger to health, safety, or property, or an unauthorized use of property, the Operator shall remove or relocate any or all parts of Operator's Cable System at the request of the City. If the Operator fails to comply with the City's request, the City may remove or relocate any or all parts of the Operator's Cable System upon reasonable notice to Operator. If Operator's compliance with the City's request pursuant to this subsection results in the breach of any of Operator's obligations under this Agreement, and Operator has so notified the City before complying with the City's request, Operator shall not be liable for its failure to satisfy such obligations. • 8. Any and all Public Rights-of-Way, public property, or private property that is disturbed or damaged during the construction, repair, replacement, relocation, operation, maintenance, or construction of a System shall be repaired, replaced and restored, in a good workmanlike, timely manner, to substantially the same condition as immediately prior to the disturbance (including appropriate landscape restoration). All repairs, replacements and restoration shall. be undertaken within no more than thirty (30) days after the damage is incurred, and shall be completed as soon as reasonably possible thereafter. The Operator shall guarantee and maintain such repairs, replacements and restoration for at least one year against defective materials or workmanship. • 9. Any contractor or subcontractor used for work or construction, installation, operation, maintenance, or repair of System equipment must be properly licensed under laws of the State of California and all applicable local ordinances, where applicable, and each contractor or subcontractor shall have the same obligations with respect to its work as the Operator would have if the work were performed by the Operator. The Operator will take reasonable measures to require that contractors, subcontractors and all employees who will perform work for it are trained and experienced. The Operator shall be responsible for ensuring that the work of contractors and subcontractors is performed consistent with this Agreement and Applicable Law, shall be fully responsible for all acts or omissions of contractors or subcontractors, shall be responsible for promptly correcting acts or omissions by any contractor or subcontractor, and shall implement a quality control program to ensure that the work is properly performed. 10. The City does not guarantee the accuracy of any maps showing the horizontal or vertical location of existing substructures. • B. Undergrounding. 13 • I. In those areas of the City where transmission or distribution facilities of all the public utilities providing telephone and electric power service are underground, the Operator likewise shall construct, operate and maintain its transmission and distribution facilities therein underground. In those areas of the City where transmission or distribution facilities of all the public utilities providing telephone and electric power service are aerial, the Operator shall likewise construct, operate and maintain its transmission and distribution facilities therein on an aerial basis,unless otherwise agreed to by the City. 2. In those areas of the City where the Operator's cables are located on the above- ground transmission or distribution facilities of the public utility providing telephone or electric power service, and in the event that the facilities of both such public utilities subsequently-are placed underground, the Operator shall similarly and simultaneously construct, operate and maintain its transmission and distribution facilities underground, at the Operator's cost 3. In those areas of the City where transmission or distribution facilities of the Cable System are other than aerial (and therefore not pole-mounted), all passive electronic facilities, 4f -) including without limitation all tap pedestals, shall be underground;provided that where the Operator demonstrates 'to the reasonable satisfaction of the City that, by reason of peculiar underground conditions in a given area of the City, the passive electronic facilities cannot be feasibly maintained in below-ground structures, the Operator may then place such passive electronic facilities in above-ground enclosures. However, the City specifically reserves all of its rights to approve, in accordance with this Agreement, all above-ground and/or underground locations for all such equipment subject to Applicable Law. The Operator shall, at installation • and throughout the term of the Franchise, install and maintain all mitigation measures required in the Mitigated Negative Declaration dated September 1, 1999 related to the Cable System adopted by the City for all such above-ground equipment installations. C. Compliance with Construction Codes and Permitting Requirements: 1. The Operator shall obtain all necessary permits from the City before commencing any construction, repair, upgrade or extension of the System, including the opening or disturbance of any Public Rights-0f--Way, on private or public property within the City. The Operator shall adhere to all state and local laws and building and zoning codes currently or hereafter applicable to construction, operation,or maintenance of the System in the City and give due consideration at all times to the aesthetics of the property. 2. The City shall, at all times, have the right to inspect all construction or installation work performed pursuant to the provisions of the Franchise and to make such tests at its own expense as it shall find necessary to ensure compliance with the terms of the Franchise and applicable provisions of local, state and federal law in such a manner so as to minimize disruption of service to Subscribers. D. Conditions on Use of the Public Rights-of-Way: • 1. Any and all Public Rights-0f--Way or public property or private property, which are disturbed or damaged during the construction, repair, replacement, relocation, operation, or 14 • reconstruction of the System shall be promptly and fully restored by the Operator, at its expense, to a condition as good as that prevailing prior to the Operators work, in accordance with the City's normal restoration procedures and standards regarding Public Rights-0f--Way and other public property In so doing, the Operator shall comply with all directions of the City Engineer, including without limitation direction to utilize directional boring in lieu of trenching. Moreover, the Operator shall use its best efforts to reduce, through coordination with the City Engineer, its trench cuts of the Public Rights-of-Way by coordinating such intrusions with other users, franchisees, licensees and occupants of the Streets so as to minimize the trench cuts and resulting pavement degradations in the Public Rights-of-Way. It is a violation of this Franchise for the Operator to leave cable unburied on the ground for more than the shortest, temporary period.required to bury it and, in no event, overnight. If the Operator shall fail to promptly perform the restoration required herein after written notice and an opportunity to cure, the City shall have the right to put the Public Rights-of-Way, public, or private property back into a condition as good as that prevailing prior to the Operator 's work and the City shall obtain reimbursement for such restoration from the Operator. The City may deduct the Operator's payment due from the Security Fund, if it shall remain unpaid fifteen(15) days after presentation for payment. Nothing contained in this Agreement shall excuse or relieve the Operator from compliance with any street cut ordinance of general application which the City should hereafter enact. 2. Nothing in this Franchise shall be construed to prevent the City from constructing, maintaining, repairing or relocating sanitary sewers and/or storm drains; grading, paving, maintaining, repairing, relocating and/or altering any Public Rights-of-Way; constructing, laying down, repairing, maintaining or relocating any water mains; or. constructing, maintaining, relocating, or repairing any sidewalk or other public work. 3. All System transmission and distribution structures, lines and equipment erected by the Operator within the City shall be located so as not to unreasonably obstruct or unnecessarily interfere with the usual and customary use of the Public Rights-0f--Way, and to cause minimum interference with the rights of property owners who abut any of the Public Rights-of-Way, and not to unreasonably interfere with existing public utility installations. The Operator shall furnish to and file with City Engineer the maps, plats, and permanent records of the location and character of all facilities constructed, including underground facilities, and the Operator shall file with the City updates of such maps, plats and permanent records annually if changes have been made in the System. 4. If at any time during the period of this Franchise the City shall alter, or change the grade or location of any Public Rights-of-Way, the Operator shall at'its own expense, upon notice by the City, remove and relocate its poles, wires, cables, conduits, manholes and other fixtures of the System, and in each instance comply with the standards and specifications of the City. 5. The Operator shall not place poles, conduits,or other fixtures of the System above or below ground where the same will unreasonably interfere with any gas, electric, telephone, water or other utility fixtures. All the Operator's poles, conduits, or other fixtures placed in any • Public Rights-of-Way shall be so placed as to comply with all requirements of the City. 15 • 6. The Operator shall, on request of any Person holding a moving permit issued by the City, temporarily move its wires or fixtures to permit the moving of buildings with the expense of such temporary removal to be paid by the Person requesting the same, and the Operator shall be given not less than ten (10) business days advance notice to arrange for such temporary changes. 7. The Operator shall cooperate with and participate fully in Underground Service Alert (USA) and other reputable underground facility locating services to insure that damage and/or interference with other underground facilities occupants is minimize_ 8. If(i) the Operator should in the course of the construction and/or reconstruction of the System elect to place underground cable plant in the public utility easement on private property where there was, at the time of the Operator 's election, space available for the installation of such plant within the public roadway, and (ii) the Operator should fail, neglect or refuse to take pre-construction photography (or videography) of the condition of any private property upon which underground construction is to occur,the Operator shall have the burden of proof as to the condition of the private property prior to the,initiation of such construction in any subsequent complaint resolution, arbitration or judicial procedure between the Operator and the private property owner. If the Operator enters private property for the purposes of construction where there is no dedicated public easement, the Operator shall first secure the private property owner's written consent. • 9. Notwithstanding any other term, condition or provision hereof, no trench cut or portion thereof by the Operator in any Public Rights-of-Way shall remain open and unfilled for more than three (3) business days from the date of its initial opening. The Operator shall be subject to the imposition of liquidated damages pursuant hereto for each additional day that any such trench or portion thereof shall remain open beyond the aforesaid three (3) business day limit. For.purposes of this section, "open" shall mean and include any degree of refilling and/or restoration of the trench short of the final restoration of the pavement to its original grade. Moreover, the Operator shall, at the close of each day, suitably cover, by plate or other means acceptable to the City, (i) any unfilled trench or portion thereof, and (ii) any open trench which traverses a driveway or other means of ingress and egress for any property owner in such a fashion as to allow full use of the driveway or other means of ingress and egress by the property owner during periods of non-construction. Each failure by the Operator to cover any such trench shall be a separate event of default which shall be separately.subject to the liquidated damages provisions of this Agreement. 10. Notwithstanding the approval, and/or acceptance by the City of the construction by the Operator in the Public Rights-of-Ways, including without limitation the repair and/or restoration of trench cuts, as of the completion of the Operator's construction or.any phase thereof, the City may re-inspect any such construction by the Operator("Re-inspection') within twenty-four(24) months after the completion of all construction by the Operator(as established by the Notice of Completion for the last Construction Segment Area) and the Operator shall, as a condition of this Franchise, repair and restore to such standards as the City may then specify, any deficiencies and/or degradations noted by the City in the Re-inspection. Any such repairs and/or 16 • restorations by the Operator pursuant to such a Re-inspection shall be subject to a further Re- inspection within twenty-four(24)months from the completion thereof. 11. The Operator shall,at installation and throughout the term of the Franchise, install and maintain all mitigation measures required in the Mitigated Negative Declaration adopted by the City pursuant to the California Environmental Quality Act, which are hereby incorporated by reference as fully as if set forth herein. Each failure to install and/or maintain such a mitigation measure specified in-the Mitigated Negative Declaration shall.be a separate event of default which shall, in addition to all other available remedies, be separately subject to the liquidated damages provisions of this Agreement. 12. Except in cases of emergency or responses to unplanned system failures where it is impractical to do so, prior to entering onto private property to construct, operate or repair its Cable System(unless the repair or construction can be performed from the Public Rights-of--Way without disrupting private property), the Operator shall give the Person residing on or using the property adequate notice, not less than twenty-four (24) hours nor more than seventy-two (72) hours in advance, that it intends to work on the property, a description of the work it intends to perform and a name and telephone number the Person can call to protest or seek modification of the work. Failure of the Operator to give the timely and adequate notice as described above-shall cause the burden of proof, in any subsequent legal action for damage by the Operator to the private property,to shift to the Operator as to all matters before the court. Work.shall be done in a manner that causes the least interference with the rights and reasonable convenience of • property owners, residents and users and that complies with Applicable Law. In such case, subject to the exception for timely notice, the notice shall be given to the Person residing or using the property as soon as possible. 13. When in the course of aerial construction, it is necessary to replace an existing pole and the Operator desires to utilize a temporary second pole without simultaneously removing the original pole (hereinafter "Temporary Duplicative Pole Method') in order to maintain the pace of construction, the Operator shall make application to the City to use the Temporary Duplicative Pole Method. The Temporary Duplicative Pole Method shall not be utilized without the prior written approval of the City. In determining whether or not to grant its approval for the use of the Temporary Duplicative Pole Method, the City may consider, among other things, the degree of delay which will be incurred if the Duplicative Pole Method is not utilized, the Operator's diligence and foresight theretofore in pursuing the processing of make ready work and the timely construction of the System, and the Operator's timely completion(or lack thereof) of the relocation of facilities on previously approved Temporary Duplicative Pole Method permits. If the City shall approve the use of the Temporary Duplicative Pole Method in a given instance, the Operator shall deposit with the City one and one-half(I V2) times the City's estimate of the cost to complete the relocation of facilities to the new pole and remove the old pole and shall agree in writing to complete the relocation of all facilities to the new pole and the removal of the old pole within four (4) months from the date of the City's approval of the Temporary Duplicative Pole Method permit. Each failure to complete the relocation of facilities within the time specified shall be a separate event of default which shall, in addition to all other • remedies,be separately subject to the liquidated damages provisions of this Agreement. 17 • 14. The City shall have the option to lay its own. conduit or place other public improvements that do not incur significant cost, delay or redesign by Operator, including without limitation wiring for traffic signals, streetlights, etc. in the Operator's open trenches during the initial construction and during any future rebuilds or repairs. 15. The City shall have the right, at no charge(but at no additional cost to Operator), to install or maintain any wires and fixtures desired by the City upon the poles and within the underground pipes and conduits of the Operator that are located in the same Public Rights-of- Way. If the City desires to utilize the Operator's facilities, the City and the Operator shall enter into a mutually acceptable separate agreement for the provision thereof. Any such agreement shall, contain terns and conditions other than rate provisions that are no more favorable nor less burdensome than the terms and conditions made available by the Operator to any other Person. The.Operator may deny use of its facilities if the City's proposed installation or maintenance is not technically feasible, exceeds available space, would delay Operator's construction schedule such that liquidated damages would be payable as a result, would cause a violation of this Agreement, or otherwise interferes with the existing or future operations of the Operator. • 18 • E. System Architectural Design Review Process: Prior to submitting the initial Application for a Notice to Proceed, the Operator shall deliver to the City a System design plan, which shall include the following elements: 1. All hub sites and node map; 2. "Sell sheet"level description of equipment at hubs, and nodes; 3. System level bunking maps to illustrate the architecture of the system. The City's review shall not operate to excuse any non-performance under this Agreement, the Ordinance or other Applicable Law. The City may review the design plan and submit comments to the Operator within thirty (30) days of the date it was submitted by the Operator. The Operator shall take any such comments into account in implementing its construction plan. F. Construction Segments: The Operator shall construct the Cable System in a series of reasonably contiguous areas of the City,to be defined by the Operator in its application for a Notice to Proceed for each such area(such an area hereinafter a"Construction Segment Area" or"CSA'). Subject to such exceptions as maybe approved by the City, in its sole discretion, each CSA shall be adjacent to and contiguous with a prior approved CSA. The Operator shall not construct any Cable System facilities within a Construction Segment Area until the Operator has secured a Notice to Proceed • for that CSA from the City. The Operator's Application for a Notice to Proceed shall be accompanied by evidence that the Operator has obtained all of the permits and approvals necessary to fully complete construction of the Cable System within that Construction Segment Area from(1) the City, (2) other applicable Governmental Authorities and (3) pole owners (as to aerial construction). The Operator shall obtain approval for the siting of all pedestals and similar structures prior to installation of any such structure or construction of any facilities serving or served by such a structure. Approval for such siting shall be obtained in accordance with the usual procedures governing such structures, and nothing in this Agreement or the Cable Ordinance shall be deemed to waive any such procedures. Upon proof to the reasonable satisfaction of the City that all such authorizations reasonably necessary to the completion of the Cable System within an otherwise approved Construction Segment Area have been issued, including any authorizations related to the siting of pedestals and similar structures, the City shall issue a Notice to Proceed to the Operator with respect to that Construction Segment Area. The Operator shall not undertake any construction or encroachment within the public right of way prior to receipt of the Notice to Proceed applicable to the area of construction. Nothing contained in this section shall be deemed to prevent the Operator commencing construction of its head-end facility on its own property at any time,provided that it is otherwise in compliance with Applicable Law. The parties may agree to a different process for phasing construction. G. Construction Manual: Operator has submitted to City a System construction manual, and plan for notifying area residents of the system construction work process. City shall have a right to review and approve or disapprove the plan and manuals by October 1, 1999. • 19 H. Post-Construction Design Modifications: At least ninety (90) days prior to the date of any construction on the System,which construction is initiated after completion of the System and which is intended to implement any modifications to the design of the System, the Operator shall deliver to the City a detailed description of the proposed design modifications. The description shall include any of the information required by subsection 6(e), relevant to an understanding of the proposed modification. The City may review the plan and, within thirty (30) days of the date the plan is made available for City review, submit comments to the Operator. I. System Operation Test: The Operator shall comply with the following procedures as it completes construction of plant: 1. The City shall be added to the notice list and shall be kept up-to-date regarding progressive activation of the System and testing of the same. 2. Successful completion of the first semi-annual FCC.proof-of-performance test for a portion of the System shall constitute.the final acceptance test for that portion. The Operator shall notify the City of the date at least ten(10) days in advance, in writing or by e-mail to City's fianchise administrator, that it will conduct such a test. City shall have the right to have a designated observer present during each test. The Operator shall send a copy of the written results of each test to City promptly upon completion of each test. If the tested portion of the System passes the performance test, that portion shall be deemed accepted by the City. If the tested portion does not pass, the Operator shall take all steps necessary to meet the applicable standards and the affected portion shall be retested. 3. Final acceptance of the entire System shall take effect when (i) all nodes as set forth in the system architectural design plan approved by the City pursuant to Section V(C) have been constructed, activated, and accepted pursuant to paragraph (1) above; and (ii) at least 80% of the entire System, as measured by the number of nodes,has passed the first semi-annual FCC proof-of-performance test. J. Construction Deadlines: The Operator shall commence construction in the City within six months of the Effective Date, and shall complete construction within the first CSA within 120 days thereafter. Failure to meet either of these requirements shall be deemed material defaults under this Agreement and shall 'be grounds for..revocation of the Franchise, or the exercise of any other remedy available under this Agreement or the Ordinance. The Cable System shall be completed within each Construction Segment Area within one hundred twenty (120) calendar days from the issuance of the Notice to Proceed for that Construction Segment Area pursuant to this Agreement. Moreover, in any event, the Cable System shall be completed and operational throughout the City within twenty-four (24) months from the Effective Date of this Agreement. 20 K. Periodic Progress Reporting. 1. Following the commencement of construction of the System or any similar major construction, the Operator shall meet with the City at least every three (3) months until the construction is completed,and provide an update on the progress of the construction according to the Operator's general plan, unless the City waives such meeting. Upon request, the Operator shall provide detailed written reports to the City on the Operators progress in construction, within ten(10)business days of the request. 2. Public Notification. Prior to the beginning of any System construction, and periodically during each phase,the Operator shall inform the public and its Subscribers about the progress of the construction areas where construction crews will be working and any expected temporary interruptions to existing services which may occur. 3. Delays in the System Construction. The Operator shall not be excused from the timely performance of its obligation to begin and complete any system construction within the times specified herein, except for any"Force Majeure"situation,as described herein. 4. Consequences of Delays. Absent a showing of excusable delay pursuant to this Agreement, should the Operator be unable to demonstrate the commencement or timely completion of the System Construction by the times specified herein, or be unable to reasonably justify any delays,then the Operator shall be in violation of a material provision of this Franchise Agreement and the City may, in its sole discretion, either grant the Operator an extension of time to complete such construction or implement any enforcement measures specified in this Agreement or the Ordinance, including but not limited to revocation of the Franchise. In the event of excusable delay pursuant to this Agreement, the time-for completion shall be extended by the period of such delay. L. System Tests and Inspections: 1. The Operator shall perform all tests necessary to demonstrate compliance with the requirements of the Franchise and the technical standards of the FCC set forth in Part 76, Subpart K (Technical Standards) of the FCC's Hiles, 47 C.F.R. § 76.601 et seq., including without limitation performance tests, technical standards, signal leakage performance criteria and cable television system monitoring. In the event that the FCC's technical performance standards are repealed or are no longer applicable to the Operator's Cable System, such standards shall remain in force and effect until the City and the Operator agree to new standards. 2. The Operator shall conduct tests as follows: a. proof of performance tests on the System at least once every six months or as required by FCC rules, whichever is more often, except as federal law otherwise limits the Operator's obligation; and b. - special proof of performance tests when Subscriber complaints indicate tests are warranted. 21 • 3. A written report of test results shall be filed with the City within seven(7) days of the test. In addition, the Operator shall retain written reports of the results of any tests required by the FCC,and such reports shall be submitted to the City within seven(7)days of a request. 4. If any test indicates that any part or component of the System fails to meet applicable requirements, the Operator, without requirement of additional notice or request from City, shall take corrective action, retest the locations and advise the City of the action taken and results achieved. M. Publicizing Proposed Construction Work- The Operator shall notify the general public prior to commencing any proposed construction'that will significantly disturb or disrupt public property or Public Rights-of-Way, or have the potential to present a danger or affect the safety of the public generally. Where possible, the Operator shall publicize proposed construction work at least one week prior to commencement of that work by notifying those residents and others in the immediate vicinity of where work is to be done and most likely to be affected by the work in at least one of the following ways: by telephone, in person, by mail, by distribution of door hangers or flyers to residences, by publication in local newspapers, or in any other manner reasonably calculated to provide adequate notice. Notice to affected Persons must include the name and local telephone number of an Operator representative who is qualified to answer questions concerning proposed construction. In addition, before entering onto any Person's property for proposed non-emergency construction work in connection with Operator's Cable System, the Operator shall contact the property owner or (in the case of residential property, the resident) at least two days in advance,when possible. N. Right of Inspection: The City shall have the right to inspect all construction; reconstruction or installation work performed by the Operator under the provisions of this Agreement and Applicable Law, to ensure the Operator's compliance and to protect the health, safety and welfare of the City's citizens. All work performed by the Operator shall be fully subject to the general ordinances of the City and, in case of conflict between such general ordinances and this Agreement,the general ordinances shall prevail. O. System Maintenance: 1. The Operator shall, when practicable, schedule and conduct maintenance on Operator's Cable System so that interruption of service is minimized and occurs during periods of minimum Subscriber use of Operator's Cable System. The Operator shall provide reasonable prior notice to Subscribers and the City before interrupting service for planned maintenance or construction,except where such interruption is expected to be one hour or less in duration. Such notice shall be provided by methods reasonably calculated to give Subscribers actual notice of the planned interruption. 2. Maintenance of the System shall be performed in accordance with the technical performance and operating standards established by FCC rules and regulations. 22 • P. Standard Connections: If the aerial or underground connection for service to a Subscriber's location (sometimes known as a "drop') requires no more than a one hundred fifty (150') foot extension drop measured from the nearest Street (whether or not the Operator has elected to place its Cable System in that Street), the Operator shall provide the connection to its service at no charge for the initial one hundred fifty (150') feet other than the Operator's standard installation fee. V. - SYSTEM FACILITIES, EQUIPMENT AND SERVICES A. System Requirements. The Operator's Cable System generally shall meet or exceed the following requirements: 1. Compliance With FCC Rules. a. The System shall conform to or exceed all applicable FCC technical performance standards, as amended from time to time, including, without.limitation, those set forth in 47 C.F.RL § 76.601 and other applicable standards established by the City pursuant to Section 4(a)(2) above. b. The System shall have personnel, facilities and equipment sufficient to cure violations of FCC technical standards and to ensure that Operator's Cable System remains in compliance with the standards specified in Section 0. c. The System shall have such facilities and equipment as necessary to maintain, operate, and evaluate.Operator's Cable System to comply with FCC technical standards, as such standards may be amended from time to time. 2. Continuous 24-Hour Operation. The System shall be designed to be capable of continuous twenty-four-hour daily operation in accordance with FCC standards except as caused by a force majeure condition. 3. No Interference. The System shall be operated in such a manner as to comply with all applicable FCC requirements regarding (i) consumer electronic equipment and (ii) interference with the reception of off-the-air signals by a Subscriber. 4. No Deterioration to Access Signals. The 'System shall be so constructed and operated that each PEG Channel shall be delivered over the System with transmission quality the same as or better than the transmission quality of any other Channel on Basic Cable Service. 5. Industry-Accepted Equipment. The System shall use equipment generally used in high-quality, reliable, modem systems of similar design. Facilities and equipment shall be used at the headend to allow the Operator to transmit or cablecast signals in substantially the form received, without substantial alteration or deterioration. For example, the System shall include components so that a signal received at the headend in color may be received by a Subscriber in color,a stereo signal in stereo. 23 • 6. Program Security. The System shall include equipment so that any pay-per-view programming can only be activated by the positive action of a subscriber using, for example, a private identification number or other individual selection procedure. 7. Handicapped Service. The Operator shall comply with all requirements of applicable law, including but not limited to the Americans with Disabilities Act. Operator shall comply with FCC rules on transmission of closed captioning for the hearing-impaired. 8. Safety. The System's facilities and equipment shallbe designed, built and operated in such a manner as to protect the safety of Operator's Cable System workers and the public. 9. Sufficient Staff and Equipment. The System shall have sufficient trucks, tools, testing equipment, monitoring devices and other equipment and facilities and trained and skilled personnel required to enable the Operator to substantially comply with Applicable Law, including applicable customer service requirements and including requirements for responding to system outages. B. System Characteristics. The Operator shall complete construction of a System in the Franchise Area in accordance with the following minimum standards: 1. The System shall have a minimum activated bandwidth of at least 860 MHz, shall • be capable of delivering at least 134 analog Channels, and shall provide the equivalent of at least 87.analog Channels of programming upon activation. The System shall strictly conform, at a minimum, to the system described in Operator's franchise application dated February 10, 1999. 2. The bandwidth specifications in Section V(B)(1) refer to the engineering bandwidth of the system and do not limit what sorts of signals (e.g., analog or digital) the Operator carries on any part of that bandwidth. 3. The System shall utilize a fiber-optic wire trunk and distribution design("fiber-to- the-neighborhood"). Node size shall not exceed 500 homes per node. The System shall be designed and constructed to enable later segmentation to fewer homes per node as demand warrants. 4. The distribution plant shall have no more than six active components in a cascade. 5. The Operator shall provide standby power generating capacity at the headend and at all hubs. The Operator shall maintain standby power capable of at least 24 hours duration at the headend, at least four(4)hours duration for all system hubs, and at least 2 hours to each node and the distribution plant, with automatic response systems to alert the system headend when conventional power is interrupted. The Operator shall maintain sufficient portable generators to be deployed to a hub site in the event that the power disruption is expected to last more than four hours. 24 6. The Operator shall activate two-way capability throughout the system. The Operator shall activate all electronics for two-way operation, sweep and balance the reverse path of the system, and verify operation of the plant using procedures in NCTA Recommended Practices for Measurement on Cable Television Systems, as supplemented in October 1997, to the 1993 revised 2d edition. 7. As part of the System, the Operator shall offer every Subscriber, the opportunity to lease equipment that utilizes wireless remote controls, and that allow Subscribers to view a program on one channel while taping a program on another channel. 8. The entire System shall be technically capable of transmitting NTSC analog, compressed digital, and HDTV transmissions. The Operator shall comply with all FCC regulations regarding carriage of HDTV. 9. The Operator shall make Internet access available to all Subscribers at the same time as other services are provided over the Cable System to any Subscriber. Both upstream and downstream Internet access shall be provided over the Cable System(not via telephone lines). 10. The Operator's construction plan shall insure that the System is extended to all parts of the City without regard to income level. C. Periodic Review. CITY and OPERATOR acknowledge and agree that the field of cable television is rapidly changing which may see other regulatory, technical, and legal changes during the term of this Agreement. Therefore, in order to provide for the maximum degree of • flexibility in this Agreement, and to help achieve a continued, advanced and modem Cable System, the following evaluation provisions will apply: 1. The CITY reserves the right to adopt reasonable rules and regulations controlling the procedures as set forth below and the subjects for evaluation sessions to the extent consistent with Applicable Law.In the absence of any CITY action taken to exercise these rights, OPERATOR shall be subject to the procedures and the subjects described in this Agreement. 2. The CITY may require, in its sole discretion, that OPERATOR participate in evaluation sessions with CITY at any time and from time to time during the term of this Agreement; provided, however, there shall not be more than four (4) evaluation sessions, with one(1) each occurring during.years 3,6,9 and 12 of the Agreement. 3. Topics which may be discussed at any evaluation session include, but are not limited to, rates, channel capacity, the System performance, programming, PEG access, municipal uses of the System, Subscriber complaints,judicial rulings, FCC rulings and any other topics CITY or OPERATOR may deem relevant. 4. During an evaluation session, OPERATOR shall fully cooperate with CITY and shall provide without cost such nonproprietary information and documents as CITY may reasonably request to perform the evaluation. 25 5. If at any time during its evaluation, CrrY determines that reasonable evidence exists of inadequate System performance, CrrY may require OPERATOR to perform tests and analyses directed toward such suspected inadequacies at OPERAToR's expense. OPERATOR shall fully cooperate with CrrY in per-forming such testing and any report prepared by OPERATOR shall include at least: a. a description of the alleged problem in the System performance which precipitated the special tests; b. the System component tested; c. the equipment used and procedures employed in testing; d. the method, if any, by which the System performance problem was resolved; and e. any other information pertinent to said tests and analyses which may be reasonably required by C=,or determined when the test is performed. 6. If after receiving OPERATOR'S report, CrrY determines that reasonable evidence still exists of inadequate System performance, Crrx may enlist an independent engineer to perform tests and analyses directed toward such suspected inadequacies. The costs of such engineer shall be chargeable against the Security Fund. 7. As a result of an evaluation session, CITY or OPERATOR may determine that an amendment in the terms of this Agreement may be required, that the requirements of the.System or this Agreement should be updated, changed or revised, and/or that additional services should be provided by OPERATOR (collectively a "Proposed Modification"). If the Proposed Modification is consistent with the terms of this Agreement, the needs of OPERATOR and CrrY and existing state-of-the-art technology, including what is provided by OPERATOR in other Systems owned, operated or managed by it; or its parent company, OPERATOR and CrrY will, in good faith, review the terms of the Proposed Modification and consider amending this Agreement accordingly.Nothing herein shall be construed as requiring either OPERATOR or CrrY to agree to any Proposed Modification. D. Equipment Compatibility: 1. The Operator shall comply with all FCC regulations regarding scrambling or other encryption of signals, Subscriber premises equipment, equipment compatibility, and facilities and equipment that permit Subscribers to fully utilize the capabilities of consumer electronic equipment while receiving cable service. FCC regulations governing compatibility with consumer electronics equipment, as they may be amended from time to time, including but not limited to 47 C.F.R. §§ 76.629 and 76.630, are incorporated herein by reference. The City shall have authority, consistent with applicable law, to adopt enforcement regulations to ensure • that the Operator complies with these FCC regulations. 26 2. Upon request by a Subscriber or the City, .the Operator will provide accurate. information regarding equipment compatibility and the availability of universal remote controls and other compatible equipment(a list of which, specifying brands and models, shall be provided to any Subscriber upon request). 3. As part of normal installations, without additional cost, the Operator will include full connection of all consumer equipment in use at the time-of the installation, including connections permitting multiple signal reception (e.g., allowing two different Channels to be received, consistent with FCC regulations, so as to display picture-in-picture or allow a Subscriber to view one Channel while recording another). The Operator shall make such connections after installation upon a subscribers request, at a price consistent with any Appli- cable Law. E. Types of Service: Should the Operator desire to change the selection of programs or services offered on any of its tiers, it shall maintain the mix, quality and level of services provided over the System. Any change in programs or services offered shall comply with all lawful conditions and procedures contained in this Agreement and in Applicable Law. The Operator shall provide thirty(30)days' advance written notice to Subscribers and the City of any change in channel assignment or in the video programming service provided over any channel, unless this requirement is waived by the City or by operation of federal or state law, or due to events beyond the reasonable control of the Operator. F. Offices. The Operator shall maintain an office at a convenient location within the City. The office shall be open at least from 9:00a m. - 6:00 p.m. five days a week, and from 9:00 a.m. - 5:00 p.m. on Saturdays to allow Subscribers to request service, pay bills, and conduct other business. Notwithstanding the foregoing, no sooner than five (5) years after opening its office within the City, the Operator may request that City approve the relocation of its office to a convenient location outside the City. City shall approve the relocation promptly unless it finds that the relocation would be unreasonably inconvenient to subscribers within the City. G. Leased Access Channels: The Operator shall provide leased access channels as required by federal law. 27 H. Interconnection: 1. Operator shall design its System so that it may be two-way interconnected with any or all other cable television systems in the area. Interconnection of systems may be made by direct cable connection,microwave link, satellite or other appropriate methods. 2. Operator may interconnect its system with other Cable Systems upon its- own initiative, or upon request of the City Council to interconnect. If so ordered, Operator shall begin good faith negotiations concerning interconnection with the other affected system or systems. If so ordered, Operator shall interconnect with any adjacent Cable System which is controlled by the Operator or its Affiliate. 3. All signals to be interconnected will comply with FCC technical standards for all. classes of signals and will result in no more than a de minimus level of distortion. 4. The Operator shall cooperate with any interconnection corporation, regional interconnection authority, state or federal regulatory agency which may be hereafter established for the purpose of regulating, facilitating, financing or otherwise providing for the interconnection of-communications systems within and beyond the boundaries of the City. To facilitate interconnection with other adjacent systems which are owned or controlled by the Operator or any Affiliate thereof ("Adjacent Related Systems'), the Operator shall place all comparable Access channels on the System and on Adjacent Related Systems on channels having the same numerical designations. I. Customer Service Monitoring: The Operator shall install and maintain status monitoring equipment and keep such records as required to enable the City to determine whether the Operator is complying with all telephone answering standards required by applicable customer service regulations, as amended from time to time. J. Emergency Alert System: The Operator shall comply with the requirements of 47 C.F.R. Part 11, as amended. The Cable System shall be designed and constructed to permit the City to simultaneously override audio and video signals and broadcast emergency messages on all Channels on the System. The City shall have the capability to initiate emergency messages from City Hall, or such other place as the Administrator of Emergency Services may designate. The Operator shall assist and cooperate with the City in periodic testing of the emergency alert system. K. Home Wiring. Operator shall comply `with all applicable FCC requirements, including any notice requirements,with respect to home wiring and home run wiring. L. Uses of System: Operator shall notify the City of all active uses of the Operator's Cable System as promptly as possible after the institution of such uses. M. Parental Control Lock: The Operator shall provide, at no charge, to Subscribers, upon request, a parental control locking device or digital code that permits inhibiting the video • and audio portions of any Channels offered by the Operator. 28 • N. Open Platform for Internet Services: The Operator agrees to comply with all requirements of Applicable Law with respect to nondiscriminatory access to the Operator's cable modem platform for providers of internet service. O. No Limitation of Streaming Video: Unless expressly mandated by Applicable Law, the Operator shall place no restriction upon the downstream streaming of video programming over its internet access service. VI. CHANNELS AND FACILITIES FOR PUBLIC, EDUCATIONAL AND GOVERN- MENTAL USE A. Access Channels: 1. The parties acknowledge that the franchise granted by the City to the Incumbent Operator expires on February 18, 2001, and that the City is in the process of ascertaining cable- related community needs and interests pursuant to 47 U.S.C. § 546. Those needs and interests, including requirements for channel capacity for public, educational and governmental use, will be reflected in the terms of any Renewal.Franchise. The parties agree that if such a Renewal Franchise is granted, the Operator shall provide, beginning on the effective date of the Renewal Franchise,the same number of analog Access Channels as is required of the Incumbent Operator under the Renewal Franchise. Beginning immediately upon commencement of Cable Service to the first Subscriber in the City, the Operator shall provide two analog Access Channels for public, educational and governmental use. One channel shall be used, to the extent Operator has access to the same, for the live broadcast of City Council meetings and, by obtaining and replaying videotapes, providing similar bulletin boards or through the Incumbent Operator's system, the other programming currently carried on Channel 6 of the Incumbent Operator's System. The other channel shall be used to carry CCTV, the government access channel for Contra Costa County as soon as Operator's Cable System has direct access to the same. In addition, the Operator shall make available up to two additional analog Access Channels within thirty(30)days of a written request from the City. The additional Access Channels shall be used for public, educational or governmental access programming, the allocation thereof to be at the sole discretion of the City. Any entity that manages an Access Channel may use that capacity to provide one or more channels of service. 2. Additionally the parties agree that if such a Renewal Franchise is granted, the Operator shall provide, beginning on the effective date of the Renewal Franchise, the same amount of digital PEG Access capacity as is required of the Incumbent Operator under the Renewal Franchise. Beginning immediately upon commencement of Cable Service to the first Subscriber in the City, and subject to subsection (3) below, the Operator shall provide digital capacity in an amount equal to the amount needed to transmit four (4) video channels, with accompanying audio, that are in digital format and capable of producing sound and picture of NTSC quality, based on the compression technology then in use in the Cable System. Any use of such digital capacity shall be compatible with the technology, including without limitation the compression technology, used by Operator in the Cable System. The City and the Operator shall 29 • work together to implement technical solutions that make the most efficient use of this capacity . Further, if the Operator offers subscribers a radio or music service delivered over the Cable System, the Operator shall include in such service, if reasonably feasible, a non-profit public radio station designated by City which is either operated by City or by a non-profit organization within Contra Costa County. 3. Any of the foregoing analog or digital PEG capacity, the control of which has not been transferred to City or a Designated Access Provider, may be utilized by the Operator for any purpose unless and until it is so transferred. Four analog PEG channels shall be provided in the manner specified in Section 6(a)(1). Additional PEG capacity up to the maximum specified in Section 6(a)(1) (as to analog) and (2) (as to digital) shall be provided as follows: Prior to requesting additional PEG capacity, City shall, in its sole discretion, determine that such additional PEG capacity can reasonably be used for PEG purposes. In making this determination, City shall consider the extent to which existing PEG capacity is being utilized, the community need for additional PEG programming, the resources and capabilities of the City or the applicable Designated Access Provider needed to produce additional PEG programming and . the impact on the Operator and its Subscribers. Upon making this determination, City shall deliver written notice to the Operator indicating the amount and type of capacity needed and the date upon which the capacity should be provided. If the Operator has capacity of the specified amount and type which it is not actively using, it shall provide the capacity by the specified date. If the Operator does not have such unused capacity, it may defer providing such capacity until the earlier of(i) the date such capacity becomes available or(ii) twelve (12) months after receipt • of the notice from City. The Operator may defer providing the capacity in the foregoing manner ` only if it delivers a written notice to the City within fourteen (14) days after receipt of the City's notice. No third party shall have any independent right under this section to obtain additional PEG capacity, and City shall have the exclusive right to obtain additional PEG capacity for itself or a Designated Access Provider pursuant to this section. 4. The Operator shall provide dedicated, bidirectional fiber optic links between the headend and(i) City Hall; and two (2) other sites designated by the City in order to deliver PEG access programming to the headend. These links shall be completed as soon as practical after construction of the System commences. The Operator shall be responsible for providing all equipment at the origination sites necessary to transport the video programming from those origination sites to Operator's headend. The Operator shall place the PEG access signals on their designated channels at the headend. Each of the Access Channels provided under this Section, both initially and after the effective date of any franchise issued as a result of renewal proceedings for the renewal of the Incumbent Operator's franchise ("the Renewal Franchise"), shall, to the extent possible, carry PEG video programming which corresponds to one of the Access Channels provided over the Incumbent Operator's system. Operator shall make all reasonable good faith efforts to connect with the Incumbent"Operator's system as necessary to deliver all PEG programming made available by the Incumbent Operator as of the Effective Date. 5. The Operator shall provide any analog Access Channels on the Basic Service Tier • throughout the life of this Franchise and the balance of any PEG access capacity, on the lowest tier or level of such capacity offered to Subscribers. If channels or capacity on the Cable System 30. are displayed through a menu system, Access Channels or capacity, shall be displayed in the same manner as other channels or capacity. Access Channels and programming shall be in channel positions that are contiguous with, and not separated by scrambled channels from, the other channels located on the Basic Cable Service tier. 6. Each analog Access Channel shall be transmitted on the System in standard 6 MHz, unscrambled NTSC format so that every Subscriber can receive and display the PEG signals using the same converters and signal equipment that is used for other Basic Service Channels. 7. The Operator shall not change the channel assignments for the Access Channels, without the prior written approval of the City Manager. The foregoing is not intended to waive or contravene any Applicable Law, now or hereafter in effect. 8. Any educational Access Channel shall be for the noncommercial use of the educational community of the City. The City or its designee may adopt reasonable rules regarding the use of any such Channel. 9. Any governmental Access Channel shall be for the noncommercial 'use of the City. The City or its designee may adopt reasonable rules regarding the use of any such Channel. 10. Any public Access Channel shall be for the noncommercial use of the public. The City or its designee may adopt reasonable rules regarding the use of any such channels. 11. The City may, but need not, designate one or more PEG access providers ("Designated Access Providers"), including itself, to control and manage the use of any or all Access facilities and/or resources under this Franchise for a period of time or at the pleasure of the City. To the extent of such designation by the City, as between the Designated Access Provider and the Operator, the Designated Access Provider shall have sole and exclusive responsibility for operating and managing such access facilities and/or resources. The Operator shall cooperate with Designated Access Providers in the use of the Cable System and access facilities and/or resources for the provision of PEG Access. The Operator shall enter into such operating agreements with Designated Access Providers as may be necessary to facilitate and coordinate the provision of PEG access, provided that such operating agreements may not be inconsistent with this Franchise nor with such designation by the City. • 12. If the City has not designated a Designated Access Provider, and the City elects not to manage an Access facility itself:, the City may request that the Operator assume that role, subject to negotiation of the terms under which the Operator shall do so. If the City so requests,-the Operator shall, at a minimum, provide the Community Programming and Access Facilities and Support specified on pages 27-28 of the Operator's Franchise Application dated February 9, 1999. . • 13. Nothing contained in this Agreement shall be construed to prevent the CrrY and/or any Designated Access Provider from entering into underwriting or advertising 31 agreements with for-profit ventures to provide support for PEG access programming to the extent allowed by Applicable Law. No sums derived by the CITY and/or any Designated Access Provider from such underwriting activities or advertising shall be construed to diminish or otherwise offset PEG access payments due from under this Franchise. The City and/or any Designated Access Provider may carry non-commercial programming that is generated by entities other than the City and/or any Designated Access Provider. The City agrees to use or permit the use of the Access facilities for PEG use only. B. Periodic PEG Access Capital Paymentsi In addition to and apart from the Franchise Fee paid by the Operator for the use and occupancy of the Public Rights-of-Way and in addition to and apart from the Lump Sum PEG Access Capital Payment as defined below to be paid by the Operator, the Operator shall pay to the City a sum equal to three percent (3%) of its Gross Revenues as PEG Access Capital Payments ("Periodic PEG Access Capital Payments'), provided, however, that(i) for the first twelve months after the date of first activation of Cable Service to a residential Subscriber ("Activation Date'), the periodic PEG Access Capital Payments shall not be required;{ii) for the second twelve (12) months after the Activation Date, the Periodic PEG Access Capital Payments shall equal one percent(1%) of Gross Revenues; and (iii) for the third twelve (12) months after the Activation Date, the Periodic PEG Access Capital Payments shall equal two percent (2%) of Gross Revenues. If the Incumbent Operator's franchise is renewed at any time prior to the end of the third year of the Franchise term, the Operator shall immediately begin. paying the full three percent payment, effective on the effective date of the Renewal Franchise. The Periodic PEG Access Capital Payments shall be • paid quarterly at the same time and pursuant to the same calculations and rules as the calculation and payment of Franchise Fees. The Periodic PEG.Access Capital Payments designated hereby shall be under the direction and control of the City, and may be used for PEG access and institutional network purposes, including PEG access equipment (including, but not limited to, studio and portable production equipment, editing equipment and program playback equipment), institutional network equipment (including, but not limited to, network equipment, electronic transmission equipment and end user interface equipment) or for renovation or construction of PEG access or I-Net facilities. The City shall exercise its sole discretion as to the allocation of such resources among and within the public, educational and governmental functions, including without limitation the I-Net. The-City may, at any time, upon ninety (90) days' notice to Operator,reduce the percentage of Gross Revenues constituting the Periodic PEG Access Capital Payments. C. Lump Sum PEG Access Capital Payment: In addition to and apart from the Franchise Fee paid by the Operator for the use and occupancy of the Public Rights-of-Way and in addition to and apart from the Periodic PEG Access Capital Payment as defined above to be paid by the Operator, the Operator shall pay to the City eighteen (18) months after the Effective Date hereof the sum of(i) One Hundred Sixty Thousand Dollars ($160,000). In addition, for each of the twenty-seven I-Net sites that City chooses not to designate to be connected to the I-Net pursuant to Section VI(E) below up to a total of four (4) such sites, the Operator shall pay the additional sum of FORTY THOUSAND DOLLARS ($40,000.00) eighteen(18)months after the Effective Date. The sum of all of the foregoing payments (the "Lump Sum PEG Access Capital • Payment') shall be for the purpose of capital costs incurred in or associated with the PEG Facilities, including without limitation a regional studio, a Walnut Creek studio, and/or the I-Net, 32 • as distinct from payments for, or in support of the operational use of such Facilities, such as salaries and training. The parties have arrived at the amount of this Lump Sum PEG Access Capital Payment after consideration of a variety of factors, including without limitation, the population of the City, the term of this Agreement and a rough approximation of the present value of a studio. Nothing in the foregoing is intended to imply that the City has any particular expectation that the Incumbent Operator or any other cable operators that may enter into fianchise agreements with the City will provide or agree to provide any contributions and/or resources for PEG Access Capital Payments D. Cable Service to Certain Facilities: 1. The Operator shall, without charge, install one activated connection to each facility listed on Exhibit 1 under the following subheadings: City Facilities; Walnut Creek Libraries,Fire Stations and Public Schools. The Operator shall provide Basic Cable Service and the cable programming services tier, and any equipment necessary to receive and decode'such service, free of charge to each of the foregoing facilities. Subject to Applicable Law, Operator also.shall, without charge, provide Internet access service to the locations listed on Exhibit 1 under the subheading City Facilities, with a connection at each such City-designated location to enable City employees Internet access. The Operator shall provide one dynamically assigned IP address to each such location and shall allow the City to transfer any existing City-controlled IP addresses to the Operator's System At its option, City may choose to have such Internet access provided to some or all of such locations by Operator over the I-Net(to the extent such facilities • are connected to the I-Net pursuant to subsection (e) below) or over the City's Local Area Network or Wide Area Network. If City chooses the foregoing option, the Operator shall provide one (1) ten (10) M 3PS connection to either City Hall or the Dean Lesher Regional Center for the Arts, as specified by City. 2. Upon the request of the City, the Operator shall provide the Ygnacio Valley Library and the Downtown Library with a total of forty(40) cable modems (or their equivalent), equal in speed and capacity to the fastest and largest capacity offered by the Operator to any basic residential Subscriber, and Internet connection subscriptions, both at no charge to the libraries. The Operator shall also supply necessary interior cabling and equipment to connect said service to the libraries' local area network(not to individual computers). The Operator shall provide said cable modems (or their equivalent) and the Internet access service on or before the latest of (i) March 31, 2000; (fi) the date of completion of the CSA in which the library is _ located, or (iii) such later date as the City may designate. The Operator shall be permitted to advertise and promote its Cable System, including the distribution of promotional coupons, to the extent that such activities are consistent with the then-applicable rules of the libraries relating to such promotional activities by other underwriters of the libraries. 33 E. Institutional Network a--Net): 1. The Operator shall, concurrent with the building of the main subscriber network, construct an Institutional Network (I-Net) dedicated for the City, public agency, educational and non-profit use consisting of twelve (12) optical fibers. The I-Net shall be a bidirectional, fully fiber-optic network designed and constructed with single mode fiber, in a design so that each Public Facility can originate and receive fully interactive video, data and voice signals. The I- Net shall be completed within twenty-four(24)months of the Effective Date. The Operator shall assure in the design and construction of its system that the aforementioned optical fiber capability will be provided on all of the Operator's fiber backbone routes. The dedicated fibers shall connect all the Public Facilities (nodes) listed on Exhibit 1, up to a maximum of twenty- seven (27) locations, and allow a protected connection to assure that I-Net communications can move upstream and downstream in, out, and through each node. The City shall designate by October 1, 1999, which of the foregoing locations, up to the maximum of twenty-seven (27), shall be connected. The parties shall meet as soon as possible for the purpose of discussing the specific design of the I-Net. The I-Net shall be designed and constructed in compliance with the IEEE 802.3u standard for 100 megabit systems. The I-Net shall also be reasonably designed in such a manner as to permit a future migration to a 1,000 megabit system at no cost to the Operator and at City's sole expense. The parties shall reasonably agree upon the design as soon as possible and no later than ninety (90) days after the Effective Date of this Agreement. The optical fiber capability will be available to the City and 'its designated agencies for I-Net purposes pursuant to tenhs and conditions described in this Section. The I-Net shall be reserved for the sole use of the City and its designated agencies. Upon request the Operator shall. extend similar capacity on the I-Net to any City building, or the City designated agency building, located within the Franchise area, which is .constructed, acquired or leased by the City or its designated agency during the term of the Franchise, up to a maximum of one (1) such site per year. If such one additional site or any other future sites that the City may desire to be connected to the I-Net has not already been passed by the existing I-Net fiber, then the cost of providing such service to such additional location shall be borne by the City, such cost not to exceed Operator's out-of-pocket expenses plus ten percent (10%). Notwithstanding the foregoing, for each additional$40,000 Lump Sum PEG Access Capital Payment that City receives as a result of not designating an I-Net site pursuant to subsection (c) above, City shall not be entitled to .designate an additional I-Net site during one (1) subsequent year. For example, if City initially only designates 24 I-Net sites and the Operator makes a corresponding Lump Sum PEG Access Capital Payment of$40,000 for each of the 3 undesignated sites, City shall not be entitled to designate additional i-Net sites during the first three years after the Effective Date. 2. During initial construction the Operator shall construct optical fiber nodes within each building listed in Exhibit 1 as specified by the City, or its designated agency(not to exceed 27 sites). The cost of extending fiber from the Operator's backbone into each building shall be borne by the Operator. The Operator shall install at the Operator's expense in each of the 27 designated facilities ' listed in Exhibit 1 the necessary equipment to activate a 100 megabit Ethernet system with routers and equipment racks necessary to make the system operable at each location. The parties shall meet in good faith to determine the specific equipment to be provided, with the understanding that the equipment shall be of reasonable quality typical in the industry for similar applications and reasonably available to the Operator through its vendors. 34 The Operator shall Interconnect the facilities and hardware specified within this Section into an operational network to assure that I-Net communications can move upstream and downstream in, out, and through each node. Upon acceptance of the I-Net by the City, all nodal equipment shall be owned by the City, or its designated agency, and the City or designated agency shall be responsible for.its maintenance and,if necessary, its replacement. 3. Upon completion of I-Net construction, the Operator shall provide; for the purposes described below, all equipment necessary to satisfactorily conduct and provide the City with proof of performance measurements pursuant to this Section. After acceptance of the.proof of performance by the City,.the Operator shall be responsible for maintaining the I-Net facilities (including the optical fiber lines and any equipment necessary to operate those lines outside of City facilities, and not including the nodal equipment or any other facilities which are not provided by the Operator pursuant to this Agreement)to the same extent and in the same manner as it maintains its comparable facilities in the Subscriber network. The Operator shall provide reasonable technical. support and consultation to the City or its designated agency regarding the development and use of the I-Net. 4. The Operator shall begin restoration of service for all Service Outages, whether reported to Operator by the City or independently identified by Operator, within two hours of notice or discovery of the Service Outage during normal business hours,.four hours otherwise. The term "Service Outage" shall mean any condition or damage of or to the physical fiber optic network affecting the I-Net plant that precludes or substantially impairs the transmission of information on the I-Net or a portion thereof. Permanent repairs shall be completed within three • business days. Upon identification of a Service Outage, Operator shall, within such response time, have qualified personnel on site to investigate the outage, assess the cause and commence necessary repairs. To the extent that necessary repairs resulting in restoration of connectivity on the I-Net can be immediately accomplished, Operator shall effect such repairs in connection with its investigation of the cause of the Service Outage. To the extent that repairs cannot be immediately effected, Operator shall, within the response time, inform the City of the apparent cause of the Service Outage, the anticipated time for restoration of connectivity and, in cases where the City bears the cost of maintenance, the estimated cost of restoration connectivity. 5. The use of the I-Net shall be free of charge to the City and its designated agencies.The CrrY will determine which agencies may utilize the I-Net. 6. The parties acknowledge that the agreement regarding usage of the I-Net is subject to all local, state, and federal law. The City agrees to indemnify and hold harmless the Operator from and against any and all claims, damages, liabilities, costs and expenses, including reasonable attomey's fees and costs directly and solely related to the material under the City's control carried on the I-Net, including but not limited to, copyright infringement, libel, slander, defamation, patent, trademark, or invasion of privacy claims. Based on the City's control of the I-Net, City waives all claims, damages, liabilities, costs and expenses related to the material carried on the I-Net,as against Operator, and as to all functionality of the nodal equipment, from and after the expiration of the manufacturer's warranty applicable to the same. 35 0 F. Compliance with Federal Law: The Operator and the.City agree that the Periodic PEG Access Capital Payments and the Lump Sum PEG Access Capital Payment referenced in this Agreement will not be deemed to be "fi-anchise fees" within the meaning of Section 622 of the Cable Act(47 U.S.C. §542), and such obligations shall not be deemed to be (i) "payments in kind" or any involuntary payments chargeable against the Franchise Fees to be paid to the City by the Operator pursuant to this Agreement or (ii) part of the Franchise Fees to be paid to the City by the Operator pursuant to this Agreement. G. Additional Payments, Contributions, Support Not Franchise Fees: 1. The Operator acknowledges and agrees that the payments or contributions to be made by, or the Services, equipment, facilities, support, resources or other activities to be provided or performed by the Operator pursuant to Section 6 of this Agreement, or otherwise in connection with the construction, operation, maintenance or upgrade of the System shall not be franchise fees chargeable against the franchise Fees payable by the Operator to the City pursuant to this Agreement. 2.. The Operator acknowledges and agrees that each of the payments and contributions to be made by, or the Services, equipment, facilities, support, resources or other activities to be provided or performed by the Operator pursuant to Section 6 of this Agreement are within the exclusions from the term "franchise fee" set forth in Section 622 of the Cable Act (47 U.S.C. §542). • 3. The Operator acknowledges and agrees that the Franchise Fees payable by the Operator to the City pursuant to this Agreement shall take precedence over all other payments, contributions, Services, equipment, facilities, support,resources or other activities to be provided or performed by the Operator pursuant to this Agreement. 4. The Operator shall not apply or seek to apply all or any part of the Franchise Fees to be made by the Operator to the City pursuant to this Agreement as a deduction from or credit or offset against any taxes, fees or assessments of general applicability levied or imposed by the City or any other Governmental Authority(including any such tax, fee or assessment imposed on both utilities and cable operators or their services, but not including a tax, fee or assessment which is unduly discriminating against cable operators or cable Subscribers). VII. FRANCHISE FEE A. Payment to the City: In consideration of the grant of the Franchise provided for herein and the Operator's use and occupation of the Public Rights-of-Way, the Operator shall, at all times during the term of this Agreement,pay to the City a Franchise Fee of five percent(5%) of the Operator's annual Gross Revenues. The Franchise Fee shall be payable quarterly within thirty(30)days of the expiration of each of the Operator's fiscal quarters. Each payment shall be accompanied by a report in such form as the City may reasonably request showing the • computation of the Franchise Fee for the preceding quarter and such other relevant facts as may be reasonably required by the City, including the completion of a Franchise Fee Payment 36 • • Worksheet in a form specified by the City. Nothing herein shall be construed to prohibit the • Operator from itemization of the Franchise Fee on Subscriber bills to the extent required by 47 U.S.C. 542(c)and 47 C.F.R. 76.985. B. Computation: In the event that the Operator shall, during the term of the Franchise, bundle, tie or combine Cable Services (which are subject to the Franchise Fee) with non-Cable Services (which are not subject to the Franchise Fee), the combined revenue therefrom shall fust be allocated to Cable Services to the full extent which would have been charged by the Operator if the Subscriber had received only the Cable Services. In no event shall the amount allocated to Cable Services under the foregoing calculation exceed (i) the total amount of combined revenue actually received by the Operator or (ii) the net revenues derived when mandatory, tariff rates imposed by a Governmental-Authority for components of the combined service are deducted from the combined revenue. C. Supporting Information: The City, on an annual basis, shall be famished a statement within ninety (90) days of the close of the calendar year, certified by anofficer of the Operator reflecting the total amounts of Gross Revenues and all payments, and computations of the Franchise Fee for the previous calendar year. Upon ten (10) business days prior written notice, the City shall have the right to conduct an independent audit of the Operator's records. If such audit indicates a Franchise Fee underpayment of two percent (2%) or more, the Operator shall assume all reasonable costs of such an audit and shall remit to the City all applicable Franchise Fees due and payable together with a late payment fee equal to interest thereon at the lesser-of the maximum rate permitted by Applicable Law or 18%per annum. • D. No Accord or Satisfaction: Except as otherwise provided by law, no acceptance of any payment by the City shall be construed as a release or as an accord and satisfaction of any claim the City may have for further or additional sums payable as a Franchise Fee under this Agreement or any Franchise Agreement or for the performance of any other obligation of the Operator. E. Interest: In the event that any Franchise Fee payment or recomputed amount is not made on or before the dates specified in this Agreement, the Operator shall pay as additional compensation only a late payment fee computed from such due date, at an annual rate equal to the lesser of the maximum rate permitted by Applicable Law or 18% per annum during the period for which payment was due. 37 • F. No Limitation on Taxing Authority: 1. Nothing in this Agreement shall be construed to limit any authority of the City to impose any tax, fee,or assessment of general applicability. 2. The Franchise fee payments required by this section shall be in addition to any and all taxes of a general nature or other fees or charges which the Operator shall be required to pay to the City or to any state or federal agency or authority, as required herein or by law,3 all of which shall be separate and distinct obligations of the Operator. The Operator shall not have or make any claim for any deduction or other credit of all or any part of the amount of said Franchise Fee payments from or against any of said City taxes or other fees or charges which the Operator is required to pay to the City, except as required by law.or expressly provided in this Agreement. The Operator shall not apply nor seek to apply all or any part of the amount of said Franchise Fee payments as a deduction or other credit from or against any of said City taxes or other fees or charges, each of which shall be deemed to be separate and distinct obligations of Operator. Nor shall the Operator apply or seek to apply all or any part of the amount of any of said taxes or other fees or charges as a deduction or other credit from or against any of its Franchise Fee obligations, each of which shall be deemed to be separate and distinct obligations of the Operator. The Operator may designate a Franchise Fee and/or amounts representing the Periodic PEG Access Payments required hereunder as a separate item in any bill to a Subscriber of the Operator's Cable System,but shall not designate or characterize it as a tax. • VIII. RATE REGULATION A. All Rights Reserved: The City reserves all of its rights to regulate the Operator's rates to the maximum extent permitted by Applicable Law. B. Geographic Uniformity: The Operator's residential rates throughout the Franchise Area shall be uniform, except as provided in Section 8(c). C. Senior Citizen Discount: Throughout the term of this Franchise and any extension or renewal thereof,the Operator shall offer to qualified Subscribers a thirty(30%) percent discount ("Senior Rate Discount') on all fees and rates necessary to receive Basic Cable Service. The discount shall be offered to all Subscribers meeting all of the following criteria: (1) sixty-five (65) years of age or older, (2) personally responsible for the payment of the cable charge to the Subscriber's residential living quarters and is directly billed by the Operator for Cable Services, and (3)the Subscriber certifies to the Operator that the aggregate gross income of all the persons who share the Subscribers residential living quarters on a permanent basis does not exceed an annual sum equal to the then-established"very low income" figures adjusted for household size, as established by the United States Department of Housing and Urban Development for the Oakland PMSA. The discount shall be prospective from the date of the application of the Subscriber for such discount. The Operator shall notify all Subscribers concurrently with an rate promotion or package of the existence and level of the Senior Rate Discount. In no event shall • such notification occur less than once every twelve (12) months and the notification of the existence and level of the Senior Rate Discount shall be at least as prominent (in terms of font 38 • size, placement, etc) as the most prominent advisement by the Operator to Subscribers of any other rates or charges (promotional or regular) during the preceding twelve (12) months. No single household shall receive more than one such Senior Rate Discount at any one time. DL INSURANCE,SURETY,AND INDEMNIFICATION A. Insurance Required. The Operator shall obtain, and by its acceptance of the Franchise specifically agrees that it will maintain, throughout the entire length of the Franchise period, at its own cost and expense and keep in force and effect the following insurance covering the Operator, and by additional insured provision, the City. Coverage must be placed with an insurance company/companies authorized to do business in the State of California and evidenced by a certificate of insurance and/or copies of the insurance policies. Operator's insurance shall be primary. B. Minimum Scope of Insurance: Coverage shall be at least as broad as: 1. Insurance Services Office number GL0002 (Ed. 1/73) covering Comprehensive General Liability and Insurance Services Office form number GL 0404 covering Broad Form Comprehensive General Liability; or Insurance Services Office Commercial General Liability coverage ("occurrence" form CG 0001). The policy must include coverage for Contractual Liability, Premises and Operations, Independent Contractors, Broad Form Property Damage, • Personal Injury, and Products and Completed Operations. The policy must also include coverage for the explosion, collapse and underground hazard. 2. Insurance Services Office form number CA 0001 (Ed. 1/78) covering Automobile Liability, code 1 "any auto" and endorsement CA 0025. 3. Workers' Compensation insurance as required by the Labor Code of the State of California and Employers Liability insurance. 4. If Operator should engage in programming origination of any kind, including production of advertising, Operator shall obtain Broadcasters' Liability Coverage, covering errors and omissions and negligent acts and other operations of the Operator, committed during the term of the Franchise period with the City. Operator shall provide a one-year discovery period under this policy. C. Minimum Limits of Insurance: Operator shall maintain policy limits of no less than: 1. General Liability: $1,000,000 combined single limit per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this proj ecttlocation or the general aggregate limit shall be twice the required occurrence limit. 39 • 2. Automobile Liability: $1,000,000 combined single limit per accident for bodily injury•and property damage. 3. Worker's Compensation and Employers Liability: Worker's compensation limits as required by the Labor Code and Employers Liability limits of$1,000,000 per accident. 4. Broadcasters' One million dollars ($1,000,000) per claim if required pursuant to subsection 9(b)(D)above. The City may review these amounts no more than once a year and may require reasonable adjustments to them consistent with the public interest, any increases not to exceed. the Consumer Price Index for the San Francisco-Oakland-San Jose Metropolitan Area for the period since the prior review,or the Effective Date, as applicable. D. Deductibles and Self-Insured Retentions: Any deductibles or self-insured retentions must be declared to and approved by the City. At the option of the City, either the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects the City, its officers, officials, employees and volunteers; or the Operator shall procure a bond guaranteeing payment of losses and related investigations,claim administration and defense expenses. E. Other Insurance Provisions: The policies shall contain,or be endorsed to contain, the following provisions: • 1. General Liability and Automobile Liability Coverages. a. The City, its officers, officials, employees, agents and volunteers are to be covered as insured as respects: liability arising out of activities performed by or on.behalf of the Operator; products and completed operations of the Operator, ; premises owned, occupied or used by the Operator, or automobiles owned, leased, hired or borrowed by the Operator. The coverage shall contain no special limitations on the scope of protection afforded to the City, its officers, officials, employees, agents or volunteers acting within the performance of the official duties of the position and not resulting from malfeasance in office, willful neglect of duty or bad faith. b. The Operator's insurance coverage shall be primary insurance as respects the City, its officers, officials, employees and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, agents or volunteers shall be excess of the Operator's insurance and shall not contribute with it. c. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to the City, its officers,officials, employees, agents or volunteers. d. The Operator's insurance shall apply separately to each insured against whom claim is made or suit is brought,except with respect to the limits of the insurer's liability. 40 1. Workers Compensation and Employers Liability Coverage. The insurer shall agree to waive all rights of subrogation against the City, its officers, officials, employees and volunteers for losses arising from work performed by the Operator for the City. 2. All Coverages. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended,voided,cancelled by either party,reduced in coverage or in limits except after thirty (30) days' prior written notice by certified mail, return receipt requested,has been given to the City. F. Acceptability of Insurers: Insurance is to be placed with insurers with a Best's rating of no less than A:VII. G. Verification of Coverage: The Operator shall furnish the City with certificates of insurance and with original endorsements effecting coverage required by this clause. The certificates and endorsements for each-insurance policy are to be signed by a person authorized by that insurer to bind coverage on its behalf. All certificates and endorsements are to be received and approved by the City before work commences. The City reserves the right to require complete certified copies of all required insurance policies, at any time. H. Failure Constitutes Material Violation: Failure to comply with the insurance requirements set forth in this Section shall constitute a material violation of the Franchise. I. Indemnification: 1. The Operator shall indemnify, defend and hold the City, its officers, boards, P �', ty commissions, agents and employees (collectively the "Indemnified Parties") harmless from and against any and all lawsuits, claims, causesof action, actions, liability, demands, damages, judgments, settlements, losses, expenses (including reasonable attorneys' fees) and costs that any of the Indemnified Parties acting within the performance of the official duties of the position and not resulting from malfeasance in office, willful neglect of duty or bad faith, may at any time suffer, sustain or incur arising out of, based upon or in any way connected with the grant of a Franchise to the Operator, the operation of the Operators System and/or the acts and/or omissions of the Operator or its agents or employees, whether or not pursuant to the Franchise. This indemnity shall apply, without limitation, to any action or cause of action for invasion of privacy, defamation, antitrust, errors and omissions, fire, violation or infringement of any copyright, trademark, trade names, service mark, patent, or any other right of any Person by the Operator, but shall exclude any claim or action arising out of the sole negligence or willful misconduct of the Indemnified Parties or related to any City programming or other Access programming for which the Operator is not legally responsible. An Indemnified Party shall promptly submit a written request to the Operator of any claim or legal proceeding which gives rise to the Operator's indemnification obligations under this Section. An Indemnified Party shall be offered the opportunity to participate in the defense, compromise, settlement or other resolution or disposition of any claim or proceeding. The Indemnified Party shall fully cooperate with the Operator regarding any such matter. 41 • 2. Specifically, the Operator shall fully indemnify, defend, and hold harmless the City, and, in their capacity as such, the officers, agents, and employees thereof; from and against any and all claims, suits, actions, liability, and judgments for damages or otherwise subject to 47 U.S.C. § 558, arising out of or alleged to arise out of the installation, construction, operation, or maintenance of the System, including but not limited to any claim against the Operator for invasion of the right of privacy, defamation of any Person, firm or corporation, or the violation or infringement of any copyright,trade mark, trade name, service mark, or patent, or of any other right of any Person, firm, or corporation, except to the extent such loss, damage, cost or expense is due to the sole negligence or willful misconduct of the City or its employees or agents, or arising from City programming or other Access programming for which Operator is not legally responsible. 3. The indemnification obligations of the Operator set forth in this Agreement are not limited in any way by the amount or type of damages or compensation payable by or for the Operator under Workers' Compensation, disability or other employee benefit acts, acceptance of insurance certificates required under this Agreement or the terms, applicability or limitations of any insurance held by the Operator. 4. The City does not and shall not, waive any rights against the Operator which it may have by reason of the indemnification provided for in this Agreement, because of the acceptance by the City, or the deposit with the City by the Operator, of any of the insurance policies described in this Agreement and regardless of whether or not such insurance policies shall have been determined to be applicable to any such damages or claims for damages. 5. The Operator's and the City's indemnification obligations under this Agreement shall survive the expiration, cancellation or termination of this Agreement. J. No Limit of Liability: Neither the provisions of this Section nor any damages recovered by the City shall be construed to limit the liability of the Operator for damages under the Franchise. X. PERFORMANCE GUARANTEES AND REMEDIES A. Per Bond: 1. The Operator shall obtain and at all times maintain during the entire term of-this Franchise, and any extension(s)thereof, a performance bond in favor of the City in the amount of $400,000 to ensure the Operator's satisfactory performance of construction and other work in the Public Rights-of-Way,.including,but not limited to, the construction required by this Agreement. The City may agree to accept a letter of credit in a form acceptable to the City in lieu of a Performance Bond. 2. In the event the Operator fails, after ten (10) business days' written notice and opportunity to cure from the City, to complete any System construction, upgrade or other work in the Public Rights-of-Way in a safe, timely, and competent manner, in accordance with.the provisions of this Agreement and the Cable Ordinance, there shall be recoverable, jointly and 42 • i severally from the principal and the surety of the bond, any damages or loss suffered by the City as a result, including the full amount of any compensation, indemnification, or cost of removal or abandonment of any property of the Operator, or the cost of completing or repairing the System. rebuild, construction, upgrade, or other work in the Public Rights-of-Way, plus a reasonable allowance for attorneys' fees, up to the full amount of the bond. The bond shall expressly include all of the foregoing provisions. The City may also recover against the bond any amount recoverable against the security fund required under this Agreement,where such amount exceeds that available under the security fund. Within thirty (30) days of being notified that any amount has been withdrawn from the performance bond, the Operator shall restore the performance bond to the amount specified in paragraph(a). 3. Issuance of Bond. All performance bonds required by this Certificate or the City Code shall be in a form acceptable to the City and shall be issued by a surety with an A-1 or better rating of insurance in Best's Key Rating Guide, Property/Casualty Edition; shall be subject to the approval of the City; and shall contain the following endorsement: "This bond may not be canceled, or allowed to lapse, until sixty (60) days after receipt by the City, by certified mail, return receipt requested, of a written notice from the issuer of the bond of intent to cancel or not to renew." • 4. Release of Bond. Ninety(90) days after acceptance by the City of construction of the System, the Operator may submit to the City a written request to release the performance bond. The City shall then authorize the Operator and the surety, in writing, to release and cancel the performance bond, provided that all outstanding claims of the City have been resolved to the City's satisfaction. 5. Forfeiture. The total amount of any bond shall be forfeited in favor of the City in the event that this Agreement is revoked pursuant to Section 10(h) of this Agreement, and the performance bond shall so state. B. Security Fund: 1. The Operator shall file and maintain with the City an irrevocable letter of credit from a financial institution licensed to do business in California in the amount of $50,000 to ensure the Operator's faithful performance of its obligations. The form and content of the letter of credit shall be approved by the City. 2. The Operator and its surety shall be jointly and severally liable under the terms of the letter of credit. • 3. There shall be recoverable by the City from the letter of credit any and all fines, penalties,and liquidated damages due to the City and any and all damages, losses, costs, and expenses suffered or incurred by the City resulting from the failure of the Operator to faithfully comply with the material provisions of this Agreement, the Cable Ordinance, and 43 Applicable Law; comply with all orders, permits and directives of any City agency or body having jurisdiction over its acts or defaults; pay fees due to the City; or pay any claims or liens due the City. Such losses, costs and expenses shall include but not be limited to reasonable attorney's fees. • 4. The letter of credit shall provide for thirty (30) days' prior written notice to the City of any intention on the part of the Operator to cancel, fail to renew, or otherwise materially alter its terms. • 5. The letter of credit shall be released only upon expiration or nonrenewal of the Franchise or upon the replacement of the letter of credit within the time specified herein. C. Rights Cumulative. The rights reserved to the City herein are in addition to all other rights of the City, whether reserved herein or authorized by Applicable Law, and no action, proceeding,or exercise of a right with respect to the letter of credit or performance bond required by this Agreement will affect any other right the City may have. Neither the filing of a letter of credit or performance bond with the City, nor the receipt of any damages recovered by the City thereunder,shall be construed to excuse faithful performance by the Operator or limit the liability of the Operator under the terms of its Franchise for damages, either to the full amount of the letter of credit,the performance bond,or otherwise. D. Letter of Credit Procedures: The following procedures shall apply to drawing on the letter of credit: 1. If the Operator fails to make timely payment to the City of any amount due under this Agreement or Applicable Law, or fails to compensate the City within ten(10) business days of written notification that such compensation is due, for any damages, costs, or expenses the City suffers or incurs by reason of any act or omission of the Operator in connection with this Agreement or its enforcement, or fails, after ten (10) business days' written notice, to comply with any provision of this Agreement or the Cable Ordinance that the City determines can be remedied by an expenditure against the letter of credit, including, without limitation,payment of liquidated damages, the City Manager, upon five (5) business days notice to Operator, may withdraw the amount thereof with interest and any penalties, from the letter of credit. 2. Within three(3) days of a withdrawal from the letter of credit, the City shall mail, by certified mail, return receipt requested, written notification of the amount, date, and purpose of such withdrawal to the Operator. 3. If at the time of a withdrawal from the letter of credit by the City, the amounts available are insufficient to provide the total payment towards which the withdrawal is directed, the balance of.such payment shall continue as the obligation of the Operator to the City until it is paid. 4. No later than thirty (30) days after mailing of notification to the Operator by certified mail, return receipt requested, of a withdrawal under the letter of credit, the Operator ishall restore the letter of credit to the total amount specified herein. 44 � s • 5. Upon termination of the Franchise under conditions other than those stipulating forfeiture of the letter of credit, the balance then remaining in the letter of credit shall be returned to the Operator within forty-five (45) days of such termination, provided that there is then no outstanding default on the part of the Operator. E. Failure Constitutes Material Violation: Failure to maintain or restore the letter of credit or the performance bond shall constitute a material violation of this Agreement. F. Remedies: In addition to any other remedies available at law or equity, the City may apply any one or a combination of the following remedies in the event the Operator violates, and fails to cure after notice and expiration of the applicable cure period, the Cable Ordinance, this Franchise Agreement,or applicable state or federal law: 1. Apply any remedy provided for in this Agreement. 2. Revoke the Franchise or shorten the term pursuant to the procedures specified in this Agreement. 3. Impose penalties available under the Cable Ordinance or other applicable state and local laws for violation of City ordinances. 4. In addition to or instead of any other remedy, seek legal or equitable relief from any court of competent jurisdiction. G. Liquidated Damages: Because the Operator's failure to comply with provisions of the Ordinance and this Franchise Agreement will result in injury to the City, and because it will be difficult to estimate the extent of such injury, the City and the Operator agree to the following liquidated damages to be effective during the term of the Ordinance for the following violations of the Franchise and of this Agreement, which represent both parties' best estimate of the damages resulting from the specified violation. Such damages shall not be a substitute for actual performance by the Operator of a financial payment, but shall be in addition to any such actual performance. Any liquidated damages remedy shall be cumulative and in addition to any other remedies the City may have under this Agreement or Applicable-Law, other than monetary damages. The City Manager, or designee, shall have the authority to waive or reduce the liquidated damage amounts herein for good cause. 1. For failure to submit any required plans indicating expected dates of installation of various parts of the System: $200/day for each day after Operator's receipt of notice that the violation continues; 2. For failure to commence operations or to substantially complete construction in accordance with the requirements-of this Franchise Agreement: $1,500/day for each day after Operator's receipt of notice that the violation continues; 3. For transferring the Franchise without approval: $2,000/day for each violation for each day after Operator's receipt of notice that the violation continues; 45 r • • • 4. For failure to comply with requirements for educational and governmental use of the System: $200/day for each violation for each day after Operator's receipt of notice that the violation continues; 5. For failure to supply information, reports, or filings lawfully required under this Franchise Agreement or Applicable Law or by the City: $300/day for each day after Operator's receipt of notice that the violation continues; 6. For violation of customer service standards: $200 per violation after Operator's receipt of notice that the violation continues; 7. For rate regulation violations specified under the Cable Ordinance, City orders or resolutions, or other Applicable Law, for each day that the same violation-occurs and continues: $200 per day; 8. For failure, except in the case of force majeure, of the System to perform in the event of a public emergency or vital information situation: $2,500 per day; 9. For failure to render payment for reimbursement of any Franchise expenses, but excluding any failure to pay Franchise fees (for which the imposition of interest shall be the sole remedy) or liquidated damages: $100 per day after Operator's receipt of notice that the failure has occurred and is continuing; 10. For failure to file, obtain or'maintain the required Security Fund in a timely fashion: $100 per day after Operator's receipt of notice that the failure has occurred and is continuing; 11. For failure to restore damaged property: $100 per day after Operator's receipt of notice that the failure has occurred and is continuing, in addition to the cost of the restoration and any other penalties or fees as required elsewhere herein or in the Ordinance; 12. For violation of technical standards established by the FCC: $100 per day after Operator's receipt of notice that the failure has occurred and is continuing; 13. For any other violations of this Agreement, the Ordinance, or other Applicable Law: $100/day for each day after Operator's receipt of notice that the violation continues. In all events, the City shall deliver to Operator notice of the asserted violation or failure and Operator shall have the right to dispute the asserted occurrence of such failure or violation. H. Shortening, Revocation, or Termination of Franchise: 1. Upon completion of the term of the Franchise granted under this Agreement, if a new,.extended, or renewed Franchise is not granted to the Operator by the City, the Operator's right to occupy the Public Rights-of-Way shall terminate, subject to Applicable Law. 46 2. The City shall have the right to revoke the Franchise, or to shorten the term of the Franchise to a term not less than thirty-six (36) months from the date Operator receives written notice from the City of the City's decision to act pursuant to this Agreement concerning the City's shortening action, for the Operator's material violation of this Agreement. 3. To invoke the provisions of this Section, the City shall give the Operator written notice of the default in its performance. If within sixty (60)calendar days following such written notice from the City to the Operator, or such other period as the Operator and the City shall agree, the Operator has not taken corrective action to the satisfaction of the City, the City may give written notice to the Operator of its intent to revoke or shorten the Franchise, stating its reasons; provided that no opportunity to cure shall be provided where the Operator is shown to have defrauded or attempted to defraud the City or its Subscribers in connection with this Agreement or Cable Service in any way that has a material adverse effect on Operator's provision of Cable Services pursuant to this Agreement. 4. Prior to shortening the term of or revoking the Franchise, the City.shall hold a public hearing, on thirty (30) calendar days' notice, at which time the Operator and the public shall be given an opportunity to be heard. Following the public hearing, the City may determine whether to revoke or shorten the term of the Franchise based on the information presented at the hearing, and other information of record, or, where applicable, grant additional time to the Operator to effect any cure. If the City determines to shorten the Franchise tern or revoke the Franchise, it shall issue a written decision setting forth the reasons for its decision. A copy of • such decision shall be transmitted to the Operator. 5. If the City revokes the Franchise, or if for any other reason the Operator abandons, terminates, or fails to operate or maintain service to its Subscribers, the following procedures and rights are effective: 47 • XI. REPORTING AND REVIEW A. Records Required and the City's Right to Inspect: 1. The Operator shall at all times maintain and upon request provide to the City: a. A full and complete set of plans, records and "as-built" maps showing the location of the Cable System installed or in use in the City, exclusive of Subscriber service drops and equipment provided in Subscribers' homes. To the extent technically and economically feasible, the Operator shall also make records and maps available to the City in electronic format compatible with the City's computer system. b. If requested by the City, a summary of service calls, identifying the number, general nature and disposition of such calls, on a monthly basis. A summary of such service calls shall be submitted to the City within thirty (30) days following its request in a form reasonably acceptable to the City. 2. Upon reasonable notice, and during the hours of 9:00 a.m. to 5:00 p.m., Monday through Friday, the Operator shall permit examination by any duly authorized representative of the City, of all Cable System property and facilities, together with any appurtenant property and facilities of the Operator situated within or without the City, and all records relating to the Franchise, provided they are necessary to enable the City to carry out its regulatory responsibilities under Applicable Law and this Agreement. The Operator shall have the right to be present at any such examination. r- 3. The City or its designee shall also have the right to inspect and copy (at City's expense), upon twenty-four (24) hours written notice, at any time during the hours of 9:00 a.m. to 5:00 p.m., Monday through Friday, at the Operator's local office, all books, records, maps, plans, financial statements, service complaint logs, performance test results, and records of request for service of the Operator. To the extent not inconsistent with Applicable Law, the Operator shall have the right to designate confidential, proprietary, trade secret and privileged information and the City shall thereupon treat such information as privileged from disclosure under the California Public Records Act. The City shall provide the Operator with reasonable advance notice of any request by a third party for disclosure of information designated by the Operator as confidential, proprietary, trade secret or privileged. To the extent that any information regarding the local Cable System is maintained, either separately or cumulatively with information concerning other Cable Systems or operations, by the Operator or an Affiliate, the Operator shall make copies of such records available for inspection and auditing at the local office within seven days after receipt of a written request by the City. 4. Copies of all petitions, applications, communications and reports submitted by the Operator or on behalf of the Operator to the Federal Communications Commission,.Securities and Exchange Commission, or any other Governmental Authority having jurisdiction with respect to any matters affecting the Cable System authorized pursuant to this Agreement and any Franchise shall be submitted upon request to the City. Copies of responses from the Governmental Authority to the Operator shall likewise be furnished upon request to the City. 48 B. Annual Reports: 1. The Operator shall within ninety (90) days of each calendar year end, submit a written end of the year report to the City with respect to the preceding calendar year containing the following information: a. A summary of the previous yea's (or in the case of the initial reporting Year, the initial year's) activities in development of the Cable System, including but not limited to Cable Services commenced or discontinued during the reporting year; b. A list of the Operator's officers, members of its board of directors, and other principals of the Operator, and c. A list of stockholders or other equity investors holding thirty (30) percent (30%) or more of the voting interest in the Operator. C. Reports available for inspection: All reports required under this Agreement, except those required by law to be kept confidential and any confidential, proprietary, trade secret and/or privileged information, shall be available for public inspection in the Operator's offices during the hours of 9:00 a.m. to 5:00 p.m.,Monday through Friday. D. Operator's Expense: All reports and records required under this Agreement shall be furnished at the sole expense of the Operator, except as otherwise provided in this Agreement. XII. RIGHT TO PURCHASE A. The City's Right to Purchase System: Except for a sale, transfer, or other conveyance by the Operator to an Affiliate, the City shall have a right of first refusal to purchase the Cable System in the event the Operator receives a bona fide offer which has been accepted by the Operator, subject to the City's rights under this Agreement. The price to be paid by the City shall be the amount provided for in the bona fide offer, including the same terms and conditions as the bona fide offer. The City shall notify the Operator of its decision to purchase within the forty-five (45) days of the City's receipt from the Operator of a copy of the written bona fide offer and such other relevant and pertinent information as the City shall deem reasonably appropriate. The City's failure to respond within said 45-day period shall be deemed to constitute the City's election not to purchase the Cable System. B. Purchase by the City Upon Expiration or Revocation: Upon the expiration, cancel- lation, revocation or termination of the Franchise granted by this Agreement for which the City has lawfully denied renewal under Applicable Law, the City shall have the right to purchase the entire Cable System, in accordance with Applicable Law, upon the payment to the Operator of the then-existing fair market value of the Cable System determined on the basis of generally accepted appraisal principles(exclusive of any value attributable to the Franchise itself). C. Abandonment or Removal of Equipment: 49 0 • 1. The Operator shall not abandon any portion of its Cable System without giving at least three (3) months prior written notice to the City. The Operator shall not abandon any portion of the Cable System without compensating the City for any damages resulting to the City from the abandonment. 2. The City, upon such terms as the City may reasonably impose, may give the Operator permission to abandon, without removing, any System facility or equipment laid, directly constructed, operated or maintained in, on, under or over the Franchise Area. Unless such permission is granted or unless otherwise provided in this Agreement, the Operator shall remove all abandoned facilities and equipment upon receipt of written notice from, the City and shall restore any affected street to its former state at the time such facilities and equipment were installed, so as not to impair its usefulness. In removing its plant, strictures and equipment, the Operator shall refill, at its own expense, any excavation made by or on behalf of the Operator and shall leave all Streets and other public ways and places in as good condition (per the City's standard procedures for the same) as that prevailing prior to such removal without materially interfering with any electrical or telephone cable or other utility wires,poles or attachments. The City shall have the right to inspect and approve the condition of the Streets, public ways, public places, cables, wires, attachments and poles prior to and after removal according to the City's usual standards and procedures. The liability, indemnity and insurance provisions of this Agreement and any Security Fund provided for in this Agreement shall continue in full force and effect during the period of removal and until full compliance by the Operator with the terms and conditions of this Section. 3. Upon abandonment of any Franchise property in place, the Operator, if required by the City, shall submit to the City a bill of sale and/or other an instrument, reasonably .satisfactory in form and content to the City, transferring to the City the ownership of the Cable System property abandoned. 4. At the expiration of the term for which the Franchise is granted, or upon its earlier revocation or termination, as provided for in this Agreement in any such case without renewal, extension or transfer, the City shall have the right to require the Operator to remove, at its own expense, all above-ground portions of the Cable System from all Streets and public ways within the City within a reasonable period of time, which shall.not be less than one hundred eighty (180) days, except to the extent the Operator is authorized or utilizing the System pursuant to Applicable Law. 5. Notwithstanding anything to the contrary set forth in this Agreement,the Operator may,with the consent of the City, abandon any underground Franchise property in place so long as it does not materially interfere with the use of the Street or public rights-of-way in which such property is located or with the use thereof by any public utility or other cable operator. D. Extended Operation and Continuity of Service: Upon the expiration, revocation or termination of the Franchise,the Operator shall, upon request of the City, continue to operate the Cable System for a period of time not to exceed six (6) months from the date of such expiration, revocation or termination under the terms and conditions of this Agreement and the Franchise 50 and to provide the regular Subscriber service and any and all of the services that may be provided at that time. XIII. MISCELLANEOUS PROVISIONS A. Conflict with and Amendment of Ordinance: All of the terms, conditions, and provisions of the Franchise shall be deemed to be embodied in the Ordinance and this Agreement, and, in the event of any conflict, the express terms of the Ordinance, as amended, shall prevail over conflicting or inconsistent provisions in the Agreement, provided that the Ordinance shall not, without Operator's consent, alter the terms of Sections I; H(B); H(C); IV(n; V(B);V(C);V(F);VI(A) -VI(G);VH(A);X(A);X(B) or X(G). -B. No Discrimination: In the offering of its services, the Operator shall not discriminate between offerees, including without limitation in the use of discounts (except as otherwise expressly provided herein) and/or free or promotional packages based upon income levels and/or area of residence within the City. C. Unbundling. In the event that the Operator shall, during the term of the Franchise, bundle or combine Cable Services with non-Cable Services, it shall also offer all such Cable Services separately without the necessity of purchasing non-Cable Services. D. Receivership and Foreclosure: 1. The Franchise granted hereunder shall at the option of the City, cease and terminate one hundred twenty (120) days after appointment of a receiver or receivers, or trustee or trustees, to take over and conduct the business of the Operator, whether in a receivership, reorganization, bankruptcy or other action or proceeding, unless such receivership or trusteeship shall have been vacated prior to the expiration of said one hundred twenty (120) days, or unless: (1) such receivers or trustees shall have, within one hundred twenty (120) days after their election or appointment, fully complied with all the terns and provisions of this Agreement and the Franchise granted pursuant hereto, and the receivers or trustees within said one hundred twenty (120) days shall have remedied all the defaults and violations under the Franchise and/or this Agreement or provided a plan for the remedy of such defaults and violations which is satisfactory to CrrY, and (2) such receivers or trustees shall, within said one hundred twenty (120)days,execute an agreement duly approved by the court having jurisdiction in the premises, whereby such receivers or trustees assume and agree to be bound by each and every term, provision and limitation of the Franchise and this Agreement. 2. In the case of a foreclosure or other judicial sale of the.Franchise property or any material part thereof;the City may give notice of termination of any Franchise granted pursuant to this Agreement upon the Operator and the successful bidder at such sale, in which the event the Franchise granted and all rights and privileges of the Operator hereunder shall cease and terminate thirty (30) days after such notice has been given, unless (1) the City shall have approved the transfer of the Franchise in accordance with the provisions of the Franchise and this 51 f • Agreement; and (2) such successful bidder shall have covenanted and agreed with the City to assume and be bound by all terms and conditions of the Franchise. E. Franchise Renewal: Franchise renewal, if any there should be, shall be in accordance with Applicable Law and the Cable Ordinance. The City and the Operator, by mutual consent, may enter into renewal negotiations at any time during the term of the Franchise. To the extent consistent with Applicable Law and the Ordinance, a reasonable non-refundable renewal application fee in an amount established by the City may be required to accompany any renewal application to the extent consistent with Applicable Law,provided that(1) the amount of such a fee shall be reasonably related to the City's cost incurred in handling the renewal request and negotiations and(2)the same fee shall be applicable to all similarly-situated franchises,provided that the Operator shall not be required to elect whether or not to renew the Franchise prior to a date which is more than thirty-six (36) months prior to the expiration date of the Franchise granted hereunder. F. Severability: If any provision of this Agreement is held by any Governmental Authority of competent jurisdiction, to be invalid or unenforceable as conflicting with any Applicable Law now or hereafter in effect, or is held by such Governmental Authority to be modified in any way in order to conform to the requirements of any such Applicable Law, such provision shall be considered a separate, distinct, and independent part of this Agreement, and such holding shall not affect the validity and enforceability of all other provisions hereof. In the event that such Applicable Law is subsequently repealed, rescinded, amended or otherwise changed, so that the provision hereof which had been held invalid or modified is no longer in conflict with such law, said provision shall thereupon return to full force and effect and shall thereafter be binding on the City and the Operator, provided that the City shall give the Operator thirty(30)days written notice of such change before requiring compliance with said provision or such longer period of time as may be reasonably required for the Operator to comply with such provision. If the terms of this Agreement are materially altered due to changes in Applicable Law, then the parties shall negotiate in good faith to reconstitute this Agreement in a form that, to the maximum"extent possible, is consistent with the original intent of Operator and the City and preserves the benefits bargained for by each party. Operator shall have no liability for any violation or non-compliance of any such invalid, unenforceable, repealed, amended or rescinded law or provision during any period of invalidity, unenforceability, repeal, amendment or rescission of the-subject.law. 52 G. Preemption: In the event that federal or state laws, rules or regulations preempt a • provision or limit the enforceability of a provision of this Agreement, then, subject to the City's right under subsection (M), the provision shall be read to be preempted to the extent and for the time,but only to the extent and for the time,required by law. In the event such federal or state law, rule or regulation is subsequently repealed, rescinded, amended or otherwise changed so that the provision hereof that had been preempted is no longer preempted, such provision shall thereupon return to full force and effect, and shall thereafter be binding on the parties hereto, without the requirement of further action on the part of the City,provided that if reasonably necessary,Operator shall have a minimum-of sixty (60) days in which to comply with the previously preempted provision. H. Compliance With Federal and State Laws: Both parties shall, at all times during the term of this Franchise Agreement, including any extensions thereofi comply with all applicable federal,state,and local laws and regulations. I. Force Majeure: In the event the Operator's performance of any of the terms, conditions or obligations required by this Agreement or a Franchise granted hereunder is prevented by an unforeseeable cause or event not within the Operator's reasonable control, such inability to perform shall be deemed excused for the period of such inability and no penalties or sanctions shall be imposed as a result thereof provided the Operator has notified the City in writing within ten(10)business days of its discovery of the occurrence of such an event. The Operator shall not be excused from any violation of the terms, provisions and conditions of • this Franchise, except for causes which are beyond the reasonable control of the Operator. In the event of any such force majeure occurrence, Operator shall perform to the maximum extent possible. Except as otherwise provided above, violations caused exclusively by acts or omissions by the City or its officers, agents or employees shall constitute an excuse and justification for failure of the Operator to comply with the terms, provisions and conditions of this Franchise, precluding a determination that the Operator is in breach. However, violations as a result of such exclusive causes shall not be deemed to excuse the Operator from other unrelated violations, shield the Operator from a determination that it is in breach for such other unrelated violations,or bar any relief for damages or otherwise as a result of such other unrelated breach. Examples of circumstances beyond the control of the Operator which will excuse the Operator from violation and being in breach of the teens, provisions and conditions of this Franchise, when such violations are caused thereby, include the following: strikes, acts of public enemies; orders by military authority; insurrections; riots; epidemics; landslides; lightning; earthquakes; fires; floods; civil disturbances; explosions; partial or entire failure of utilities; delays in obtaining inspection by the City inspectors of more than one (1) business day (provided that the request for such inspection shall have been given by the Operator in a commercially reasonable manner within regular business hours of the City) and Acts of God. J. Notices: All notices, reports or demands required or permitted to be given under this Agreement shall be in writing and shall be deemed to be given when delivered personally to the party designated below, or when delivered by the United States mail in a sealed envelope, with registered or certified mail, postage prepaid thereon, or delivered by express mail or nationally 53 recognized overnight air courier addressed to the party to which notice, report or demand is being given, as follows: If to the City: CrrY Manager CITY OF WALNUT CREEK 1660 N. Main Street Walnut Creek, CA 94596 If to the Operator: SEREN INNOVATIONS, INC. Attention: President/CEO 15 South Fifth Street Suite 500 Minneapolis,MN 55402 Such addresses may be changed by either party upon notice to the other party given as . provided in this Section. K. Time of Essence: In determining whether a party has substantially complied with this Franchise Agreement,the parties agree that time is of the essence. L Captions and References: 1. The captions and headings of sections throughout this Agreement are intended solely to facilitate reading and reference to the sections and provisions of this Agreement. Such captions shall not affect the meaning or interpretation of this Agreement. 2. When any provision of the Cable Ordinance is expressly mentioned herein, such reference shall not be.construed to limit the applicability of any other provision of the Cable Ordinance or City law that may also govern the particular matter in question. M. Rights Reserved to the City: 1. In addition to any rights specifically reserved to the City by this Agreement, the City reserves to itself every right and power which is required to be reserved by a provision of any ordinance or under the Franchise. 2. The City shall have the right to waive any provision of the Franchise to be performed by Operator, except those required by Applicable Law, if the City, in its reasonable opinion, determines (1) that it is in the public interest to do so, and (2) that the enforcement of such provision will impose an undue hardship on the Operator or the Subscribers. Waiver of any provision in one instance shall not be deemed a waiver of such provision subsequent to such instance nor be deemed a waiver of any other provision of the Franchise unless the statement so recites. 54 3. Notwithstanding any other provision in this Agreement, nothing in this Agreement shall preclude the City from exercising its police powers to enact, amend or supplement any law or regulation governing cable communications within the City. N. Operator Bears Its Own Costs: Unless otherwise expressly provided in this Agreement, all acts that the Operator is required to perform must be performed at the Operator's own expense. O. City Bears Its Own Costs: Unless otherwise expressly provided in this Agreement, all acts that the City is required to perform must be performed at the City's own expense. P. Entire Agreement: This Agreement embodies the entire understanding and agreement of the City and the Operator with respect to the subject matter hereof and merges and supersedes all prior representations, agreements, and understandings, whether oral or written, between the City and the Operator with respect to the subject matter hereof; including, without limitation, any and all written or oral statement or representations by any official, employee, agent, attorney, consultant, or independent contractor of the City or the Operator. Q. Adequacy and Sufficiency of Consideration: The parties hereto expressly declare and agree that adequate and sufficient consideration has been provided for each and every promise, covenant, commitment and undertaking contained in this Agreement. R. Possessory Interest Taxation: The City hereby declares, pursuant to California Revenue & Taxation Code section 107.6, that as a result of this Agreement, a possessory interest subject to property taxation may be created and any such property interest may be subject to property taxation if it is created. The Operator, as the party in whom the possessory interest will be vested,may be subject to the payment of property taxes levied upon such an interest. S. Representations and Warranties of the Operator's Signatories: Each of the Persons executing this Agreement on behalf of the Operator do affirmatively represent and warrant as follows: 1. That this Agreement and the resulting contract constitute a valid and binding obligation, as to each and every term thereof, enforceable against the Operator in accordance with the terms thereof; 2. That the execution and delivery of this Agreement has been duly authorized and approved by the Board of Directors of the Operator, 3. That the persons who have executed this Agreement on behalf of the Operator are duly authorized to do so by all necessary action; and 4. That the execution and deliveryof this Agreement does not violate any provision of the by-laws and/or Articles of Incorporation of the Operator's corporation. 55 T. Jurisdiction of California Courts and Waiver of Diversity Jurisdiction: This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to its conflicts of laws rules or principles. In the event that suit is brought by any party, the parties agree that trial of such action shall be vested exclusively in the state courts of California, County of Contra Costa, or, in the event of a "federal question" in the United States District Court for the Northern District of California. Moreover, the Operator expressly consents to service of process pursuant to California Code of Civil Procedure Section 416.10 at the office of Operator's registered agent for service of process as to any action arising under or purporting to rise under this Agreement and the Operator expressly declares and agrees that, for the purpose of any action arising under this Agreement and for no other purpose, its principal place of business shall be deemed to be within the State of California, and that it shall not assert otherwise in connection with any claim of"diversity of citizenship" under 28 U.S.C. Section 1441(b). U. Rights of Individuals: 1. The Operator shall not deny Cable Service, deny access, or otherwise discriminate against Subscribers, Channel users, or general citizens on the basis of race, color, religion, disability, national origin, age, gender or sexual preference. The Operator shall comply at all times with all other Applicable Law,relating to nondiscrimination. 2. The Operator shall adhere to the applicable equal employment opportunity requirements of Applicable Law, as now written or as amended from time to time. • 3. Neither the Operator, nor an Person, agency, or entity shall, without the P Y g Subscriber's consent, tap or arrange for the tapping of any cable; line, signal input device, or Subscriber outlet or receiver for any purpose except routine maintenance of the System, detection of unauthorized service, polling with audience participating, or audience viewing surveys to support advertising research regarding viewers where individual viewing behavior cannot be identified. 4. In the conduct of providing its Cable Services, the Operator shall take reasonable steps to prevent the invasion of a Subscriber's or general citizen's right of privacy or other personal rights through the use of the System as such rights are delineated or defined by Applicable Law. The Operator shall not, without lawful court order or other applicable valid legal authority, utilize the System's interactive two-way equipment or capability for unauthorized personal surveillance of any Subscriber or general citizen. 5. No signals of a Class IV Channel may be transmitted from a Subscriber terminal for purposes of monitoring individual viewing patterns or practices without the express written permission of a Subscriber. The request for permission must be contained in a separate document with a prominent statement that the Subscriber is authorizing the permission in full knowledge of its provisions. The written permission must be for a limited period of time not to exceed one year,which is renewable at the option of the Subscriber.No penalty may be invoked for a Subscriber's failure to provide or renew the authorization. The authorization is revocable at 56 any time by the Subscriber without penalty of any kind. The permission must be required for • each type or classification or Class IV Channel cable communications activity planned. a. No information or data obtained by monitoring transmission of a signal from a Subscriber terminal including but not limited to the lists of the names and addresses of the Subscribers or lists that identify the viewing habits of Subscribers may be sold or otherwise made available to any Person other than to the Operator and its employees for internal business use, or to the Subscriber who is the subject of that information, unless the Operator has received specific written authorization from the Subscriber to make the data available. b. Written permission from the Subscriber must not be required for conducting System wide or individually addressed electronic sweeps for the purpose of verifying System integrity or monitoring for the purpose of billing. Confidentiality of this information is subject to the provisions of this Agreement. 6. In the offering of its services, the Operator shall not discriminate between offerees, including without limitation in the use of discounts (except as otherwise expressly provided herein) and/or free or promotional packages based upon income levels and/or area of residence within the City. V. Ownership of the Operator: The Operator represents to the City that the names of the shareholders,partners,members or • 57 other equity owners of the Operator and of any of the shareholders, partners, members and/or other equity owners of the Operator as of the date of this Agreement are as set forth in Exhibit 2 hereto. AGREED TO THIS DAY OF CITY OF WALNUT CREEK SEREN INNOVATIONS,INC., a Minnesota corporation By: / By: ity Manager Title: J CED APPROVED AS TO FORM: Gaj 04-: � Assistant City Attorney • CAROLE A WA"CE NOTARY PUBLIC-MINNESOTA 161MY QWM E*m Jaa 31 2ppQ • 58 UVVV .0 UVUUUVUVUU UU �'1 a 14 v fevl -9 - 1 a Y1a1 -9 l a 19 1 -a 4 v a v a v ar a v v v Cu v a a v a s U � Ss � � O A c U aUUV > > E= t7 Zp .� .t� ► t--4 cd �n cn u� Z z o C ) a Lf) .0 C) O OCA h. t� c•t e—t tr) C� N Lf) �O w e-• OIA �+ ch c+a m r-i c. 00 d o O •fl Q r4 r-4 + � m � cvCc) CC) tH4 acv a v U G ca v � a 'co a w o � _ �, 2 41 G o w v W W O O sem` z 'oG U H u a U a C7w o U > �+ a ,—� x p cn e-+ U v a U w a .54 ,x d w a a a c o .� R, U 114 tv � U Hwa aL4.u.0 �nxU • w° Haw • U U U U u U U U U u u U U U U u U U xxxx xxxxxxxxx xx � � 4) (U a, a) (, 0) 'a w w w a w a w a� (Uof o) a� uuuu uuuuuuuuu uubu u u4-1 41 41 " u I O 0 ; Q PQ to 0 ° Q c� ° Q 0 per, O O ttrt�i � R., u f�cc��) cn N O c� LO tlmmj . + Lo N N N oN n O t1') `•' � n �-+ n eM-+ N LO N � 1 N N M 00 N D N r-4 000 LO cd v O b0 d N t�l x cl 9 a o 0 a ... ci 0 c/] Q O w a� N M d IM 'r��y" % b y •p • co W � obi obi .� x � � W (u b � ulW •.. a� ai v' 'b W•'" *J b owr-+ c. � > o 0xu � � � > uta g � chU n cooaa�' a � � r� > 3 V. Z >4 a� cS . Ole 1 0 0 0 0 U U x x U C� ti a� o o Cc) Lf) � N O� q a� ani c '. 4r O CO ,wOL O cli " .54 US Wv SOU ao U � x ocnm a, a, a, +r' o o 0 o U � 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 b.-4 ..r -4 -4 ..-4 •.y -4 -4 ..i . 4 ..i .;o .C; ..r ." ..r .;5 a b +, u u u u u u u u u u u u u u u u eu cv ou cu cv cu to cv cv cv cu cv cu cv tv cv ' °' cin ? ? ?i ?i ?- ?- ?� ? ? ?• ? ? O O O O w � 10 0 b � u • • > N U o .� � cru •~ .— � ai + .1F: rnOz � . v ; .ti o HU w ,.aw o 0 w w M (z O N ,-� U F. U 4 �o �n V 0 0 0 0 0 zvivizzzuu � ZZm cnuizo -4 M7 •�1 r M1•' '.x • w O • N O - cd Q O G O U z O � O O 00 00r-r "o cd d F IPO 10 ►-] Z w +� ate, v 'd �, }, raL cis1.4 Ou 00 w ° � Op°Q ;� a�i � °tic S U rg � o U U-) U) P, p0 � a, .� .� W $--4 O O o a W W O .� .� 3 � ,� (uj act V b G U S " b 0 -0 �� > > > cC I UV V HHa aara r; I.MIFL-1 � N N o °' Ira 0 v No aw) VIA cA o BEFORE THE BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA In the Matter of the Appeal of DECLARATION OF LILLIAN T. FUJII IN SUPPORT OF COUNTY STAFF SEREN INNOVATIONS, INC. REPORT AND RECOMMENDATION November 6, 2001 I, Lillian 1'. Fujii, declare as follows: 1. I am employed by the County of Contra Costa as a Deputy County Counsel in the County Counsel's Office. 2. I have been working with Cable TV Administrator Patricia Burke on the County's negotiations with Seren Innovations, Inc. ("Seren"). 3. Following Seren's application for encroachment permits, I requested and received copies of documents from Seren's attorney. True and correct copies of selected • documents provided by Seren are attached hereto including the following: A. Seren's Certificate of Public Convenience and Necessity (part), including Negative Declaration (14), copy attached hereto as Exhibit A, and numbered pages 1 - 56. B. Seren's Petition for Certificate of Public Convenience and Necessity and Attachment 7 thereto (Proponent's Environmental Assessment), attached hereto as Exhibit B, and numbered pages 57 - 73. I declare under penalty of perjury under the laws of the State of California the foregoing is true and correct. Executed onO(4tlW 30,2Q I at Martinez, California. Lillian T. Fuji�r Page 1 �' ..� �, ,, `� �, �, 1 �� . . �' `, �' .. �, ''i ,, �� 1 •' �, ,� ., ,,� i ,., `' 1 ,. 1 i ,' �, r� • EXHIBIT A ALJ/TRP/ays Mailed 6/24/99 Decision 99-06-083 June 24, 1999 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Order Instituting Rulemaking on the Commission's Own Motion into Competition for Rulemaking 95404-043 Local Exchange Service. (Filed April 26, 1995) Investigation 95-04-044 Order Instituting Investigation on the (Filed April 26, 1995) Commission's Own Motion into Competition for (Petition Nos. 132, 133, 134, Local Exchange Service. 135, 136, 137,138, 139 140, and 142) OPINION By this decision, we grant the petitions for certificates of public convenience and necessity (CPCN) to operate as facilities-based competitive local carriers (CLCs) and to offer resold local exchange services within the territories of Pacific Bell (Pacific),GTE California Incorporated (GTEC),Roseville Telephone Company (RTC), and Citizens Telephone Company (CTC), for those petitioners as set forth in Appendix B'of this decision,subject to the terms and conditions included herein. We also grant petitioners' requests for intrastate interLocal Access and Transport Areas (interLATA) and intraLATA authority on a statewide basis as designated in Appendix B. 1. Background We initially established rules for entry of facilities based CLCs in Decision (D.) 95-07-054. Under those procedures, we processed a group of candidates that filed petitions for CPCNs by September 1,1995, and granted authority effective •• January 1, 1996,for qualifying CLCs to provide facilities based competitive local 458n - 1 - 000001 R.95-04-043,I.95-04-044 ALJ/TRP/ays exchange service in the territories of Pacific and GTEC. We authorized CLCs seeking to provide resale-based services to begin operations on March 1,1996. We further advised prospective entrants that any filings from nonqualifying CLCs, and any filing for CLC operating authority made after September 1, 1995, would be treated as standard applications and processed in the normal course of the Commission's business. By D.96-12-020,effective January 1, 1997,we instituted quarterly processing cycles for granting CPCN authority for facilities-based CLCs in order to streamline the approval process for these particular carriers. Since we had been processing the environmental impact review required under the California Environmental.Quality Act (CEQA) on a consolidated basis for groups of qualifying facilities-based CLCs, we concluded in D.96-12-020 that it would be more efficient and consistent to process other aspects of the CLC filings on a • consolidated basis, as well. Accordingly, we directed that any CLC filing on or after January 1, 1997, for facilities-based CPCN authority was to make its filing in the form of a petition to be docketed in Investigation (I.)95-04-044 that would be processed quarterly on a consolidated basis. CLCs seeking only resale authority continued to file individual applications. On September 24, 1997,we adopted D.97-09-115 in which we extended the coverage of our adopted rules for local exchange competition to include the service territories of California's two midsized.local exchange carriers (MSLECs), RTC and CTC. In that decision, we also authorized candidates seeking CLC CPCN authority within the MSLECs' territories to immediately begin making filings following the applicable entry rules previously adopted in D.95-07-054 and subsequent decisions. Specifically,requests for CLC CPCN authority for facilities-based service were to be filed in the form of a petition docketed in • I.95-04-044,while resellers have sought authority through applications. In - 2 - 000002 R.95-04-043, I.95-04-044 ALJ/TRP/ays D.98-01-055,we approved the first group of petitions for facilities-based CPCNs to offer local exchange service within the MSLEC territories. In this decision,we approve CPCNs for those facilitiesbased CLCs which filed petitions during the first quarter of 1999 and satisfied all applicable rules for certification as established in Rulemaking (R.) 95-04-043. The Petitioners identified in Appendix B will be authorized to begin offering service upon the filing of tariffs and compliance with the terms and conditions set forth in this order. ll. CEQA Review We have reviewed the petitions for compliance with CEQA. CEQA requires the Commission to assess the potential environmental impact of a project in order that adverse effects are avoided, alternatives are investigated, and environmental quality is restored or enhanced to the fullest extent possible. • To achieve this objective,Rule 17.1 of the Commission's Rules requires the proponent of any project subject to Commission approval to submit with the petition for approval of such project a Proponent's Environmental Assessment (PEA). The PEA is used by the Commission to focus on any impacts of the project which may be of concern,and prepare the Commission's Initial Study to determine whether the project needs a Negative Declaration or an Environmental Impact Report (EIR). Based on its assessment of the facilities-based petitions and PEAs, the Commission staff prepared a Negative Declaration and Initial Study generally describing the facilities based Petitioners' projects and their potential environmental effects. The Negative Declaration prepared by the Commission staff is considered a Mitigated Negative Declaration (MND). This means that, although the initial study identified potentially significant impacts,revisions -3 - 000003 R.95-04-043, 1.95-04-044- ALJ/TRP/ays which mitigate the impacts to a less than significant level have been agreed to by the Petitioners. (Pub. Res.Code § 21080(c)(2).) A. Results of the Negative Declaration On April 29, 1999, the Negative Declaration and Initial Study were sent to various city and county planning agencies, as well as public libraries throughout the state for review and comment by May 28, 1999. The Commission staff prepared a public notice which announced the preparation of the draft negative declaration, the locations where it was available for review, and the deadline for written comments. The public notice was advertised in newspapers throughout the state. The draft Negative Declaration was also submitted to the Governor's Office of Planning and Research where it was circulated to affected state agencies for review and comment. Public comments on the draft Negative Declaration were reviewed and • answered, as necessary. The Commission staff then finalized the MND covering all facilities-based CLC petitions listed in Appendix B. The finalized MND includes a list of mitigation measures with which the CLCs must comply as a condition of their CPCN authority. The MND includes a Mitigation Monitoring Plan to ensure that the mitigation measures are followed and implemented as intended. A copy of the MND is attached to this decision as Appendix D. We hereby approve the MND as finalized by staff. Concurrently with our approval of the MND, we grant the request of the Petitioners in Appendix B for CPCN authority subject to the terms and.conditions set forth in our order beiow. B. Required Payment of CEQA Deposit Commission Decision 97-04-W stipulates that all petitioners for CLC authority must submit with their filing an initial payment of$2000 to cover CEQA costs. The$2000 payment is used to cover the Commission's costs for -4- 000004 R.95-04-043, 1.95-044j44 ALJ/TRP/ays preparing and publishing the Mitigated Negative Declaration for each qualifying petitioner,as required by CEQA law. As of the date of this order,the Commission has received payment of the required$2000 deposit from each of the CLCs, as identified in Appendix B. .III. Review.of CPCN Petitions A. Overview The CLC petitions have been reviewed for compliance with the certification-and-entry rules (Rules) adopted in Appendices A and B of D.95-07-054 and subsequent decisions in R.95-04-043/I.95-04-044. Consistent with our goal of promoting a competitive market as rapidly as possible,we are granting authority to all of the facilities-based CLCs that filed during the first quarter of 1999 and met the Rules. The Rules are intended to protect the public against unqualified or unscrupulous carriers, while also encouraging and easing • the entry of CLC providers to promote the rapid growth of competition. Petitioners had to demonstrate that they possessed the requisite managerial qualifications, technical competence, and financial resources to provide facilities-based local exchange service. Petitioners were also required to submit proposed tariffs which conform to the consumer protection rules set forth in Appendix B of D.95-07-054. In response to a notice of tariff deficiencies,the various petitioners submitted tariff corrections.Except for the outstanding deficiencies noted in Appendix C, the petitioners'proposed tariffs are found to be satisfactory with no deficiencies noted. As prescribed in Rule 4.B.(1),prospective facilities-based CLCs must also show that they possess a minimum of$100,000 in cash or cash-equivalent resources, as defined in the Rules. In order to demonstrate that they possess the • requisite financial resources,petitioners submitted copies of recent financial -5 - 000005 R.95-04-043, I.95-04-044 ALJ/TRP/ays • statements. Because the financial statements contain commercially sensitive information, the petitioners filed motions for limited protective orders to restrict the financial statements and related documents containing commercially sensitive information from public disclosure pursuant to General Order (GO) 66-C. We grant those motions as prescribed in our order below. Based upon our review, we conclude that each of the facilities-based Petitioners identified in Appendix B, has satisfactorily complied with our certification requirements for entry, including the consumer protection rules set forth in D.95-07-054,subject to correcting any tariff deficiencies in Appendix C, payment of the required CEQA deposit, and satisfying the additional conditions set forth in the ordering paragraphs below. Accordingly, we grant these Petitioners authority to offer facilities based and resold local exchange service within the territories of Pacific and GTEC and, where requested, within the CTC and RTC territories. We also grant the statewide inter- and intraLATA.authority as requested. Pursuant to D.97-09-115,CLC resale authority within the RTC and CTC territories was authorized to become effective on or after April 1, 1998 As we stated in D.97-09-115,until the time that tariffed wholesale discount rates are adopted for RTC and CTC,individual CLCs certificated to resell local service within the CTC/RTC territories may enter into negotiations with each of the MSLECs to seek agreement on an interim wholesale discount rate. Disputes over the terms of resale arrangements may be submitted to the Commission for arbitration pursuant to the provisions of Section 252(b)(1) of the Telecommunication Act of 1996 and Commission Resolution ALJ-174. -6- 000006 R.95-04-043, I.95 ALJ/TRP/ays B. Motion of DSLnet DSLnet Communications, LLC ("DSLnet"), attempted to file a petition (# 142) for CLC local exchange authority on March 31, 1999,with the intention of being included in the Commission's quarterly "batch" review of such petitions filed during the first quarter of 1999. However, DSLnet subsequently learned that, due to certain confusion surrounding whether DSLnet's Petition was complete for purposes of the Commission's review, the Commission did not technically accept DSLnet's petition until April 13, 1999. As a result,it is now too late for DSLnet's Petition to be included in the Commission's quarterly review process for such petitions filed during the first quarter of 1999, at least to the extent DSLnet seeks facilities-based authority. Nonetheless, in order to allow DSLnet to initiate competitive telecommunications service in California as soon as possible, DSLnet filed a motion on May 4, 1999, asking the Commission to: (1) immediately consider the portion of DSLnet's Petition seeking authority to resell local exchange telecommunications services, and (2) consider the portion of DSLnet's Petition seeking facilities-based authority in the Commission's quarterly review process for Petitions filed during the second quarter of 1999. No party has objected to the motion of DSLnet. We consider the request of DSLnet for consideration of the resale portion of its petition in the current quarterly review to be reasonable, under the circumstances and shall grant it. Due to the timing requirements relating to the Mitigated Negative Declaration,DSLnet's request for facilities-based authority cannot be considered during the.current quarter,but shall be deferred to the subsequent quarterly review period. -7- 000007 • R.95-04-043,1.95-04-04-4 ALJ/TRP/ays IV. Compliance With Section 311 In compliance with Pub. Util. Code Section 311 (g)(2), this is an uncontested matter in which the decision grants the relief requested. Accordingly,pursuant to Pub. Util. Code Section 311(8)(2), the otherwise applicable 30-day period for public review and comment is being waived. Findings of Fact 1. Nine petitioners filed requests during the first quarter of 1999 seeking a CPCN to provide competitive local exchange services in the territories of various California incumbent local exchange carriers as set forth in Appendix B. 2. An additional petitioner,DSLnet attempted to file during the first quarter, but the filing was not actually docketed until April 13, 1999. DSLnet subsequently filed an uncontested motion seeking to have its request for CLC resale authority to be considered as part of the first quarterly group of CLCs. 3. No protests to the CLCP etitioners have been filed. 4. A hearing is not required. 5. By prior Commission decisions,we authorized competition in providing local exchange telecommunications service within the service territories of Pacific,GTEC,RTC, and CTC for carriers meeting specified criteria. 6. The Petitioners listed in Appendix B have demonstrated that each of them has a minimum of$100,000 in cash or cash equivalent reasonably liquid and readily available to meet its start-up expenses. .7. Petitioners' technical experience is demonstrated by supporting documentation which provides summary biographies of their key management personnel. 8. Except as noted in Appendix C, Petitioners have each submitted a • complete draft of their initial tariff which complies with the requirements -8 - 000008 R.95-04-043, I.95-04-0 ALJ/TRP/ays established by the Commission, including prohibitions on unreasonable deposit requirements. 9. Commission D.97-04-046 stipulates that all petitioners for CLC authority must submit with their filing an initial payment of$2,000 to cover the Commission's costs for preparing and publishing the Mitigated Negative Declaration pursuant to CEQA. 10. Each of the CLCs, as identified in Appendix B,has submitted the required $2,000 CEQA deposit as of the date of this order. 11. By D.97-06-107,petitioners or applicants for CLC authority are exempt from Rule 18(b). 12. Exemption from the provisions of Pub. Util. Code§§816-830 has been granted to other nondominant carriers. (See,e.g., D.86-10-007 and D.88-12-076.) 13. The transfer or encumbrance of property of nondominant carriers has been exempted from the requirements of Pub. Util. Code§851 whenever such transfer or encumbrance serves to secure debt. (See D.85-11-044.) Conclusions of Law 1. Each of the Petitioners listed in Appendix B has the financial ability to provide the proposed services, and has made a reasonable showing of technical expertise in telecommunications. 2. Public convenience and necessity require the competitive local exchange services to be offered by Petitioners subject to the terms, conditions,and restrictions set forth below. . 3. Each Petitioner is subject to: a. The current 0.0% surcharge applicable to allintrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the Universal Lifeline • Telephone Service (Pub. Util. Code§879; Resolution T-16245, December 3, 1998); "9 " 000009 R.95-04-043 I.95AL /TRP/ays • , J b. The current 0.192%surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as • 1 modified b D.95-02-050 to fund the California Relay y Service and Communications Devices Fund (Pub. Util. Code§2881; Resolution T-16234; D.98-12-073, , December 17, 1998); c. The user fee provided in Pub. Util. Code §§431-435, which is 0.11% of gross intrastate revenue for the 1998-1999 fiscal year (Resolution M-4789); d. The current surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California High Cost Fund-A (Pub. Util. Code§ 739.30; D.96-10-066,pp.3-4, App. B, Rule 1.C; Resolution T-16242 at 0.0% for 1999, December 3, 1998); e. The current 3.8% surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California High Cost • Fund-B (D.96-10-066, p. 191, App. B, Rule 6.F.,Resolution T-16244, December 3, 1998); and, f. The current 0.05%surcharge applicable to all intrastate' services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California Teleconnect Fund (D.96-10-066,p. 88,App. B, Rule 8.G, Resolution T-16165; August 1, 1998). 4. Petitioners should be exempted from Rule 18(b). 5. Petitioners should be exempted from Pub. Util. Code§§816-830. 6. Petitioners should be exempted from Pub. Util. Code § 851 when the transfer or encumbrance serves to secure debt. 7. Each of the Petitioners must agree to, and is required to,carry out any specific mitigation measures adopted in the Mitigated Negative Declaration (MND),attached as Appendix D, in compliance with CEQA. - 10 - 000010 R.95-04-043, 1.95 ALJ/TRP/ays • 8. With the incorporation of the specific mitigation measures in the final • MND, the Petitioners' proposed projects will not have potentially significant adverse environmental impacts. 9. The Petitioners should be granted CPCNs subject to the terms,conditions, and restrictions set forth in the order below. 10. Any CLC which does not comply with our rules for local exchange competition adopted in R.95-04-043 shall be subject to sanctions including,but not limited to, revocation of its CLC certificate. ORDER IT IS ORDERED that: 1. A certificate of public convenience and necessity (CPCN), shall be granted to each of the Petitioners listed in Appendix B (Petitioners) to permit each of them to operate as a facilities-based provider of competitive local exchange telecommunications services, as a rese'_ler of competitive local exchange telecommunications services within the service territories as noted in Appendix B and, as a statewide nondominant interexchange carrier (NDIEC), as noted in Appendix B,contingent on compliance with the terms identified in Appendix B and in the remainder of this order. 2. Each Petitioner shall file a written acceptance of the certificate granted in this proceeding prior to commencing service. 3. a. The Petitioners are authorized to file with this Commission tariff schedules for the provision of competitive local exchange,intraLATA (Local Access Transport Area) toll and intrastate interLATA services, as applicable. The Petitioners may not offer these services until tariffs are on file, and until any applicable deficiencies as noted in Appendix C have been corrected. Petitioners' - 11 - 000011 R.95-04-043, I.95ALJ/TRP/ays • initial filing shall be made in accordance with General Order (GO) 96-A, • excluding Sections N, V, and VI, and shall be effective not less than one day after approval by the Telecommunications Division. b. The Petitioners are competitive local carriers (CLCs). The effectiveness of each of their future tariffs is subject to the schedules set forth in Decision (D.) 95-07-054, Appendix A, §4E. A. "E. CLCs shall be subject to the following tariff and contract-filing,revision and service-pricing standards: "(1) Uniform rate reductions for existing tariff services shall become effective on five (5) working days' notice to the Commission. Customer notification is not required for rate decreases. "(2) Uniform major rate increases for existing tariff services shall become effective on thirty (30) days' notice to the Commission, and shall require bill inserts, or a message on •. the bill itself, or first class mail notice to customers at least 30 days in advance of the pending rate increase. "(3) Uniform minor rate increases, as defined in D.95-07-054, shall become effective on not less than five (5) working days'notice to the Commission. Customer notification is not required for such minor rate increases. "(4) Advice letter filing for new services and for all other types of tariff revisions, except changes in text not affecting rates or relocations of text in the tariff schedules,shall become effective on forty (40) days' notice to the Commission. "(5) Advice letter filings revising the text or location of text material which do not result in an increase in any rate or charge shall become effective on not less than five (5) days' . notice to the Commission. "(6) Contracts shall be subject to GO 96-A rules for NDIECs, • except interconnection contracts. - 12- 000012 R.95-04-043, I.95- ALJ/TRP/ays • "(7) CLCs shall file tariffs in accordance with Public Utilities (Pub. Util.) Code Section 876." 4. The Petitioners.may deviate from the following provisions of GO 96-A: (a) paragraph II.C.(1)(b),which requires consecutive sheet numbering and prohibits the reuse of sheet numbers, and (b) paragraph II.C.(4),which requires that "a separate sheet or series of sheets should be used for each rule." Tariff filings incorporating these deviations shall be subject to the approval of the . Commission's Telecommunications Division. Tariff filings shall reflect all fees and surcharges to which Petitioners are subject, as described in Conclusion of Law 3. Petitioners are also exempt from GO 96-A Section II.G.(1) and (2) which require service of advice letters on competing and adjacent utilities,unless such utilities have specifically requested such service. 5. Each Petitioner shall file as part of its initial tariffs, after the effective date of this order and consistent with Ordering Paragraph 3, a service area map. 6. Prior to initiatingservice each Petitioner shall provide the Commission's � Consumer Services Division with the Petitioner's designated contact persons for purposes of resolving consumer complaints and the corresponding telephone numbers. This information shall be updated if the names or telephone numbers change or at least annually. 7. Where applicable,each Petitioner shall notify this Commission in writing' of the date local exchange service is first rendered to the public within.five days after service begins. The same procedure shall be followed.for the authorized intraLATA and interLATA services,where applicable. 8. Each Petitioner shall keep its books and records in accordance with generally accepted accounting principles. - 13- 00001i3 R.95-04-043, 1.95-04-P AL1/TRP/ays • 9. Petitioners shall each file an annual report, in compliance with GO 104-A, on a calendar-year basis using the information-request form developed by the Commission Staff and contained in Appendix A. 10. Petitioners shall ensure that its employees comply with the provisions of Pub. Util. Code§ 2889.5 regarding solicitation of customers. 11. The certificate granted and the authority to render service under the rates, charges, and rules authorized will expire if not exercised within 12 months after the effective date of this order. 12. The corporate identification number assigned to each Petitioner, as set forth in Appendix B,shall be included in the caption of all original filings with this Commission, and in the titles of other pleadings filed in existing cases. 13. Within 60 days of the effective date of this order, each Petitioner shall comply with Pub. Util. Code §708,Employee Identification Cards, reflecting its authority, and notify the Director of the Telecommunications Division in writing of its compliance. 14. Each Petitioner is exempted from the provisions of Pub. Util. Code §§816-830. 15. Each Petitioner is exempted from Pub. Util. Code §851 for the transfer or encumbrance of property,whenever such transfer or encumbrance serves to secure debt. 16. If any Petitioner is 90 days or more late in filing an annual report or in remitting the fees listed in Conclusion of Law 4,Telecommunications Division shall prepare for Commission consideration a resolution that revokes that Petitioner's CPCN, unless that Petitioner has received written permission from Telecommunications Division to file or remit late. - 14 - 0.00014 R.95-04-043, I.95-04-0•ALJ/TRP/ays • 0 17. The Final Mitigated Negative Declaration, including the Mitigation Monitoring Plan, attached as Appendix D of this decision is hereby approved and adopted. 18. Each of the Petitioners listed in Appendix B shall comply with the conditions and carry out the mitigation measures outlined in the adopted Mitigated Negative Declaration. 19. Each of the Petitioners shall provide the Director of the Commission's Energy Division with reports on compliance with the conditions and implementation of mitigation measures under the schedule outlined in the Mitigated Negative Declaration. 20. Petitioners shall comply with the consumer protection rules set forth in Appendix B of D.95-07-054. 21. Petitioners shall comply with the Commission's rules for local exchange competition in California that are set forth in Appendix C of D.95-12-056, including the requirement that CLCs shall place customer deposits in a protected, segregated,interest-bearing escrow account subject to Commission oversight. 22. Petitioners shall comply with the customer notification and education rules adopted in D.96-04-049 regarding the passage of calling party number. 23. Petitioners' respective motions for a limited protective order keeping designated documents containing financial and other operating information confidential are granted. Such documents will remain under seal for one year from today unless a petitioner makes a timely request for extension of confidential treatment of its documents by filing a separate motion with good cause shown. 24. The motion of DSLnet to have the resale portion of its CLC petition • considered in the current quarterly cycle is granted. - 15 - 000015 R.95-04-043, I.95-04-04-•ALJ/TRP/ays 25. The petitions listed in Appendix B are granted only as set forth above. This order is effective today. Dated June 24, 1999, at San Francisco, California. RICHARD A. BILAS President HENRY M. DUQUE JOSIAH L. NEEPER JOEL Z. HYATT CARL W. WOOD Commissioners - 16 - 000016 R.95-04-043, 1.95-04-M ALJ/TRP/ays • APPENDIX A Page 1 of 2 TO: ALL COMPETITIVE LOCAL CARRIERS AND INTEREXCHANGE TELEPHONE UTILITIES Article 5 of the Public Utilities Code grants authority to the California Public Utilities Commission to require all public utilities doing business in California to file reports as specified by the Commission on the utilities'California operations. A specific annual report form has not yet been prescribed for the California interexchange telephone utilities. However, you are hereby directed to submit an original and two copies of the information requested in Attachment A no later than March 31St of the year following the calendar year for which the annual report is submitted. Address your report to: • California Public Utilities Commission Auditing and Compliance Branch, Room 3251 505 Van Ness Avenue San Francisco, CA 94102-3298 Failure to file this information on time may result in a penalty as provided for in §§ 2107 and 2108 of the Public Utilities Code. If you have any question concerning this matter, please call (415) 703-1961. • 000017 R.95-04-043, I.95-04-OSALJ/TRP/ays APPENDIX A • Page 2 of 2 Information Requested of California Competitive Local Carriers and Interexchange Telephone Utilities. To be filed with the California Public Utilities Commission,505 Van Ness Avenue, Room 3251,San Francisco,CA 94102-3298,no later than March 31st of the year following the calendar year for which the annual report is submitted. 1. Exact legal name and U#of reporting utility. 2. Address. 3. Name,title,address,and telephone number of the person to be contacted concerning the reported information. 4. Name and title of the officer having custody of the general books of account and the address of the office where such books are kept. 5. Type of organization (e.g.,corporation,partnership,sole proprietorship,etc.). If incorporated,specify: a. Date of filing articles of incorporation with the Secretary of State. b. State in which incorporated. 6. Commission decision number granting operating authority and the date of that decision. 7. Date operations were begun. 8. Description of other business activities in which the utility is engaged. 9. A list of all affiliated companies and their relationship to the utility.State if affiliate Ls a: a. Regulated public utility. b. Publicly held corporation. 10. Balance sheet as of December 31st of the year for which information is submitted. 11. Income statement for California operations for the calendar year for which information is submitted. (END OF APPENDIX A) 000018 R.95-04-043, 1.95-0440 ALJ/TRP/ays • APPENDIX B ; • Page 1 of 1 i LISTING OF PETITIONERS GRANTED CPCN AUTHORITY/ Requested Authorit�� Granted Statewide Name of Petitioner Petition UtilityLocal Exchaa�i Inter/Intra- No. U-No. Facilities-based Resale LATA 1. Eagle Communications of 132 U-6182C X X California, LLC 2. US Data Highway Corp.21 133 U-6183C X 3. Seren Innovations, Inc. 2 1 U-6184C X X X 4. HTC Communications, LLC 2 135 U-6185 X X X 5. Network Plus, Inc. 136 U-61 6C X X X 6. Campuslink Communications 137 U-6 87C X X X Systems, Inc.2 7. XL Networks, Inc. 138 ,U-6188C X X X 0 8. Triad.Communications 139 / U-6189C X X X Corporation2• 9. NTC Network LLC2 1 L` U-6190C X X X 10. DSLnet Communications, 42 U-6191C X LLC 3 1 Un/ities-based ' indicated, the authorized local exchange service territory of each CLC ' 'ted to the MEC service territories of Pacific,GTEC. 2 Thd local exchange territory for this carrier encompasses the ILEC service terracific,GTEC,RTC,and CTC. 3 Thbased portion of the DSLnet petition shall be considered during the next quaw period. 000019 ' OCT-i2-99 08:57 FROM:P.A.C. • 415-291-6165 T010-233WM7 PA(E:004,032 R-95-04-043, 1.95-w44 ALj/TRp/acs J A • APR 10 2001 APPENDIX B (Corrected) COUNTY COUNSEL MARTIN . Page 1 EZ.CALIF. LISTING OF PETITIONERS GRANTED CPCN AUTHORITY Requested Authority Granted Statpwide Name of Petitioner Petition Utility Local Exchange' Inter/Intra- No. U-No. Facilities-based Resale LATA 1. Eagle Communications of 132 U-61820 X X California,LLC 2. US Data Highway Corp." 133 U-6183C X X 3. Seren Innovations,Inc. 2 134 U-6184C X X X 4. HTC Communications,LLC 135 U-6185C X X X • 5. Network Plus,Inc. 136 U-6186C X X X 6. Campuslink Communications 137 U-6187C X X X Systems,Inc.' 7. XL Networks, Inc. 138 U-6188C X X X 8. Triad Communications 139 U 6189C X X X Corporation' 9. NTC Network, LLCZ 140 U-6190C X X X 10. DSLnet Communications,LLC142 U-6191C X 'Unless otherwise indicated,the authorized Iocal exchange service territory of each CLC petaitoner is limited to the ILEO service territories of Pacific,GTEC. 'The authorized local exchwW territory for this carrier encompasses the RMC service territories of Pacific,GTEC,RTC,and CTC. The facilities-based portion of the Dfilnet petition shall be considered during the next 0 quarterly review period. (END OF APPENDIX B) 0 0 0 U 2 U R.95-04-043, 1.95ALJ/TRP/ays* • APPENDIX C LIST OF CLC Tariff Deficiencies Page 1 of 4 Eagle Communications, Pet. 132 Eagle Communications was to file a supplement to its petition as previously requested by the Telecommunications Staff to correct the many . deficiencies to its tariffs. To date,it has not filed a supplement to correct the identified deficiencies. Eagle must file a revised set of tariffs that fully comply with D.95-07-054,D.95-12-056, D.95-12-057, D.96-04-049. Network Plus — Pet. 136 Deficiencies in Network Plus's Proposed Tariffs 1. On each tariff sheet, (1) replace the phrase above the top horizontal line • "Local Exchange Services" to "Competitive Local Carrier Tariff" and (2) add a vertical line on both the left and right margins. 2. Sheet No. 3, Preliminary Statement, 1.1,last paragraph. Replace the phrase "to resell local exchange telecommunications services within the State of California" to "to provide facilities-based and resale local exchange services as a competitive local carrier in the service areas of Pacific Bell, GTEC, Citizens and Roseville Telephone Companies." 3. Sheet No. 13, Rule 1, Definitions. Include the definitions adopted in Decision 95-07-054 for: (1) Major Rate Increase, and (2) Minor Rate Increase. 4. Sheet No. 17,Rule 3, Customer Application for Service. Revise tariffs to fully comply with the provisions of Rule 2, Appendix B of Decision 95-07-054, (e.g.,service initiation based on a written or oral agreement; confirmation letter 000021 A R.95-04-043, I.95 ALJ/TRP/ays* • APPENDIX C LIST OF CLC Tariff Deficiencies Page 2 of 4 5. briefly describing services,in case of an oral agreement; statement of terms/conditions for all new customers, etc.). 6. Sheet No. 18,Rule 5,Contracts and Agreements. Delete language re effectivity on five days' notice for "subsequent completed contracts." All contracts shall be subject to the 40-day notice until revised by the Commission. 7. Sheet No. 19. (1) Rule 6,Special Information Required on Forms. Revise tariff language to fully comply with the provisions of Rule 3 (A) and (B), Appendix B of Decision 95-07-054. (2) Rule 7, Establishment and Re-establishment of Credit. Include language on situations when deposits are not required. (See Rule 4, Appendix B of Decision 95-07-054.) 8. Sheet No. 20. (1) Rule 8, Advance Payments. Revise tariff language to indicate that advance payments shall be credited on the customer's first bill. (2) Deposits. Include language on the interest rate to be added to deposits. (See Rule 5,Appendix B of Decision 95-07-054.) 9. Sheet No. 21, Rule'9, Notices. (1) Revise tariff to indicate that cancellation of service by customers may be either verbal or written. (2) Include tariff language on rates and rate revisions and information on notices of discontinuance by a competitive local carrier. (See Rule 6, Appendix B of Decision 95-07-054.) 10. Sheet No. 22,Rule 10,Cancellation of Service by Company. Revise tariff to indicate that notice of discontinuance of service by a company for nonpayment of bills shall be provided in writing by first class mail to the customer not less • than 7 calendar days prior to termination. 000022 R.95-04-043, I.95 ALJ/TRP/ays* APPENDIX C LIST OF CLC Tariff Deficiencies Page 3 of 4 11. Sheet No..25,Rule 16,Rendering and Payment of Bills. Note that a five-month back billing period for error files and one and one-half years back billing period for fraud are applicable only to interexchange service providers. Revise tariff accordingly. (See Decision 88-09-061.) 12. Sheet Nos. 27 through 31,Liability of the Company. Adopt either Pacific Bell's or GTEC's limitation of liability. The limitation of liability of these companies are appended to Decision 95-12-057. 13. Sheet 36, Rule 25, Additional Provisions, etc., Section D. Include language, to indicate that deposits will be refunded with interest within 30 days after discontinuance of service or 12 months of service, whichever comes first. 14. Sheet 37,Rule 26, Additional Provisions, etc. Comply with the back billing provisions of Decision 88-09-061 for local exchange service providers. . 15. Sheet 68, Custom Calling Services. Briefly describe each feature. Delete any reference to Caller ID service. This service can only be provided upon compliance with the customer notification and education rules adopted in Decision 96-04-049. 16. Sheet 72,Taxes and Surcharges. Update the applicable California surcharges. The current surcharges are: (1) Reimbursement Fee-0.11%; (2) ULTS-0.00%; (3) CHCF-A-0.00%; (4) CHCF-B -3.8%; (5) California Relay Service &Communications Devices Fund-0.192%; (6)California Teleconnect Fund-0.05%. 17. Include tariffs on: (1) Directories, (2) Non-published service, (3) Demarcation points, (4) Pro-rating of bills, (5) Change of service provider, 000023 R.95-04-043, I.95 ALJ/TRP/ays* APPENDIX C LIST OF CLC Tariff Deficiencies Page 4 of 4 18. (6) Blocking of 976/900 calls, (7) Access to 911 by residential customers disconnected for nonpayment, (8) Switched access, (9) Number portability, (10) Privacy, (11) Universal Lifeline Telephone Service (LILTS) rates and income Limitations, and (12) Sample forms. The forms may be filed with the company's initial tariff filing. (See Decision 95-07-054.) NTC Network, LLC — Pet. 140 NTC has to file a full set of tariffs incompliance with D.95-07-054, etc. (END OF APPENDIX Q 000024 R95-04-043, I.95-04-04/.LJ/TRP/ays • APPENDIX D 00002" • NEGA'T'IVE DECLARATION (14) Competitive Local Carriers' (CLCs) Projects for Local Exchange Telecommunications Service throughout California. The subject of this Negative Declaration are nine current petitions/applications for authorization to provide facilities based local telephone services. (See Appendix B). The California Public Utilities Commission is the lead agency in approving these petitioners' intent to compete in the local exchange market. Additional approvals by other agencies may be required depending upon the scope and type of construction proposed by the petitioner(e.g. federal, other state agencies,and ministerial permits by local agencies). Because the subject projects of the nine current petitioners are similar,with some modifications, to the projects proposed by the past petitioners, the Commission incorporates, in whole,Negative Declaration 13 for these nine petitions/applications,-and will refer to the incorporated documents as"Negative Declaration 14"(Section 15150 of CEQA Guidelines). The public comment period for the Draft Negative Declaration 14 begins on April 29, 1999 and expires on May 28, 1999. Comments should be addressed to: John Boccio, Project Manager, California Public Utilities Commission, Energy Division, 505 Van Ness Avenue, San Francisco,CA 94102,Fax: (415)703-2200, E-Mail:jbx@cpuc.ca.gov. For further information call Mr. Boccio at(4 15) • 703-2641. BACKGROUND The California Public Utilities Commission's Decision 95-07-054 enables telecommunications companies to compete with local telephone companies in providing local exchange service. Previous to.this decision, local telephone service was monopolized by a single utility per service territory. The Commission initially received 66 petitions from companies to provide competitive local telephone service throughout areas presently served by Pacific Bell and GTE California. The 66 petitioners included cable television companies,cellular(wireless)companies,' long- distance service providers,local telephone service providers,and various other telecommunication companies that specialize in transporting data. Forty of the sixty-six petitions were for approval of facilities-based services,which means that the petitioners proposed to use their own facilities in providing local telephone service. The remaining 26 petitions were strictly for approval of resale-based services,meaning that telephone 1 Wireless companies covered in the Negative Declarations adopted by the Commission for entry in the local telephone market are also subject to Commission General Order(G.O. 159A). G.O. 159A..delegates to local governments the authority to issue discretionary permits for the approval of proposed sites for wireless facilities. Commission adoption of the Negative Declarations is not intended to supersede or invalidate the requirements • contained in General Order 159A. _ 1 00002 i service will be resold using another competitor's facilities. (Most of the facilities-based • petitioners offer resale-based services as well.) The 40 facilities-based petitions indicated that physical modifications to existing facilities may be required, and.construction of new facilities was a possibility in the long-term. The 26 resale-based petitions were strictly financial and billing arrangements that involved no construction and were therefore considered to be exempt from the California Environmental Quality Act(CEQA) (Public Resources Code Sections 21000 et seq.). The Commission issued a draft Negative Declaration for the initial 40 facilities-based petitioners in October 1995. Comments on the draft Negative Declaration covered issues such as traffic congestion,public safety, cumulative impacts, aesthetic impacts,and physical wear on streets. These comments were addressed and the Negative Declaration was modified to some extent in response to the comments. In December 1995, Commission Decision D.95-12-057 adopted a final mitigated Negative Declaration finding that the proposed projects of the initial 40 facilities- based petitioners would not have potentially significant environmental effects with specified mitigation measures incorporated by the projects. Following the adoption.of D.95-12-057,the Commission received eight additional petitions for facilities-based services. The eight petitioners included cable television companies, resale-based providers approved by D.95-12-057,and other telecommunication companies. Following the public comment period,the Commission made minor modifications to the first Negative Declaration, and in September 1996,the Commission adopted the second Negative Declaration for these eight companies (D.96-09-072). ('Phis Negative Declaration is sometimes referred to as "Negative Declaration II"). In January 1997,the Commission adopted a third Negative Declaration for eight more facilities-based petitioners. "Negative Declaration III"is virtually the same document as Negative Declaration II because the proposed projects of the eight petitioners were no different from the projects proposed by the two groups of petitioners that preceded them. Following the issuance of Negative Declaration Ill,ten subsequent Negative Declarations, Negative Declaration IV(D.97-04-011),Negative Declaration*V(D.97-06-100),Negative Declaration VI (D.97-09-110),Negative Declaration VII (D97-12-084),Negative Declaration IX (D.98-03-066),Negative Declaration X(D.98406-067),Negative Declaration I I (D.98-09-66), and Negative Declaration 12(D.98-12-083)and Negative Declaration 13 (D.99-03-050)have been adopted by the Commission in granting authority to provide facibities based local telecommunication services under essentially the same circumstances. (Negative Declaration VIII addressed telecommunication companies petitioning to provide services in the Roseville Telephone Company and Citizens Telephone Company of California service areas only). Negative Declaration IV addressed nine petitioners,Negative Declaration V addressed six petitioners,Negative Declaration VI addressed eight petitioners Negative Declaration VII addressed five petitioners,Negative Declaration VIII addressed eleven petitioners,Negative Declaration IX addressed eleven petitioners,Negative Declaration X addressed,two petitioners and Negative Declaration 11 addressed eight petitioners and Negative Declaration 12 addressed twelve petitioners. • 2 000027 PROTECT DESCRIPTION • Followingthe adoption of Negative Declaration 13 the Commission received nine more P g , petitions/applications for facilities-based services. These petitioners are the subject of this Negative Declaration. (See Appendix B for a list of the current facilities-based petitioners.) Similar to the earlier petitioners,most of the'current petitioners are initially targeting local telephone service for areas where their telecommunications infrastructure is already established, and therefore only minor construction is envisioned. Services provided will include but not be limited to voice, data, video,intemet and other telecommunications services. The petitioners will need to make some modifications to their existing facilities; these modifications are minor in nature,the most common being the installation of a switch that connects potential customers to outside systems. Switch installation is necessary because customers_receiving a particular type of service may not have access to local telephone networks. For example,customers receiving cable television service are presently unable to connect to local telephone networks because of the differences in modes of service. A switch installation by a cable television provider is one step that makes the connection possible. Switch installation is considered a minor modification because it typically involves a single installation within an existing central communication facility or building. Besides the minor modifications,some of the companies are planning to install their own fiber optic cables to provide adequate service. Cables will be installed within existing utility • underground conduits or ducts, or attached to utility poles with existing overhead lines whenever posse c ca es are extremely thin,and existing conduits will-likely be able to hold multiple cables. However, if existing conduits or poles are unable to accommodate additional ca es, then new conduits or poles will need to be cons truc by the petitioner. In this case, the p > >oners vinIl construct within existing utility rights-of-way. There is also the possibili -that the petitioners may attempt to access other,_!i ts-of--way (such as roads)to construct additional conduits. Extension of existing rights-of-way into unareas is not likely,but a posse tlity. The installation of fiber optic cables into underground conduits will vary in complexity depending upon the conditions of the surrounding area For example,in urban,commercial areas,utility conduits can be accessible with minimal groundbreaking and installation simply requires stringing the cable through one end ofT a conduit and connecting it to the desired end. In this case,major excavation of the right-of-way is unnecessary. However,there may also be conditions where access to the conduit will require trenching and excavation. Some of the petitioners have plans to construct service boxes or cabinets which contain batteries for the provision of power or emergency power. The dimensions of the boxes vary,but basically range from three to five feet in height. Depending upon the type of technology and facilities operated by the petitioner,smaller service boxes(approximately 3 inches in height)would be used for power supply and backup power. Those petitioners who have no plans to use such • 3 000028 . boxes already have capable power and backup power within their existing facilities. The • petitioners who will need such boxes, have committed to placing the boxes in existing buildings, or in underground vaults. If conditions do not permit building or underground installation, the petitioners would use small low-profile boxes that are landscaped and fenced. While most of the petitioners will initially compete for customers in urban, commercial and residential zones where telecommunication infrastructure is already in place, some petitioners state their intention or right to compete on a state wide basis wherever competition is permitted. However it is unclear at this time if all areas will be affected by the projects because many petitioners are not specific where they intend to compete in the long-run. ENVIRONMENTAL DETERMINATION An Initial Study was prepared to assess the projects'potential effects on the environment, and the respective significance of those effects. Based on the Initial Study,the CLCs'projects for competitive local exchange service have the potential to cause significant adverse effects-on the environment in the area of Land Use and Planning,Geological Resources, Water,Air Quality, Transportation and Circulation,Hazards,Noise,Public Services,Aesthetic and Cultural Resources. The projects will have less than a significant effect in other resource areas of the checklist. It should be noted that Findings 2 through 10 are for those projects which require work within existing utility rights-of-way for the purpose of modifying existing facilities or installing new facilities. Finding 1 is applicable for work outside of the existing utility rights-of- way. In response to the Initial Study, the following specific measures should be incorporated into the projects to assure that they will not have any significant adverse effects on the environment. (See Public Resources Code Section 21064.5.) As a general matter,many of the mitigation measures rely on compliance with local standards and the local ministerial permit process. Although local safety and aesthetic input is essential in minimizing the impact of the petitioner's construction,local jurisdictions cannot impose standards or permit requirements which would prevent petitioners from developing their service territories,or otherwise interfere with the statewide interest in competitive telecommunication service. Therefore,the petitioners'required.compliance with local permit requirements is subject to this limitation. The findings of the draft Negative Declaration were modified in response to comments filed during the public comment period from Negative Declarations 11 and IV. Changes aremarked by italics. 1.The proposed projects could have potentially significant environmental effects for all environmental factors if a proposed project extends beyond the utility right-of-way into undisturbed areas or into other rights-of-way. ("Utility right-of-way" means any utility • 4 000029 right-of-way,not limited to only telecommunication utility right-of-way.) For the most part, the petitioners do not plan to conduct projects that are beyond the utility right-of- way. However, should this occur, the petitioner shall file a Petition to Modify it's Certificate for Public Convenience and Necessity (CPCN). An appropriate environmental analysis of the impacts of these site specific activities shall be done. 2. The proposed projects will not have any significant effects on Population and Housing, Biological.Resources,Energy and Mineral Resources, and Recreation if the proposed projects remain within existing utility right-of-way.' There are no potential environmental effects in these areas,or adequate measures are incorporated into the projects to assure that significant effects will not occur. 3.The proposed projects could have potentially significant environmental effects on Geological Resources because possible upgrades or installations to underground conduits may induce erosion due to excavation,grading and fill. It is unclear as to how many times underground conduits may be accessed by the petitioners,but it is reasonable to assume that constant excavation by various providers could result in erosion in areas where soil containment is particularly unstable. In order to mitigate any potential effects on geological resources,the petitioners shall comply with all local design,construction and safety standards by obtaining all applicable ministerial permits from the appropriate local agencies. In particular,erosion control plans shall be developed and implemented for areas identified as particularly unstable or susceptible to erosion. If more than one petitioner plans to excavate geologically sensitive areas, coordination of their plans shall be necessary to minimize the number and duration of disturbances. 4. The proposed projects could have potentially significant environmental effects on Water Resources because possible upgrades or installation to underground conduits may be in close proximity to underground or surface water sources. While the anticipated construction will generally occur within existing utility rights-of-way,the projects have the potential to impact nearby water sources if heavy excavation is required as the method of access to the conduits. In order to mitigate any potential effects on water resources,the petitioners shall comply with all local design,construction and safety standards. This will include consultation with all appropriate local,state and federal water resource agencies for projects that are in close proximity to water resources,underground or surface. The petitioners shall comply with all applicable local,state and federal water resource regulations. Appropriate site specific mitigation plans shall be developed by the petitioners if the projects impact water quality,drainage, direction, flow or quantity. If there is more than one petitioner for a particular area that requires excavation,coordination plans shall be required to minimize the number and duration of disturbances. S 000030 • 5. The proposed projects could have potentially significant environmental effects on Air Quality because possible excavation efforts for underground conduits may result in vehicle emissions and airborne dust for the immediate areas of impact. This is especially foreseeable if more than one petitioner should attempt such work in the same locale. While the impact will be temporary,the emissions and dust could exceed air quality standards for the area The petitioners shall develop and implement appropriate dust control measures during excavation as recommended by the applicable air quality management district. The petitioners shall comply with all applicable air quality standards as established by the affected air quality management districts If there is more than one petitioner for a particular area that requires excavation,coordination plans shall be required to minimize the number and duration of disturbances. 6.The proposed projects could have potentially significant environmental impacts on Transportation and Circulation and Public Services because uncoordinated efforts by the petitioners to install fiber optic cable could result in a cumulative impact of traffic congestion, insufficient parking and hazards or barriers for pedestrians. This is foreseeable if the competitors choose to compete in the same locality and desire to install their own cables. If the selected area is particularly dense with heavy vehicular or pedestrian traffic, the impacts could be enormous without sufficient control and • coordination. Uncoordinated efforts may also adversely impact the quality and longevity of public street maintenance because numerous excavation activity depreciates the life of the surface pavement. Impactsfrom trenching activity may occur in utility rights-of--way that contain other Public Services such as irrigation water lines. The petitioners'shall coordinate their efforts to install fiber optic cable's or additional conduits so that the number of encroachments to the utility rights-of-way are minimized. These coordination efforts shall also include affected transportation and planning agencies to.coordinate other projects unrelated to the petitioners'projects.For example, review of a planning agency's Capital Improvement Plan (CIP)to identify impacted street projects would be an expected part of the coordination effort by the petitioner. . Besides coordinating.their efforts,the petitioners shall abide by all local construction, maintenance and safety standards (and state standards, if applicable)by acquiring the necessary ministerial permits from the appropriate local agency or CalTrans rf within a State right-of-way). Examples of these hermits are excavation,encroachment and, buildin�ts.,Appropriate construction start and end times,and dates if appropriate, 2 The petitioners discussed in this Negative Declaration shall coordinate with all CLCs including those listed in the first Negative Declaration adopted by the Commission(D.95-12-057)and all CLCs in future Negative Declarations. CLCs covered in the first Negative Declaration shall likewise be expected coordinate with those CLCs listed in this Negative Declaration or any subsequent one adopted by the Commission. 6 00003.1. shall be employed to avoid peak traffic periods and to minimize disruption,especially if the petitioners' work encroaches upon transportation rights-of-way. Petitioners shall consult with local agencies on appropriate restoration ofpublic service facilities that are damaged by the construction and shall be responsible for such restoration. 7.The proposed projects could have potentially significant hazard-related effects because uncoordinated construction efforts described above could potentially interfere with emergency response or evacuation plans. There is also potential for an increase in overhead lines and poles which carry hazard-related impacts. The same mitigation plan as described in the previous section is applicable here as well, and shall be augmented by notice to and consultation with emergency response or evacuation agencies if the proposed project interferes with routes used for emergencies or evacuations. The coordination efforts shall include provisions so that emergency or evacuation plans are not hindered. If the projects result in an increase in overhead communication lines,the petitioner shall obtain the necessary ministerial permits to erect the necessary poles to support the lines. The Commission shall include these facilities as part of its overhead line regular inspections so that the requirements of G.O.95 are met. 8.The proposed projects could have potentially significant environmental effects on Noise because it is possible some projects may require excavation or trenching. Although • the effect is likely to be short-term,existing levels of noise could be exceeded. If the petitioner requires excavation,trenching or other heavy construction activities which would produce significant noise impacts,the petitioner shall abide by all applicable local noise standards and shall inform surrounding property owners and occupants(particularly school districts,hospitals and the residential neighborhoods)of the day(s)when most construction noise would occur. Notice shall begiven at least two weeks"in advance of the construction. 9. The proposed projects could have potentially significant environmental effects on aesthetics because it is possible that additional lines on poles in utility rights-of-way could become excessive for a particular area Aesthetic impacts may also occur in utility rights-of-way that are landscaped Moreover,there is potential for an increase in above grade utility service boxes or cabinets which also cavy aesthetic impacts. Local aesthetic concerns shall be addressed by the petitioners for all facilities that are above-ground, in particular all types of service boxes or cabinets. The local land use or planning agency shall be consulted by the petitioner so that any site-specific aesthetic impacts are assessed and properly mitigated. For example, this may include restoration of the landscaped utility rights-of-way. 10.The proposed projects could have potentially significant environmental effects on 7 000032 • cultural resources because situations involving additional trenching may result in disturbing known or unanticipated archaeological or historical resources. The petitioners shall conduct appropriate data research for known cultural resources in the proposed project area, and avoid such resources in designing and constructing the project. Should cultural resources be encountered during construction,all earthmoving activity which would adversely impact such resources shall be halted or altered so as to avoid such impacts, until the petitioner retains the service of a qualified archaeologist who will do the appropriate examination and analysis. The archeologist shall consult with appropriate federal, state and local agencies concerned with cultural resources, so that any potential impacts upon cultural resources are assessed and properly avoided or mitigated. The archeologist shall,in coordination with agencies,develop a plan for avoiding or mitigating any potential impacts upon those resources encountered. In summary, the Mitigation Measures recommended in this environmental determination are: A)All Environmental Factors: if a proposed project extends beyond the utility right-of- way into undisturbed areas or other right-of-way,the petitioner shall file a Petition to Modify its Certificate for Public Convenience and Necessity (CPCN). ("Utility right-of- way" means any utility.right-of-way,not limited to only telecommunications utility right- of-way.) An appropriate environmental analysis of the impacts of these site specific activities shall be done. If the projects remain within the utility right-of-way,the following Mitigation Measures are recommended: B)General Cumulative Impacts: in the event that more than one petitioner seeks modifications or additions to a particular locality, the petitioners shall coordinate their plans with each other,and consult with affected local agencies so that any cumulative effects on the environment are minimized. These coordination efforts shall reduce the number and duration of disturbance to existing utility right-of-way..Regardless of the number of petitioners for a particular locality,the petitioner shall consult with,and abide by the standards established,by all applicable local agencies. Each petitioner shall file a quarterly report,one month prior to the beginning of each quarter,that summarizes the construction projects that are anticipated for the coming quarter. The summary will contain a description of the type of construction and the location for each project so that the local planning agencies can adequately coordinate multiple projects if necessary. The reports will also contain a summary of the petitioner's compliance with all Mitigation Measures for the projects listed. The quarterly reports will be filed with the local planning agencies where the projects are expected to take place and the Commission's Telecommunications Division. The Commission filing will be in the form of an informational advice letter. Subsequent quarterly reports shall also summarize the status 8. 000033 of the projects listed in previous quarterly report, until they are completed. • C) Geological Resources: the petitioners shall comply with all local design construction and safety standards by obtaining all applicable ministerial permits from the appropriate local agencies including the development and approval of erosion control plans. These shall be developed and implemented for areas identified as particularly unstable or susceptible to erosion. If more than one petitioner plans to excavate sensitive areas, coordination of their plans shall be necessary to minimize the number of disturbances. The petitioners compliance with this Mitigation Measure shall be included in its quarterly report D) Water Resources:the petitioners shall consult with all appropriate local, state and federal water resource agencies.for projects that are in close proximity to water resources, underground or surface. The petitioners shall comply with all applicable local, state and federal water resource regulations including the development of site-specific mitigation plans should the projects impact water quality,drainage,direction, flow or quantity. If there is more than one petitioner for a particular area that requires excavation, coordination plans shall be required to minimize the number of disturbances. The petitioners compliance with this Mitigation Measure shall be included in its quarterly reporL E)Air Quality:the petitioners shall develop and implement appropriate dust control measures during excavation as recommended by the applicable air quality management district. The petitioners shall comply with all applicable air quality standards as established by the affected air quality management districts. If there is more than one petitioner for a particular area that requires excavation, coordination plans shall be required to minim» the number of disturbances. The petitioner's compliance with this Mitigation Measure shall be included in its quarterly report. F)Transportation and Circulation and Public Services: the petitioners'shall coordinate their efforts to install fiber optic cables or additional conduits so that the number of disturbances to the utility rights-of-way are minimized. These coordination efforts shall include affected transportation and planning agencies to coordinate other projects unrelated to the petitioners'projects.For example, review of a planning agency's Capital Improvement Plan (CIP) to idents impacted street projects would be an expected part of the coordination effort by the petitioner. Besides coordinating their efforts,the petitioners shall abide by all local construction, maintenance and safety standards (and state standards, if applicable) by acquiring the necessary ministerial permits from the appropriate local agency and/or CalTrans (if within State right-of-way). Examples of these permits are excavation,encroachment and building permits. Appropriate construction start and end times,and dates if appropriate, shall be employed 3 See Footnote 92. 9 0000*34; to avoid peak traffic periods, especially if the petitioners'work encroaches upon • transportation rights-of-way. Notice to the affected area(surrounding property owners and occupants)shall be given at least two weeks in advance of the construction. The notice will provide the time and dates of the proposed construction and discussion of potential impacts on traffic and circulation.Petitioners shall consult with local agencies on appropriate restoration of public service facilities that are damaged by the construction and shall be responsible for such restoration The notice required for Mitigation Measures F and H shall be consolidated. The petitioner's compliance'with this Mitigation Measure shall be included in its quarterly report. G) Hazards: the petitioners shall use the Transportation and Circulation mitigation measure and augment it by informing and consulting with emergency response or evacuation agencies if the proposed project interferes with routes used for emergencies or evacuations. The coordination effort shall include provisions so that emergency or evacuation plans are not hindered. If the projects result in an increase in overhead communication lines,the petitioner shall obtain the necessary ministerial permits to erect the necessary poles to support the lines. The Commission shall include these facilities as part of its overhead line regular inspections so that the requirements of G.O. 95 are met. The petitioner's compliance with this Mitigation Measure shall be included in its quarterly report. H)Noise: the petitioner shall abide by all applicable local noise standards and shall • inform surrounding property owners and occupants,particularly school districts,hospitals and the residential neighborhoods, of the day(s)when most construction noise would occur if the petitioner plans excavation,trenching or other heavy.construction activities which would cause any significant noise. Notice shall be given at least two weeks in advance of the construction. The notice required for Mitigation Measures F and H shall be consolidated. The petitioner's compliance with this Mitigation Measure shall be included in its quarterly report. I)Aesthetics:All applicable local aesthetic standards will be addressed by the petitioners for all facilities that are above-ground,in particular all types of service boxes or cabinets.- The abinets.The local land use agency shall be consulted by the petitioner so that any site-specific aesthetic impacts are assessed and properly mitigated by the petitioner. For example, this may include restoration of the landscaped utility rights-of-way. Petitioner's compliance with this Mitigation Measure shall be included in its quarterly report. J)Cultural Resources: The petitioners shall conduct appropriate data research for known cultural resources in the proposed project area, and avoid such resources in designing and constructing the project. Should cultural resources be encountered during construction,all earthmoving activity which would adversely impact such resources shall be halted or altered until the petitioner retains the service of a qualified archaeologist who will do the appropriate examination and analysis. The archaeologist will provide • 10 1 000035 proposals for any procedures to mitigate the impact upon those resources encountered. • The treatment plan will be designed through coordination with the appropriate federal, state and local agencies. The petitioner's compliance with this Mitigation Measure shall be included in its quarterly report. General Statement for all Mitigation Measures: Although local safety and aesthetic input is essential in minimizing the impact of the petitioner's construction, local jurisdictions cannot impose standards or permit requirements which would prevent petitioners from developing their service territories, or otherwise interfere with the statewide interest in competitive telecommunication service. Therefore, the petitioners'required compliance with local permit requirements is subject to this limitation With the implementation of the mitigation measures listed in A)-.1)above,the Commission should conclude that the proposed projects will not have one or more potentially significant environmental effects. The Commission should also adopt a Mitigation Monitoring Plan which will ensure that the Mitigation Measures listed above will be followed and implemented. The Mitigation Monitoring Plan is included with this Negative Declaration as Appendix C. Natalie Walsh, Program Manager Analysis Branch Energy Division Date • 11 000036 INMAL STUDY CHECKLIST ivironmental Factors Potentially Affected: The environmental factors checked below would be potentially affected by this project, involving at least one impact that is a "Potentially Significant Impact"as indicated by the checklist on the following pages. ® Land Use and Planning ❑x Transportation/Circulation 0 Public Services O Population and Housing O Biological Resources © Utilities and Service Systems IM Geological Problems ❑ Energy and Mineral Resources ® Aesthetics © Water © Hazards © Cultural Resources ® Air Quality © Noise O Recreation ® Mandatory Findings of Significance Note: For construction outside of the utility rights-of-way,potential environmental impacts are too variable and uncertain to be specifically evaluated in this Initial Study,but are addressed in Environmental termination I and Mitigation Measure(A) in the.Negative Declaration. .#etermination: On the basis of this initial evaluation: 1 find that the proposed projects COULD NOT have a significant effect on the environment,and a NEGATIVE DECLARATION will be prepared. O 1 find that although the proposed project could have a significant effect on the environment,there will not be-a significant effect in this case be- cause the mitigation measures described on an attached sheet have been added to the projects. A NEGATIVE DECLARATION will be prepared. I find that the proposed projects MAY have a significant effect on the environment,and an ENVIRONMENTAL IMPACT REPORT is required. ❑ I find that the proposed projects MAY have a significant effect(s)on the environment,but at least one effect 1)has been adequately analyzed in an earlier document pursuant to applicable legal standards,'and 2)has been addressed by mitigation measures based on an earlier analysis as described on attached sheets,if the effect is a"potentially significant impact"or "potentially significant unless mitigated." An ENVIRONMENTAL IMPACT DEPORT is required,but it must analyze only the effects that remain to be addressed. ❑ l 00003'7 el find that although the proposed project could have a significant effect on the nvironment,there WILL NOT be a significant effect in this case because all 3tentiaily significant effects(a)have been analyzed adequately in an earlier EIR pursuant to applicable standards and(b)have been avoided or mitigated pursuant to that earlier EIR, including revisions or mitigation measures that are imposed upon the proposed project. p Signature f l N- W*'s Date Natalie Walsh Program Manager Printed Name Analysis Branch, Energy Division California Public Utilities Commission • 2 000038 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact 1. LAND USE AND PLANNING. Would the proposal: a) Conflict with general plan designation or zoning? ❑ p ❑ O b) Conflict with applicable environmental plans or policies adopted by agencies with jurisdiction over the project? O ® ❑ O c) Be incompatible with existing land use in the vicinity? ❑ 0 ❑ ❑ d) Affect agricultural resources or operations (e.g. impacts to soils or farmlands,or impacts from incompatible land uses)? ❑ 0 ❑ . ❑ e) Disrupt or divide the physical arrangement of • an established community(including a low- income or minority community)? ❑ p ❑ ❑ The proposed projects are not anticipated to have any significant impacts on general or environmental plans, zoning,existing land usage,or agricultural resources. The projects are essentially modifications to existing facilities within established utility rights-of-way. Since these rights-of-way are already designed to be in compliance with zoning and land use plans,disruption of such plans are not foreseeable. -In the event that the petitioners need toconstruct facilities that extend beyond the rights-of-way,see Mitigation Measure A in the Negative Declaration. If.POPULATION AND HOUSING. Would the proposal: a) Cumulatively exceed official regional or local population projections? O ❑ ❑ 123 b) induce substantial growth in an area either directly or indirectly(e.g.through projects in an undeveloped area or extension of major infrastructure? ❑ ❑ ❑ 10 c) Displace existing housing,especially affordable housing? ❑ O ❑ '•e proposed projects will not have impacts upon population or housing. The purpose of the projects is to 3 000039 introduce competition into the local telephone service market. Since competition will be generally statewide and inot centered in one locale, it is not anticipated that the projects will have an effect on population projections or '.ousing availability of any particular arca. The areas that will not initially receive the competition are rural, less ,pulated areas; it cannot be seen that the initial lack of competitive services in these areas will result in significant movements of people to areas where competition will be heavy. Potentially Significant Potentially ' Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact III.GEOLOGIC PROBLEMS. Would the proposal result in or expose people to potential impacts involving: a) Fault rupture? ❑ E] ❑ Im b) Seismic ground shaking? ❑ O ❑ El c) Seismic ground failure, including liquefaction? ❑ ❑ ❑ 1] d) Seiehe,tsunami,or volcanic hazard? O ❑ ❑ e) Landslides or mudflows? ❑ 0 ❑ ❑ 0 ) Erosion, changes in topography or unstable soil conditions from excavation, grading,or fill? ❑ ® ❑ ❑ g) Subsidence of land? ❑ ❑ ❑ h) Expansive soils? 0 ❑ ❑ IM i) Unique geologic or physical features? O ❑ O O The projects will be constructed within existing utility facilities or established utility rights-of-way and will therefore not expose people to new risks for any of these impacts,except possibly erosion. Should additional cable facilities require the installation of new or upgraded conduits,trenching,excavation,grading and fill could be required. For appropriate mitigation,see Mitigation Measures (B)and(C) for details in the Negative Declaration. IV.WATER. Would the proposal result in: a) Changes in absorption rates,drainage patterns, or the rate and amount of surface runoff? ❑ 0 0 • b) Exposure of people or property to water related hazards such as flooding? O O O 4 . 000040 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact c) Discharge into surface waters or other alteration of surface water quality(e.g. temperature,dissolved oxygen or turbidity)? ❑ O O ❑ d) Changes in the amount of surface water in any .water body? O ❑ O 11) e) Changes in currents,or the course or direction of water movements? ❑ ❑ ❑. f) Change in the quantity of ground waters,either through direct additions or withdrawals,or through interception of an aquifer by cuts or excavations or through substantial loss of groundwater recharge capability? ❑ © ❑ ❑ g) Altered direction or rate of flow of groundwater? O ❑ ❑ h) Impacts to groundwater quality? . O O O ❑ i) Substantial reduction in the amount of groundwater otherwise available for public water supplies? ❑ ❑ ❑ The projects will involve alterations to exiting telecommunication facilities(underground conduits or overhead poles)but could expose additional risks if more than one petitioner decide to compete in the same locality. Efforts to install cables,or if necessary, new conduits,in utility rights-of-way that are in close proximity to an underground or surface water sources could carry significant effects for quality,flow,quantity,direction or drainage if done improperly and without coordination. See Mitigation Measures(B)and(D) in the Negative Declaration for details. V.AIR QUALITY. Would the proposal: a) Violate any air quality standard or contribute . to an existing or projected air quality violation? ❑ ® ❑ ❑ b) Expose sensitive receptors to pollutants? ❑ ® ❑ O 5 000041 • Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact c) Alter air movement,moisture,or temperature,or cause any change in climate? ❑ ❑ ❑ Q d) Create objectionable odors? ❑ ❑ O O If the projects do not require excavation or trenching of underground conduits,they will not have an effect upon air quality,movement,temperature or climate. However,should the projects require such work and,if more than one petitioner decide to work in the same locale,there is potential for an increase in dust in the immediate area. See Mitigation Measures(B)and(E)in the Negative Declaration for details. VI.TRANSPORTATIONXIRCULATION. Would the proposal result in: a) Increased vehicle trips or traffic congestion? ❑ ® O O b) Hazards to safety from design features(e.g. sharp curves or dangerous intersections)or •. incompatible uses(e.g. farm equipment)? ❑ ® ❑ ❑ c) inadequate emergency access or access to nearby uses? O ® O ❑ d) Insufficient parking capacity on-site'or off-site? ❑ ® O ❑ e) Hazards or.barriers for pedestrians or bicyclists? ❑ ® O ❑ f) Conflicts with adopted policies supporting alterative transportation(e.g.bus turnouts, bicycle racks)? ❑ O ❑ g) Rail,waterborne or air traffic impacts? O ® O ❑ The petitioners plan to modify existing utility conduits or poles within existing utility rights-of-way initially in urban,commercial zones and residential areas. Modification of these facilities by a single party does not present significant impacts upon traffic or circulation since the installation process is not expected to be lengthy. However,if more than one of the petitioners decide to compete in the same locality,their efforts to install their own cables will have a significant cumulative effect on circulation,especially in dense,urban commercial areas. As a result, increases in traffic congestion,insufficient parking,and hazards or barriers for pedestrian are possible. See Mitigation Measures(B)and(F)in the Negative Declaration for details. 6 00004.2 Potentially • Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact VII. BIOLOGICAL RESOURCES. Would the proposal result in impacts to: a) Endangered,threatened,or rare species or their habitats(including but not limited to plants, fish, insects,animals,and binds)? ❑ ❑ O b) Locally designated species(e.g.heritage trees)? ❑ ❑ O c) Locally designated natural communities(e.g.oak forest,coastal habitat,etc.)? ❑ O O d) Weiland habitat(e.g. marsh,riparian and vernal pool)? ❑ ❑ ❑ e) Wildlife dispersal or migration corridors? O ❑ ❑ O The projects will not affect any biological resources since all anticipated work will occur within existing utility acilities or established utility rights-of-way. Established utility rights-of-way are assumed to be outside of :ally designated natural communities, habitats or migration corridors. VIII. ENERGY AND MINERAL RESOURCES. Would the proposal result in: a) Conflict with adopted energy conservation plans? ❑ ❑ ❑ b) Use non-renewable resources in a wasteful and inefficient manner? ❑ ❑ ❑ e c) Result in the loss of availability of a known mineral resource that would be of future value to the region and the residents of the State? ❑ ❑ O The projects will no impact upon mineral resources or the use of energy. The projects provide competitive telecommunication services that have no direct relationship to efficient energy use or mineral resources. The installation of additional fiber optic cables are within existing facilities or rights�of-way that are assumed to have adequate mitigation designs to avoid impacts on any mineral resources within proximity. i 000043 Potentially • Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact IX. HAZARDS. Would the proposal involve: a) A risk of accidental explosion or release of hazardous substances(including, but not limited to: oil, pesticides,chemicals or radiation)? ❑ O ❑ b) Possible interference with an emergency response plan or emergency evacuation plan? O ❑ 13 c) . The creation of any health hazard or potential health hazard? ❑ O ❑ p d) Exposure of people to existing sources of potential health hazards? ❑ ❑ ❑ p e) Increased fire hazard in areas with flammable brush,grass,or trees? ❑ ❑ O • te installation of fiber optic cables can be a quick,clean and simple procedure with little use of heavy machinery. However there may be situations where excavation and trenching of underground conduits is necessary if the conduits are not easily accessible. Should this occur, uncoordinated efforts by the-petitioners in one concentrated area could potentially affect emergency response or evacuation plans for that locale. See Mitigation Measures(B)and(G)in the Negative Declaration for details. Once the project is completed,the additional cables do not represent any additional hazards to people nor do they increase the possibility of fires. X.NOISE. Would the proposal result in: a) Increases in existing noise levels? ❑ IXF O ❑ b) Exposure of people to severe noise levels? ❑ ® ❑ ❑ The anticipated projects can be a quick and simple procedure,but in some cases could require heavy machinery or construction activity such as excavation,trenching,grading and refill. There is also the possibility that uncoordinated efforts by the petitioners in one locale could increase existing noise levels,if their activities involve the construction described. See Mitigation Measures(B)and(H) in the Negative Declaration for details. 8 000044 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact Xl. PUBLIC SERVICES. Would the proposal have an effect upon,or result in.a need for new or altered government services in any of the following areas: a) Fire protection? ❑ ❑ ❑ Q b) Police protection? ❑ ❑ ❑ p c) 'Schools? ❑ O O d) Maintenance of public facilities, including roads? O © O ❑ e) Other government services? ❑ ❑ ❑ The proposed projects will increase competition in the local telephone service. The construction associated with the projects have potential impacts on the maintenance of public streets and roads. Numerous disturbances-to the street surfaces depreciates the quality and longevity of the pavement.. Trenching projects may also impact other existing public service facilities(e.g. irrigation lines) in the utility rights-of-way. Mitigation Measure F addresses *his impact. X11. UTILITIES AND SERVICE SYSTEMS: Would the proposal result in a need for new systems or supplies, or substantial alterations to the following utilities: a) Power or natural gas? ❑ ❑ ❑ Im b) Communication systems? ❑ D ❑ ❑ C) Local or regional water treatment or distribution facilities? ❑ ❑. ❑ O d) Sewer or septic tanks? ❑ ❑ O e) Storm water drainage? 17 ❑ ❑ f) Solid waste disposal? ❑ O ❑ D g) Local or regional water supplies? O ❑ ❑ 191 The proposed projects could substantially alter communication systems in the event that existing facilities are �k to accommodate all of the participants in the market If this should occur,additional conduits or poles for •lecommunication equipment will need to be inserted in existing utility rights-of-way or the petitioners may seek ay to other rights-of-way. If the petitioners are forced to construct outside of the existing utility rights-of-waY. 9 000045 Mitigation Measure A is applicable. For work within the rights-of-way,see Mitigation Measure B in the Negative . Declaration. Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact XIII. AESTHETICS. Would the proposal: a) Affect a scenic vista or scenic highway? ❑. © ❑ ❑ b) Have a demonstrated negative aesthetic effect? ❑ © ❑ ❑ c) Create light or glare? ❑ ❑ ❑ The proposed projects will occur within utility rights of way that will be either be undergrounded or on existing poles. Undergrounded facilities will have no demonstrated negative aesthetic effects. However, landscaped utility rights-of-way may be impacted by trenching activities. Additional lines on the poles may be a concern,but the proposed cables are not easily discernible and will unlikely have a negative impact. The only scenario where an aesthetic effect can occur is if the number of competitors for a particular area become so heavy that the cables on the poles become excessive. There is potential for an increase in service.boxes if the boxes cannot be installed within buildings or underground. Should this occur,the petitioners should follow Mitigation Measures(B)and (1) described in the Negative Declaration. XIV,CULTURAL RESOURCES. Would the proposal: a) Disturb paleontological resources? ❑ 0 ❑ ❑ b) Disturb archaeological resources? ❑ © ❑ ❑ c) Affect historical resources? ❑ ® ❑ ❑ d) Have potential to cause a physical change which would affect unique ethnic cultural values? ❑ ® ❑ ❑ e) Restrict existing religious or sacred uses within the potential impact area? ❑ © ❑ ❑ The projects will involve existing utility facilities or established rights-of-way that are assumed to be clear from any paleontological,historical or archaeological resources. However,some projects may require excavation or trenching of utility rights-of-way,or outside the rights-of-way. If brown or unanticipated cultural resources are encountered during such work,then the Mitigation Measures(B)and(J)should be followed. See Negative Declaration for details. • 10 000040 Potentially • Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact XV. RECREATION. Would the proposal: a) Increase the demand for neighborhood or regional parks or other recreational facilities? ❑ ❑ ❑ p b) Affect existing recreational opportunities? ❑ ❑ ❑ O The projects will have no impact on recreational facilities or opportunities since these resources have no direction relationship to increased competition in local telephone services. XVI.MANDATORY FINDINGS OF SIGNIFICANCE. a) Does the project have the potential to degrade the quality of the environment,substantially reduce the habitat of a fish or wildlife species,cause a fish or wildlife population to drop below self-sustaining levels,threaten to eliminate a plant or animal community,reduce the number or restrict the range of a rare or endangered plant or animal,or eliminate important examples of the major periods of California history or prehistory? ❑ ❑ ❑ 0 b) Does the project have the potential to achieve short-term,to the disadvantage of long-term, environmental goals? ❑ ❑ ❑ c) Does the project have impacts that are individually limited,but cumulatively considerable?("Cumulatively considerable"means that the incremental effects of a project are considerable when viewed in connection with the effects of past projects,the effects of other current projects,and the effects of probably future projects.) ❑ ® ❑ D d) Does the project have environmental effects which will cause substantial adverse effects on human beings, either directly or indirectly? ❑ ❑ ❑ II 00004'7 Appendix A TELEPmvr*4rqtxCHANC7E & REAS { I CALIFORNIA PUBLIC UTILITIES COMMISSION 1{i 0 . lE0EN0 C= PACM BELL OM ' l 1 CONAL OP cALropip"(cn _ NUMSE.R"AAEA EOUHOAA=(NPAJ-APAA COPES' LATA GOUNCAFUES caul sPlllwcf ralRR a!!• � COUNTY LP94ES COUNTY kAWES I ® YAJ011 V.N CCOisdMATE KTi7lSECT10KS { �i��` �1- — .....—f1 AWS✓mlr�lrr o�ro�'aaa Q��IOI�a+lOrt EDrM61 �1 — f1 Y{Nr�•\M�m��waL ��/NN{�O • L ; .�� w '1'tljl �� ate.. � �.r �.s{Vtai•w a�w..w J. • � � � r '� .ar. r� �.^ti -..a... ter. ' ale- 1-r- .fir M �.I air �• �A �•m �• �� Ism=RIaYtAR4 salA/�a�O�...of , �►••�1a�a1�wr0 �•... t oft r � �•wantsat.s•eww-.. Y I• _ �ww+.�.aaa.�aar•� ` •1:�7 �1 I 1 r 2 t Ilk- J ............. ----------�- _ - � • 1 04$ APPENDIX B PROJECT SPONSORS AND ADDRESSES 1. Eagle Communications of California, LLC 60 East 56`"Street. 1.95-04-044 (Pet 132) New York,NY 10022 2. US Data Highway Corp. 1113 Hopkins Way 1.95-04-044 (Pet. 133) Pleasanton,CA. 94566 3. Seren Innovations, Inc. 15 South 5*Street,Suite 500 1.95-04-044 (Pet. 134) Minneapolis,MN 55402 4. HTC Communications,LLC 2131 N.Lamer Street 1.95-04-044 (Pet. 135) Burbank,CA 91504 5. Network Plus,Inc. 234 Copeland Street 1.95=04-044 (Pet. 136) Quincy,MA 02169 6. Campuslink Communications Systems, Inc. 1530 Eisenhower Place 1.95-04-044 (Pet. 137) Ann Arbor,Ml 48108 7. XL Networks,Inc. 909 Via Mirola 1.95-04-044 (Pet. 138) Palos Verdes Estates,CA 90274 8. Triad Communications Corporation 2420 Sand Hill Road 1.95-04-044 (Pet. 139) Menlo,Park,CA 94025 9. NTC Network,LLC 700 Wilshire Boulevard.7*Floor 1.95-04044 (Pet. 140) Los Angeles,CA 90017 • 000049 Appendix C Mitigation Monitoring Plan Competitive Local Carriers(CLCs) Projects for Local Exchange Telecommunication Service throughout California - Introduction: The purpose of this section is to describe the mitigation monitoring process for the CLCs' proposed projects and to describe the roles and responsibilities of government agencies in implementing and enforcing the selected mitigation measures. California Public Utilities Commission (Commission): The Public Utilities Code confers authority upon the Commission to regulate the terms of service and safety,practices and equipment of utilities subject to its jurisdiction. It is the standard practice of the Commission to require that mitigation measures stipulated as conditions of approval be implemented properly,monitored, and reported on. Section 21081.6 of the Public Utilities Code requires a public agency to adopt a reporting and monitoring program when it approves a.project that is subject to the adoption of a mitigated negative declaration. The purpose of a reporting and monitoring program is to ensure that measures adopted to mitigate or avoid significant environmental impacts are implemented. The Commission views the reporting and monitoring program as a working guide to facilitate not only the implementation of mitigation measures by the project proponents,but also the monitoring, compliance and reporting activities of the Commission and any monitors it may designate. The Commission will address its responsibility under Public Resources Code Section 21081.6 . when it takes action on the CLCs'petitions to provide local exchange telephone service. If the Commission adopts'the Negative Declaration and approves the petitions, it will also adopt this Mitigation Monitoring Plan as an attachment to the Negative Declaration. Project Description: The Commission has authorized various companies to provide local exchange telephone service in competition with Pacific Bell,GTE California, Roseville Telephone Company and Citizens Telephone Company of California. The current petitioners notified the Commission of their intent to compete in the territories throughout California,all of which are facilities-based services meaning that they propose to use their own facilities to provide service. 00005'0 Since many of the facilities-based petitioners are initially targeting local telephone service for areas where their telecommunications infrastructure is already established, very little construction is envisioned. However,there will be occasion where the petitioners will need to install fiber optic cable within existing utility underground conduits or attach cables to overhead lines. There is the possibility that existing utility conduits or poles will be unable to accommodate all the planned facilities,thereby forcing some petitioners to build or extend additional conduits into other rights-of-way, or into undisturbed areas. For more details'on the- project heproject description please.see Project Description in the Negative Declaration. Roles and Responsibilities: As the lead agency under the California Environmental Quality Act(CEQA),the Commission is required tomonitor this project to ensure that the required mitigation measures are implemented. The Commission will be responsible for ensuring full compliance with the provisions of this monitoring program and has primary responsibility for implementation of the monitoring program. The purpose of this monitoring program is to document that the mitigation measures required by the Commission are implemented and that mitigated environmental impacts are reduced to insignificance or avoided outright. Because of the geographic extent of the proposed projects, the Commission may delegate duties and responsibilities for monitoring to other environmental monitors or consultants as deemed necessary. For specific enforcement responsibilities of each mitigation measure, please refer to the Mitigation Monitoring Table attached to this plan. . The Commission has the ultimate authority to halt any construction, operation,or maintenance activity associated with the CLC's local telephone service projects if the activity is determined to .be a deviation from the approved project or adopted mitigation measures. For details refer to the mitigation monitoring plan discussed below. Mitigation Monitoring Table: The table attached to this plan presents a compilation of the Mitigation Measures in the Negative Declaration. The purpose of the table is to provide the monitoring agencies with a single comprehensive list of mitigation measures, effectiveness criteria,the enforcing agencies, and timing. Dispute Resolution Process: The Mitigation Monitoring Plan is expected to reduce or eliminate many potential disputes. However,in the event that a dispute occurs,the following procedure will be observed: 000051 Step 1: Disputes and complaints (including those of the public)shall be directed first to the Commission's designated Project Manager for resolution. The Project Manager will attempt to resolve the dispute. Step 2; Should this informal process fail,the Commission Project Manager may initiate enforcement or compliance action to address deviation from the proposed project or adopted Mitigation Monitoring Program. Step. 3: If a dispute or complaint regarding the implementation or evaluation of the Mitigation Monitoring Program or the Mitigation.Measures cannot be resolved informally or through enforcement or compliance action by the Commission,any affected participant in the dispute or complaint may file a written "notice of dispute" with the Commission's Executive Director. This notice shall be filed in.order to resolve the dispute in a timely manner, with copies concurrendy served on other affected participants. Within 10 days of receipt,the Executive Director or designee(s)shall meet or confer with the filer and other affected participants for purposes of resolving the dispute. The Executive Director shall issue an Executive Resolution describing his decision, and serve it on the filer and the other participants. Parties may also seek review by the Commission through existing procedures specified in the Commission's Rules of Practice and Procedure,although a good faith effort should first be made to use the foregoing procedure. • Mitigation Monitoring Program: 1. As discussed in Mitigation Measure B,the petitioners shall file a quarterly report which summarizes those projects which they intend to construct for the coming quarter. The report will contain a description of the project and its location,and a summary of the petitioner's compliance with the Mitigation Measures described in the Negative Declaration. The purpose of the report is to inform the local agencies of future projects so that coordination of projects among petitioners in the same locality can bedone. The quarterly report shall be filed with the appropriate planning agency of the locality where the project(s)will occur. The report shall also be filed as an informational advice letter with the Commission's Telecommunications Division so that petitioner compliance with the Mitigation Measures are monitored.. In order to ensure that the Mitigation Measures are fulfilled,the Commission will make periodic reviews of the projects listed in quarterly reports. The projects will be generally chosen at .random,although the Commission will review any project at its discretion. The reviews will follow-up with the local jurisdictions so that all applicable Mitigation Measures are addressed. 3 000052 If any project is expected to go beyond the existing utility rights-of-way, that project will require • a separate petition to modify the CPCN. The petitioner shall file the petition with the Commission and shall also inform the affected local agencies in writing. The local agencies are also responsible for informing the Commission of any project listed in the quarterly reports which may potentially go out of the existing utility right-of-way. As discussed in Mitigation Measure A, a complete environmental review of the project will be triggered under CEQA, with the Commission as the lead agency. .2. In the event that the petitioner and the local agency do not agree if a project results in work outside of the utility rights-of-way,the Commission will review the project and make the final determination. See Dispute Resolution Process discussed above. 3. For projects that are in the.utility rights-of-way,the petitioners shall abide by all applicable local standards as discussed in the Mitigation Measures. If a petitioner fails to comply with local regulatory standards by either neglecting to obtain the necessary permits,or by neglecting to follow the conditions of the permits,the local agency shall notify the Commission and Dispute Resolution Process begins.. 4. The Commission is the final arbiter for all unresolvable disputes between the local agencies • and the petitioners. If the Commission finds that the petitioner has not complied with the Mitigation Measures in the Negative Declaration, it may halt and terminate the project. 4 000053 c S .i tC u y it r u 4 41 0 o s a n z y V O �C ; � •G C � i A g G A m `^ F N � w a n c {� Ta p 13 o :A m = c s 0 C m moo+ 3 to _ �• � A app G A � V . $ o a•g' • 4 � n ' � o � � JD u o. � c s'� " c 'S' A •$ � � a m�. � c � $ A %' 5 's A t1 b _ ed x•1 < f o v u �5 �► 7 u o Ca 1 s o a is 415 ?03 2200 p.03�fl4 CPUC MgY_1?-2�1 1 :52 om m� CD m � " m N C rm, CL ii G �1 c O t]PO O A y = vl u ay C3 1O Q T Oa ` 0 a � m � d a � oES° $a m 3 0 a, vo o as $ � �,,� � $ g o. � �,: t►.a � a tr m c c 4 Zro 6 5 $ � i s '° o � v u a a i r•• r C • OJ n O ' c m m ° m2 m 5 = co ee v o cm M �4r m • a _qq J if F d S! v.+ •p oa a v � �L m Ci „ L" O O O ,►" �� , • � C o A m a% mg rs p a J o b 9g oo 'm"c a V 3 est » a t m L � O. a a p $ � glot 40 g � '� sr � �• � � Z� 8 � L � � � E a 0 w .o •� �° � 35 t ro o J (EKD4F AYPgKDIX D� • • • EXHIBIT B BEFORE THE PUBLIC UTILITIES COMMISSION ' OF THE STATE OF CALIFORNIA In the Matterof the Petition ) of Seren Innovations,Inc.for a ) Certificate of Public Convenience and ) I.95-04-044 Necessity to provide Competitive Local ) Petition No. Exchange,IntraLATA and InterLATA Service ) PETITION FOR CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY• Peter Glass,Esq. Peter A. Casciato General Counsel A Professional Corporation Seren Innovations,Inc. 8 California Street, Suite 701 15 South 5*Street,Suite 500 San Francisco CA 94111 Minneapolis MN 55402 Telephone:(415)291-8661F.-- Telephone: 91-8661Telephone:(612)330-6648 Facsimile: (415)291-8165 Facsimile: (612)330-5827 rn C.) - r.1 •- DATED: March 4, 1999 00005'7 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA In the Matter of the Petition ) of Seren Innovations,Inc. for a ) Certificate of Public Convenience and ) I.95-04-044 Necessity to provide Competitive Local ) Petition No. Exchange,IntraLATA and InterLATA ) Service ) 1 PETTI FOR CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY Seren Innovations,Inc.("Petitioner"),hereby respectfully requests a Certificate of Public Convenience and Necessity("CPCN")for authority to provide competitive local exchange ("CLC"), intraLATA and inter-State interLATA services in those geographical areas opened for local exchange competition as determined by this Commission. This Petition is filed pursuant to California Public Utilities Code Section 1001,Articles 4 and 5 of the Rules of Practice and Procedure of the Public Utilities Commission,and relevant Commission Decisions. By this Petition,Petitioner demonstrates that it possesses the sufficient technical experience and financial ability to provide the subject services,and that it complies with all legal and regulatory requirements for the requested CPCN. Pursuant to D.95-07-054,subsequent orders in R.95-04-043/1.95-04-044 to develop a competitive telecommunications market,Article I of Chapter 5 of the Public Utilities Code,and Sections 15-18 of the Commission's Rules of Practice and Procedure,Petitioner provides the following information: I. IDENTITY OF PETMONER[Rule 15(a)] Petitioner's name is Seren Innovations,Inc. It is a corporation created,organized and 1 000058 existing under the laws of the State of Minnesota,with its principal place of business located at 15 South 5"Street, Suite 500,Minneapolis,MN 55402. 2. CORRESPONDENCE [Rule 15(b)] Correspondence and communications regrading this Petition should be sent to: Peter A. Casciato A Professional Corporation 8 California Street,Suite 701 San Francisco CA 94111 Telephone: (415)291-8661 Facsimile: (415)291-8165 With a copy to: Peter Glass,Esq. General Counsel Seren Innovations,Inc. 15 South 5*Street,Suite 500 • Minneapolis MN 55402 Telephone: (612)330-6648 Facsimile: (612)330-5827 3. DESCRIPTION OF SERVICE [Rule 15] Consistent with the requirements of D.95-07-054 and other decisions in P,95-04- 043/1.95-04-044,as well as Commission decisions pertinent to intraLATA toll and interLATA resale,Petitioner intends to provide the following services: 1. Local Exchange Service-This service will give residential and business users the ability to originate and terminate calls to other users with access to the local exchange network. The local exchange service provided by Petitioner will also enable users to select the interexchange carrier of their choice. 2. Intereahange Carrier Access Service-This service will allow • 2 000059 • interexchange carriers to interconnect on a switched and dedicated basis with the local exchange network to originate and terminate calls. 3. Interexchange Service-This service will enable residential and business users to complete calls between exchanges within Petitioner's service territories. 4. Long Distance Resale-This service will be provided via the purchase of long distance service from facilities-based interexchange carriers. That service will then be resold to residential and business users. 4. CERTIFICATE OF QUALIFICATION AS FOREIGN CORPORATION [Rule 16(a)] A certified copy of the Petitioner's current Certificate of Qualification as a Foreign Corporation authorized to do business in California is attached to this Petition as Exhibit 1,as is • a copy of its Articles of Incorporation. Petitioner is a wholly owned subsidiary of Northern States Power Company("NSP")which,among other things,provides electric generation, transmission and distribution facilities in Minnesota, Wisconsin,North Dakota, South Dakota and Michigan. 5. DESCRIPTION OF THE PROPOSED CONSTRUCTION OR EXTENSION [Rule 18(a)] Petitioner initially proposes to construct a hybrid fiber coaxial("HFC") network in Contra Costa County capable of providing its customers the full range of telecommunications services,including those sought herein,as well as other communications not regulated by this Commission,such as cable television. The geographical extent of Petitioner's planned facilities- 3 000060 based network is illustrated by the service area map attached as Exhibit 2A to this Petition.' Petitioner, initially,will lease switching equipment and associated facilities to provide local exchange service. Thus,there will be virtually no construction or installation activities associated with that equipment,which will be carried out within existing commercial office space and will be routine in nature. 6. LIST OF COMPETING CARRIERS AND LOCAL AUTHORITIES [Rule 18(b)] As indicated by the appended certificate of service,Petitioner certifies that a copy of this Petition has been mailed to the official service list in R.95-04-043/1.95-04-044 as well as those facilities-based CLCs presently authorized by the Commission known to the Petitioner. Petitioner requests relief from the provisions of Rule 15(b)that require service of this Petition on cities and counties in California where its services will be provided given that Petitioner will not • construct or extend any facilities to provide the proposed services. That relief has been granted for similar Petitions in D.91-04-046(April 24, 199 1) and has routinely been allowed for other statewide telecommunications certificate Petitions filed before this Commission and in K95-04- 043/1.95-04-W. 7. PROPOSED AREA OF SERVICE [Rule 18(c)] Attached to this Petition as Exhibit 2A is a map showing the approximate location of Petitioner's planned facilities-based local exchange service area. Exhibit 2B encompasses ' To the extent Petitioner cannot extend its local exchange services to a bonafide prospective customer over Petitioner's own network facilities,Petitioner may purchase bundled services or unbundled network elements from other(LECs or CLECs,if available at economical prices. • 4 000061 • Petitioner's projected resale area. 8. IDENTIFICATION OF REQUIRED FRANCHISES AND HEALTH AND SAFETY PERMITS [Rule 18(d)] No municipal franchise will be required by Petitioner to provide the proposed local exchange and intrastate interexchange telecommunications services. In accordance with applicable state and local requirements,Petitioner will secure any necessary health and safety permits for the provision of services as described above in connection with the deployment of its network. Additionally, Petitioner's cable television operations, in accordance with applicable state and local law,will obtain the requisite health and safety permits related to the cable television plant to be made available for the use of Petitioner. 9. STATEMENT OF PUBLIC INTEREST [Rule 15(e)] • By its issuance of Decisions 95-07-054, 95-12-056 and 96-02-072, the Commission recognizes the benefits of competition for local exchange and intraLATA services. As a result, the Commission has granted Petitions for certificates to over 100 facilities-based and resale CLECs to provide local exchange and intraLATA and related services. Petitioner's proposed operations will serve the public interest by providing users of local exchange, intraLATA and interLATA service a further choice of carriers and high quality service,expanding the availability of technologically-advanced communications facilities in the state. 10. ESTIMATED ANNUAL FIRED AND OPERATING COSTS,ECONOMIC FEASIBILITY& FINANCIAL STATEMENT AND QUALIFICATIONS [Rules 17 and 18(fl,(g)] Petitioner has set forth its most recent financial statement as part of Exhibit 3. Pursuant to General Order 66-C,Petitioner has requested confidential treatment of its financial statement. 5 000062 Petitioner also submits,as Exhibit 4,the most recent SEC Form IOQ of its ultimate parent,NSP. Thus,Petitioner has cash or cash equivalents in excess of$100,000,as required by Commission Local Rule 4(B)as defined in Appendix C,thereto,and is,therefore,financially qualified to offer its services. 11. PROPOSED RATES [Rule 18(h)] Petitioner will offer its services pursuant to its tariffs,on a non-discriminatory basis. Attached as Exhibit 5 are Petitioner's illustrative tariffs relating to the rates,terms and conditions of its proposed local exchange telecommunications and other services: The illustrative tariff contains tentative rates and terms for all services to be offered,and consistent with the August 17, 1995 AI.J Ruling in R.95-04-043/1.95-04-044,these placeholder rates are specified in the tariff by *. Final rates will be filed before service is commenced. • 12. GENERAL ORDER 104-A STATEMENT [Rule 18(i)] As previously noted, attached as Exhibit 4 is a copy of the December 31, 1997 Form 10- K of NSP,Petitioner's parent company which satisfies the requirements of General Order 104-A and Rule 18(i),because Petitioner,itself,prepares no reports required under that General Order or Rule. 13. EXPECTED CUSTOMER BASE [Rule 18(j)] Pursuant to Rule 186),Petitioner's estimates of the number of customers who will subscribe to its proposed local exchange service at the end of its first and fifth years of service are set forth in Exhibit 6. Pursuant to General Order 66-C,Petitioner has requested confidentiality for these estimates due to their competitively sensitive and proprietary nature. 6 000063 14. TECHNICAL EXPERTISE [INITIAL RULE 4.A] Petitioner is currently authorized to provide local exchange services in Minnesota. Glynis Hinschberger,president and CEO of Petitioner,has more than 20 years of technical and management experience in the creation,marketing and maintenance of advanced communications systems. Jerry Compagnoli is Petitioner's Director of Network Operations and also has more than 2.0 years of management experience in the computer,aerospace and communications industries. Similarly,Brad Zuehlke,Petitioner's Manager,Telephony Implementation and Integration,also brings 21 years of telecommunications experience to Petitioner's management team. Thus,Petitioner has the requisite technical expertise.to receive the requested CPCN. 15. COMPLIANCE WITH RULE 17.1 (CEQA)-PROPONENT'S ENVIRONMENTAL ASSESSMENT Pursuant to Rule 17.1,and Initial Rule 4.C(2), a Proponent's Environmental Assessment ("PEA")meeting the requirements of the California Environmental Quality Act is provided as Exhibit 7. 16. DEMONSTRATION OF COMPLIANCE WITH COMIVIISSION RULES Exhibit 8 demonstrates Petitioner's compliance with Rule 18 of the Commission's Rules of Practice and Procedure governing the issuance of certificates of public convenience and necessity. 17. REQUEST FOR EXEMPTION Petitioner respectfully requests that,in connection with its authorization as a CLEC,it be accorded the same streamlined regulatory treatment previously accorded to other CLECs as a 7 000064 non-dominant interexchange carrier as set.forth in D.96-02-075 and as adopted by non-dominant interexchange carriers C NDIECs"),and including the following: L Petitioner seeks exemption from the provisions of PU Code Section 816-830 (pertaining to the issuance of stocks and securities)and PU Code Section 851 (pertaining to the transfer or encumbrance of utility assets when such transfer or encumbrance is for the purpose of securing debt). The Commission has previously concluded that NDIECs should be exempt from the provisions and requirements of PU Code Sections 816-830 and 851 (insofar as these sections pertain to the issuance of securities and transfer or encumbrance of utility property for purposes of securing debt) in D.85-07-081,D.85-11-044 and D.86-08-057,as confirmed by D,90-09-032. This exemption was extended to CLECs in D.96-02-072,ordering paragraph 18. 2. Petitioner also requests that it be accorded the exemptions afforded NDIECs from the requirements of General Order No.96-A regarding tariff pagination and the setting forth of each rule on a separate page,as granted by D.90-09-032. 3. Petitioner further requests that it be exempted from any requirement to maintain its books and records in accordance with the Uniform System of Accounts specified in Title 47 C.F.R. Part 32 consistent with D.99-02-038. 18. EX PARTE AUTHORIZATION AUTHORITY Petitioner requests that this Petition be granted upon an ex parte basis. Petitioner is prepared to offer its proposed telecommunications service at reasonable rates within a reasonably short period following Commission authorization. Such exap�rte action would enable Petitioner to meet competition. Petitioner is further requesting that arty decision granting Petitioner the authority herein 8 000065 requested become effective on date of issuance;that Petitioner be authorized to file tariffs five days after the effective date of the Commission's decision; and that such tariffs become effective one day after filing. Petitioner believes that the introduction of its proposed competitive innovative service provides ample public interest justification for its request. 19. MSCELLANEOUS - - This Petition is fully verified and contains the evidence which Petitioner believes fully supports the request authorization. If additional data or information are desired,Petitioner will promptly submit the same in verified form. 9 000066 20. CONCLUSION WHEREFORE,Petitioner requests that the California Public Utilities Commission authorize it to provide,to the extent previously determined by this Commission, (1) local exchange telecommunications service as a competitive local exchange carrier and(2)intraLATA and interLATA telecommunications services,within California DATED: March 4, 1999 Respectfully Submitted, SEREN INNOVATIONS,INC. OPeter Glass, Esq. General Counsel Seren Innovations,Inc. 15 South 5*Street, Suite 500 Minneapolis MN 55402 Telephone: (612)330-6648 Facsimile: (612)330-5827 Email: gisp02@nspco.com eter A. Casciato A Professional Corporation A/ California Street, Suite 701 San Francisco CA 94111 Telephone: (415)291-8661 Facsimile: (415)291-8165 Email:casciato@dnai.com Attorney for Seren Innovations,Inc. 10 00006'7 VERIFICATION I, Glynis Hinschberger,President of Seren Innovations, Inc.,do hereby verify that the information in the foregoing "Petition for a Certificate of Public Convenience and Necessity to Provide Competitive Local Exchange Service"and its exlu'bits are true, correct and complete to the best of my knowledge and belief. I verify that the foregoing is true under penalty of perjury. . Dated this Yd day of March, 1999 at Minneapolis,MN. 6�/+Lo HSI dye-" Gl s Hinschberger Pin ident Seren Innovations, Inc. Q O 000068 Exhibits 2 A 2A Seren Innovations,Inc. Service Area Maps 000069 ;�. .. �. • • ty ',/•��. � Kra, ?, ,r-wr � y 'X!';4 v � '� 1� • ~J"'7�"� is 1�a`C• 1 ,�,s ra.. `.;,`%t;`��r.4` � \ ` s?� i` j. �'�•� "^'1� .��y, '�•�+�:,-Y•'t'�Y �� .1'•%y�, c..•'I' -, �. '-}�S�j; ' 't""! ,.• ��t. •' � .� .t3,�'- At;lit.. � - - O� '.. •:. ,. >y �j ``";`'��.'f `�_ a- r ..A".i � �•.•'�`i� :'izt7 t ;,r1 s :.A �•Tt��• ',', 1. -{ :.1• .:i' - ' C:�'�<C!• =:i«' ,;: ,-:(a ;'r``Y�r>'' -' ''` :lu �r°'�:'�,-: ' '•{'"":t:'. '`:i - ; � .`may.. .�' � •��✓'�••. i'`� '-fie �,�.:, w�p •S ��I t`•� 1 '"-` '\•tet.' - r ( �, -. M •.,r"" � .Gt%'tea.♦`'-• . , •• � t�r�• � ,t `� •`�q � ~. ';a' ,.s r ice.'` : !, i,• '. Z _ j► � � � ,1�,j t M i t �D r,��a -��• s dw IL ..n' �:I�r:,r/ +�.y.Q� J. �1,';'�' .:. '_Y.� �L�ti c_i. •.�._ �t]• Cj ';� ;rte. it BEFORE THE PUBLIC UTILITIES COMNIISSION O OF THE STATE OF CALIFORNIA In the Matter of the Petition ) of Seren Innovations,Inc. for a ) Certificate of Public Convenience and ) I.95-044044 Necessity to provide Competitive Local ) Petition No. Exchange,IntraLATA and InterLATA ) Service ) Exhibit 7 PROPONENT'S ENVIRONMENTAL ASSESSMENT OF SEREN INNOVATIONS,INC. Pursuant to Rule 17.1 of the Rules of Practice and Procedure of the Public Utilities Commission,Applicant submits this assessment of the environmental impacts that would accompany the grant of its Petitioner. • 1. Petitioner seeks a Certificate of Public Convenience and Necessity to provide local exchange and related services,as a competitive exchange carrier authorized by this Commission. The Commission determined,in Decision No. 95-07-054(July 24, 1995), that competition in local exchange services is in the public interest and will promote the public convenience and necessity. 2. Petitioner's facilities-based telephone services will be provided using a hybrid fiber coaxial network built to provide cable television services. Initially,switching facilities will be leased from an existing provider. Petitioner's cable operations will address with local authorities the environmental issues applicable to such infrastructure 000072 prior to making such facilities available for telephony,as authorized by this Commission. OIn addition, Petitioner's cable operations will secure any required ministerial permits from the appropriate local entities. Petitioner's network facilities will be limited to existing rights of�way and the use of existing conduits or ducts in existing utility rights of way. If Petitioner ever intends to extend its construction local exchange facilities beyond the utility right-of-way into undisturbed areas or other right-of-way,Petitioner will file a Petition to Modify its Certificate of Public Convenience and Necessity,to the extent such modification is required by the Commission. 3. For these reasons,a grant of this Petition is reasonably certain to have no significant environmental impacts,within the meaning of the California Environmental Quality Act of 1970, Public Resources Code Sections 21000,et sea. and the petition fits within the "common sense"exception to CEQA, warranting a Negative Declaration. Similarly,no purpose would be served by completing the"Environmental Checklist Form"attached to Decision 89905(January 30, 1979), as every item would be checked no." The Commission should issue a Negative Declaration to that effect. 2 -000073 BEFORE THE BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA In the Matter of the Appeal of DECLARATION OF LILLIAN T. FUJII IN SUPPORT OF COUNTY STAFF SEREN INNOVATIONS, INC. REPORT AND RECOMMENDATION November 6, 2001 1, Lillian T. Fujii, declare as follows: 1. I am employed by the County of Contra Costa as a Deputy County Counsel in the County Counsel's Office. 2. I have been working with Cable TV Administrator Patricia Burke on the County's negotiations with Seren Innovations, Inc. ("Seren"). 3. Following Seren's application for encroachment permits, I requested and received copies of documents from Seren's attorney. True and correct copies of selected documents provided by Seren are attached hereto, including the following: A. Seren's Certificate of Public Convenience and Necessity (part), including Negative Declaration (14), copy attached hereto as Exhibit A, and numbered pages 1 - 56. B. Seren's Petition for Certificate of Public Convenience and Necessity and Attachment 7 thereto (Proponent's Environmental Assessment), attached hereto as Exhibit B, and numbered pages 57 - 73. I declare under penalty of perjury under the laws of the State of California the foregoing is true and correct. Executed onn(�IW30,2 at Martinez, California. T1 Lillian T. Fuj" Page 1 ALJ/TRP/ays Mailed 6/24/99 Decision 99-06-083 June 24, 1999 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Order Instituting Rulemaking on the Commission's Own Motion into Competition for Rulemaking 95-04-043 Local Exchange Service. (Filed April 26,-1995) Investigation 95-04-044 Order Instituting Investigation on the (Filed April 26, 1995) Commission's Own Motion into Competition for (Petition Nos. 132, 133, 134, Local Exchange Service. 135, 136, 137,138, 139 140, and 142) OPINION By this decision, we grant the petitions for certificates of public convenience and necessity (CPCN) to operate as facilities-based competitive local carriers (CLCs) and to offer resold local exchange services within the territories of Pacific Bell (Pacific),GTE California Incorporated (GTEC), Roseville Telephone Company (RTC), and Citizens Telephone Company (CTC), for those petitioners as set forth in Appendix B of this decision,subject to the terms and conditions included herein. We also grant petitioners' requests for intrastate interlocal Access and Transport Areas (interLATA) and intraLATA authority on a statewide basis as designated in Appendix B. I. Background We initially established rules for entry of facilities based CLCs in Decision (D.) 95-07-054. Under those procedures,we processed a group of candidates that filed petitions for CPCNs by September 1, 1995, and granted authority effective January 1, 1996,for qualifying CLCs to provide facilities-based competitive local 4sul - 1 - 000001 R.95-04-043,1.95-04-044 ALJ/TRP/ays exchange service in the territories of Pacific and GTEC. We authorized CLCs seeking to provide resale-based services to begin operations on March 1,1996. We further advised prospective entrants that any filings from nonqualifying CLCs, and any filing for CLC operating authority made after September 1, 1995, would be treated as standard applications and processed in the normal course of the Commission's business. By D.96-12-020,effective January 1, 1997,we instituted quarterly processing cycles for granting CPCN authority for facilities-based CLCs in order to streamline the approval process for these particular carriers. Since we had been processing the environmental impact review required under the California Environmental.Quality Act (CEQA) on a consolidated basis for groups of qualifying facilities-based CLCs, we concluded in D.96-12-020 that it would be more efficient and consistent to process other aspects of the CLC filings on a consolidated basis, as well. Accordingly, we directed that any CLC filing on or after January 1, 1997, for facilities-based CPCN authority was to make its filing in the form of a petition to be docketed in Investigation (I.) 95-04-M that would be processed quarterly on a consolidated basis. CLCs seeking only resale authority continued to file individual applications. On September 24, 1997,we adopted D.97-09-115 in which we extended the coverage of our adopted rules for local exchange competition to include the service territories of California's two midsized.local exchange carriers (MSLECs), RTC and CTC. In that decision, we also authorized candidates seeking CLC CPCN authority within the MSLECs' territories to immediately begin making filings following the applicable entry rules previously adopted in D.95-07-054 and subsequent decisions. Specifically,requests for CLC CPCN authority for facilities based service were to be filed in the form of a petition docketed in I.95-04-044,while resellers have sought authority through applications. In -2- 000002 R.95-04-043, I.95-04-044 ALJ/TRP/ays D.98-01-055,we approved the first group of petitions for facilities-based CPCNs to.offer local exchange service within the MSLEC territories. In this decision,we approve CPCNs for those facilities-based CLCs which filed petitions during the first quarter of 1999 and satisfied all applicable rules for certification as established in Rulemaking (R.) 95-04-043. The Petitioners identified in Appendix B will be authorized to begin offering service upon the filing of tariffs and compliance with the terms and conditions set forth in this order.. II. CEQA Review We have reviewed the petitions for compliance with CEQA. CEQA requires the Commission to assess the potential environmental impact of a project in order that adverse effects are avoided, alternatives are investigated, and environmental quality is restored or enhanced to the fullest extent possible. To achieve this objective, Rule 17.1 of the Commission's Rules requires the proponent of any project subject to Commission approval to submit with the petition for approval of such project a Proponent's.Environmental Assessment (PEA). The PEA is used by the Commission to focus on any impacts of the project which may be of concern,.and prepare the Commission's Initial Study to determine whether the project needs a Negative Declaration or an Environmental Impact Report(EIR). Based on its assessment of the facilities-based petitions and PEAs, the Commission staff prepared a Negative Declaration and Initial Study generally describing the facilities based Petitioners' projects and their potential environmental effects. The Negative Declaration prepared by the Commission staff is considered a Mitigated Negative Declaration (MND). This means that, although the initial study identified potentially significant impacts,revisions -3 000003 R.95-04-043, 1.95-04-044 ALJ/TRP/ays • which mitigate the impacts to a less than significant level have been agreed to by the Petitioners. (Pub. Res. Code§ 21080(c)(2).) A. Results of the Negative Declaration On April 29, 1999, the Negative Declaration and Initial Study were sent to various city and county planning agencies, as well as public libraries throughout the state for review and comment by May 28, 1999. The Commission staff prepared a public notice which announced the preparation of the draft negative declaration, the locations where it was available for review, and the deadline for written comments. The public notice was advertised in newspapers throughout the state. The draft Negative Declaration was also submitted to the Governor's Office of Planning and Research where it was circulated to affected state agencies for review and comment. Public comments on the draft Negative Declaration were reviewed and answered, as necessary. The Commission staff then finalized the NIND covering all facilities-based CLC petitions listed in Appendix B. The finalized MND includes a list of mitigation measures with which the CLCs must comply as a condition of their CPCN authority. The MND includes a Mitigation Monitoring Plan to ensure that the mitigation measures are followed and implemented as intended. A copy of the MND is attached to this decision as Appendix D. We hereby approve the MND as finalized by staff. Concurrently with our approval of the MND,we grant the request of the Petitioners in Appendix B for CPCN authority subject to the terms and conditions set forth in our order beiow. B. Required Payment of CEQA Deposit Commission Decision 97-04-046 stipulates that all petitioners for CLC authority must submit with their filing an initial payment of$2000 to cover CEQA costs. The$2000 payment is used to cover the Commission's costs for -4 - 000004 R.95-04-043, I.95-04-044 ALJ/TRP/ays preparing and publishing the Mitigated Negative Declaration for each qualifying petitioner,as required by CEQA law. As of the date of this order, the Commission has received payment of the required$2000 deposit from each of the CLCs, as identified in Appendix B. III. Review.of CPCN Petitions A. Overview The CLC petitions have been reviewed for compliance with the certification-and-entry rules (Rules) adopted in Appendices A and B of D.95-07-054 and subsequent decisions in R.95-04-043/I.95-04-044. Consistent with our goal of promoting a competitive market as rapidly as possible,we are granting authority to all of the facilities-based CLCs that filed during the first quarter of 1999 and met the Rules. The Rules are intended to protect the public against unqualified or unscrupulous carriers, while also encouraging and easing the entry of CLC providers to promote the rapid growth of competition. Petitioners had to demonstrate that they possessed the requisite managerial qualifications, technical competence,and financial resources to provide facilities-based local exchange service. Petitioners were also required to submit proposed tariffs which conform to the consumer protection rules set forth in Appendix B of D.95-07-054. In response to a notice of tariff deficiencies,the various petitioners submitted tariff corrections. Except for the outstanding deficiencies noted in Appendix C, the petitioners' proposed tariffs are found to be satisfactory with no deficiencies noted. As prescribed in Rule 4.13.(1), prospective facilities based CLCs must also show that they possess a minimum of$100,000 in cash or cash-equivalent resources,as defined in the Rules. In order to demonstrate that they possess the requisite financial resources,petitioners submitted copies of recent financial -5 - 000005 R.95-04-043, 1.95-04-044 ALJ/TRP/ays statements. Because the financial statements contain commercially sensitive information, the petitioners filed motions for limited protective orders to restrict the financial statements and related documents containing commercially- - sensitive information from public disclosure pursuant to General Order (GO) 66-C. We grant those motions as prescribed in our order below. Based upon our review, we conclude that each of the facilities-based Petitioners identified in Appendix B, has satisfactorily complied with our certification requirements for entry, including the consumer protection rules set forth in D.95-07-054, subject to correcting any tariff deficiencies in Appendix C, payment of the required CEQA deposit, and satisfying the additional conditions set forth in the ordering paragraphs below. Accordingly,we grant these Petitioners authority to offer facilities-based and resold local exchange service within the territories of Pacific and GTEC and, where requested, within the CTC and RTC territories. We also grant the statewide inter-and intraLATA authority as requested. Pursuant to D.97-09-115,CLC resale authority within the RTC and CTC territories was authorized to become effective on or after April 1, 1998. As we stated in D.97-09-115, until the time that tariffed wholesale discount rates are adopted for RTC and CTC, individual CLCs certificated to resell local service within the CTC/RTC territories may enter into negotiations with each of the MSLECs to seek agreement on an interim wholesale discount rate. Disputes over the terms of resale arrangements may be submitted to the Commission for arbitration pursuant to the provisions of Section 252(b)(1) of the Telecommunication Act of.1996 and Commission Resolution ALJ-174. -6- 00000E R.95-04-043, I.95 ALJ/TRP/ays B. Motion of DSLnet DSLnet Communications,LLC ("DSLnet"), attempted to file a petition (# 142) for CLC local exchange authority on March 31, 1999, with the intention of being included in the Commission's quarterly "batch" review of such petitions filed during the first quarter of 1999. However, DSLnet subsequently learned that, due to certain confusion surrounding whether DSLnet's Petition was complete for purposes of the Commission's review, the Commission did not technically accept DSLnet's petition until April 13, 1999. As a result,it is now too late for DSLnet's Petition to be included in the Commission's quarterly review process for such petitions filed during the first quarter of 1999, at least to the extent DSLnet seeks facilities-based authority. Nonetheless, in order to allow DSLnet to initiate competitive telecommunications service in California as soon as possible, DSLnet filed a motion on May 4, 1999, asking the Commission to: (1) immediately consider the portion of DSLnet's Petition seeking authority to resell local exchange telecommunications services, and (2) consider the portion of DSLnet's Petition seeking facilities-based authority in the Commission's quarterly review process for Petitions filed during the second quarter of 1999. No party has objected to the motion of DSLnet. We consider the request of DSLnet for consideration of the resale portion of its petition in the current quarterly review to be reasonable, under the circumstances and shall grant it. Due to the timing requirements relating to the D&tigated Negative Declaration, DSLnet's request for facilities based authority cannot be considered during the.current quarter,but shall be deferred to the subsequent quarterly review period. -7- 000007 R.95-04-043, I.95- ALJ/TRP/ays .IV. Compliance With Section 311 In compliance with Pub.Util. Code Section 311 (g)(2), this is an uncontested matter in which the decision grants the relief requested. Accordingly,pursuant to Pub. Util. Code Section 311(8)(2), the otherwise applicable 30-day period for public review and comment is being waived. Findings of Fact 1. Nine petitioners filed requests during the first quarter of 1999 seeking a CPCN to provide competitive local exchange services in the territories of various California incumbent local exchange carriers as set forth in Appendix B. 2. An additional petitioner, DSLnet attempted to file during the first quarter, but the filing was not actually docketed until April 13, 1999. DSLnet subsequently filed an uncontested motion seeking to have its request for CLC resale authority to be considered as part of the first quarterly group of CLCs. 3. No protests to the CLC petitioners have been filed. 4. A hearing is not required. 5. By prior Commission decisions,we authorized competition in providing local exchange telecommunications service within the service territories of Pacific,GTEC, RTC, and CTC for carriers meeting specified criteria. 6. The Petitioners listed in Appendix B have demonstrated that each of them has a minimum of$100,000 in cash or cash equivalent reasonably liquid and readily available to meet its start-up expenses. 7. Petitioners' technical experience is demonstrated by supporting documentation which provides summary biographies of their,key management personnel. 8. Except as noted in Appendix C, Petitioners have each submitted a complete draft of their initial tariff which complies with the requirements -8 - 000008 R.95-04-043, 1.95-04-0 ALJ/TRP/ays established by the Commission, including prohibitions on unreasonable deposit requirements. 9. Commission D.97-04-046 stipulates that all petitioners for CLC authority must submit with their filing an initial payment of$2,000 to cover the Commission's costs for preparing and publishing the Mitigated Negative Declaration pursuant to CEQA. 10. Each of the CLCs, as identified in Appendix B,has submitted the required $2,000 CEQA deposit as of the date of this order. 11. By D.97-06-107,petitioners or applicants for CLC authority are exempt from Rule 18(b). 12. Exemption from the provisions of Pub. Util. Code§§816-830 has been granted to other nondominant carriers. (See, e.g., D.86-10-007 and D.88-12-076.) 13. The transfer or encumbrance of property of nondominant carriers has been exempted from the_requirements of Pub. Util. Code § 851 whenever such transfer or encumbrance serves to secure debt. (See D.85-11-044.) Conclusions of Law 1. Each of the Petitioners listed in Appendix B has the financial ability to provide the proposed services, and has made a reasonable showing of technical expertise in'telecommunications. 2. Public convenience and necessity require the competitive local exchange services to be offered by Petitioners subject to the terms, conditions,and restrictions set forth below. 3. Each Petitioner is subject to: a. The current 0.0% surcharge applicable to all intrastate services except for those excluded by D.94-09-065,as modified by D.95-02-050,to fund the Universal Lifeline Telephone Service (Pub. Util. Code§879; Resolution T-16245, December 3, 1998); -9 - 000009 R.95-04-043, I.95ALJ/TRP/ays b. The current 0.192% surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California Relay Service and Communications Devices Fund (Pub. Util. Code§2881; Resolution T-16234; D.98-12-073, , December 17, 1998); C. The user fee provided in Pub. Util. Code §§431-435, which is 0.11 of gross intrastate revenue for the 1998-1999 fiscal year(Resolution M4789); d. The current surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California High Cost Fund-A (Pub. Util. Code§ 739.30; D.96-10-066,pp.3-4, App. B, Rule 1.C; Resolution T-16242 at 0.0% for 1999, December 3, 1998); e. The current 3.8% surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California High Cost Fund-B (D.96-10-066, p. 191, App. B, Rule 6.F., Resolution T-16244, December 3, 1998); and, f. The current 0.05% surcharge applicable to all intrastate' services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California Teleconnect Fund (D.96-10-066,p. 88,App. B, Rule 8.G, Resolution T-16165; August 1, 1998). 4. Petitioners should be exempted from Rule 18(b). 5. Petitioners should be exempted from Pub. Util. Code§§816-830. 6. Petitioners should be exempted from Pub. Util. Code § 851 when the transfer or encumbrance serves to secure debt. 7. Each of the Petitioners must agree to, and is required to, carry out any specific mitigation measures adopted in the Mitigated Negative Declaration (MND),attached as Appendix D, in compliance with CEQA. - 10 - 000010 MR.95-04-043, I.95 ALJ/TRP/ays 8. With the incorporation of the specific mitigation measures in the final MND, the Petitioners' proposed projects will not have potentially significant adverse environmental impacts. 9. The Petitioners should be granted CPCNs subject to the terms,conditions, and restrictions set forth in the order below. 10. Any CLC which does not comply with our rules for local exchange competition adopted in R.95-04-043 shall be subject to sanctions including,but not limited to,revocation of its CLC certificate. ORDER IT IS ORDERED that: 1. A certificate of public convenience and necessity (CPCN), shall be granted to each of the Petitioners listed in Appendix B (Petitioners) to permit each of them to operate as a facilities-based provider of competitive local exchange telecommunications services, as a reseller of competitive local exchange telecommunications services within the service territories as noted in Appendix B and, as a statewide nondominant interexchange carrier (NDIEC), as noted in Appendix B, contingent on compliance with the terms identified in Appendix B and in the remainder of this order. 2. Each Petitioner shall file a written acceptance of the certificate granted in this proceeding prior to commencing service. 3. a. The Petitioners are authorized to file with this Commission tariff schedules for the provision of competitive local exchange,intraLATA (Local Access Transport Area) toll and intrastate interLATA services, as applicable. The Petitioners may not offer these services until tariffs are on file, and until any applicable deficiencies as noted in Appendix C have been corrected. Petitioners' - 11 - 000011 R.95-04-043, 1.95-04-044 ALJ/TRP/ays initial filing shall be made in accordance with General Order (GO) 96-A, excluding Sections IV,V,and VI, and shall be effective not less than one day after approval by the Telecommunications Division. b. The Petitioners are competitive local carriers (CLCs). The effectiveness of each of their future tariffs is subject to the schedules set forth in Decision (D.) 95-07-054, Appendix A,§4E. A. "E. CLCs shall be subject to the following tariff and contract-filing, revision and service-pricing standards: "(1) Uniform rate reductions for existing tariff services shall become effective on five (5) working days' notice to the Commission. Customer notification is not required for rate decreases. "(2) Uniform major rate increases for existing tariff services shall become effective on thirty (30) days' notice to the Commission, and shall require bill inserts, or a message on the bill itself, or first class mail notice to customers at least 30 days in advance of the pending rate increase. "(3) Uniform minor rate increases, as defined in D.95-07-054, shall become effective on not less than five (5) working days' notice to the Commission.Customer notification is not required for such minor rate increases. "(4) Advice letter filing for new services and for all other types of tariff revisions,except changes in text not affecting rates or relocations of text in the tariff schedules, shall become effective on forty (40) days' notice to the Commission. "(5) Advice letter filings revising the text or location of text material which do not result in an increase in any rate or charge shall become effective on not less than five (5) days' . notice to the Commission. "(6) Contracts shall be subject to GO 96-A rules for NDIECs, except interconnection contracts. - 12- 000012 R.95-04-043, 1.95-04-* ALJ/TRP/ays "(7) CLCs shall file tariffs in accordance with Public Utilities (Pub. Util.) Code Section 876." 4.. The Petitioners may deviate from the following provisions of GO 96-A: (a) paragraph H.C.(1)(b), which requires consecutive sheet numbering and prohibits the reuse of sheet numbers, and (b) paragraph II.C.(4),which requires that "a separate sheet or series of sheets should be used for each rule." Tariff filings incorporating these deviations shall be subject to the approval of the . Commission's Telecommunications Division. Tariff filings shall reflect all fees and surcharges to which Petitioners are subject, as described in Conclusion of Law 3. Petitioners are also exempt from GO 96-A Section II.G.(1) and (2) which require service of advice letters on competing and adjacent utilities, unless such utilities have specifically requested such service. 5. Each Petitioner shall file as part of its initial tariffs, after the effective date of this order and consistent with Ordering Paragraph 3, a service area map. 6. Prior to initiating service, each Petitioner shall provide the Commission's Consumer Services Division with the Petitioner's designated contact persons for purposes of resolving consumer complaints and the corresponding telephone numbers. This information shall be updated if the names or telephone numbers change or at least annually. 7. Where applicable,each Petitioner shall notify this Commission in writing* of the date local exchange service is first rendered to the public within five days after service begins. The same procedure shall be followed.for the authorized intraLATA and interLATA services,where applicable. 8. Each Petitioner shall keep its books and records in accordance with generally accepted accounting principles. - 13 - 0000lii R.95-04-043, I.95 ALJ/TRP/ays 9. Petitioners shall each file an annual report, in compliance with GO 104-A, on a calendar-year basis using the information-request form developed by the Commission Staff and contained in Appendix A. 10. Petitioners shall ensure that its employees comply with the provisions of - Pub. Util. Code§ 2889.5 regarding solicitation of customers. 11. The certificate granted and the authority to render service under the rates, charges, and rules authorized will expire if not exercised within 12 months after the effective date of this order. 12. The corporate identification number assigned to each Petitioner, as set forth in Appendix B, shall be included in the caption of all original filings with this Commission, and in the titles of other pleadings filed in existing cases. 13. Within 60 days of the effective date of this order, each Petitioner shall comply with Pub. Util. Code§708,Employee Identification Cards, reflecting its authority, and notify the Director of the Telecommunications.Division in writing of its compliance. 14. Each Petitioner is exempted from the provisions of Pub. Util. Code §§ 816-830. 15. Each Petitioner is exempted from Pub. Util. Code§851 for the transfer or encumbrance of property, whenever such transfer or encumbrance serves to secure debt. 16. If any Petitioner is 90 days or more late in filing an annual report or in remitting the fees listed in Conclusion of Law 4,Telecommunications Division shall prepare for Commission consideration a resolution that revokes that Petitioner's CPCN, unless that Petitioner has received written permission from Telecommunications Division to file or remit late. - 14 - 0.00014 R.95-04-043,I.95-04-O��ALJ/TRP/ays 17. The Final Mitigated Negative Declaration, including the Mitigation Monitoring Plan, attached as Appendix D of this decision is hereby approved and adopted. 18. Each of the Petitioners listed in Appendix B shall comply with the conditions and carry out the mitigation measures outlined in the adopted Mitigated Negative Declaration. 19. Each of the Petitioners shall provide the Director of the Commission's Energy Division with reports on compliance with the conditions and implementation of mitigation measures under the schedule outlined in the Mitigated Negative Declaration. 20. Petitioners shall comply with the consumer protection rules set forth in Appendix B of D.95-07-054. . 21. Petitioners shall comply with the Commission's rules for local exchange competition in California that are set forth in Appendix C of D.95-12-056, including the requirement that CLCs shall place customer deposits in a protected, segregated,interest-bearing escrow account subject to Commission oversight. 22. Petitioners shall comply with the customer notification and education rules adopted in D.96-04-049 regarding the passage of calling party number. 23. Petitioners' respective motions for a limited protective order keeping designated documents containing financial and other operating information confidential are granted. Such documents will remain under seal for one year from today unless a petitioner makes a timely request for extension of confidential treatment of its documents by filing a separate motion with good cause shown. 24. The motion of DSLnet to have the resale portion of its CLC petition considered in the current quarterly cycle is granted. - 15 - 000015 R.95-04-043, I.95ALJ/TRP/ays • 25. The petitions listed in Appendix B are granted only as set forth above. This order is effective today. Dated June 24, 1999, at San Francisco,California. RICHARD A. BILAS President HENRY M. DUQUE JOSIAH L. NEEPER JOEL Z. HYATT CARL W. WOOD Commissioners - 16 - 000016 R.95-04-043, 1.95-04-LO ALJ/TRP/ays APPENDIX A Page 1 of 2 TO: ALL COMPETITIVE LOCAL CARRIERS AND INTEREXCHANGE TELEPHONE UTILITIES Article 5 of the Public Utilities Code grants authority to the California Public Utilities Commission to require all public utilities doing business in California to file reports as specified by the Commission on the utilities'California operations. A specific annual report form has not yet been prescribed for the California interexchange telephone utilities. However, you are hereby directed to submit an original and two copies of the information requested in Attachment A no later than March 31St of the year following the calendar year for which the annual report is submitted. Address your report to: California Public Utilities Commission Auditing and Compliance Branch, Room 3251 505 Van Ness Avenue San Francisco, CA 94102-3298 Failure to file this information on time may result in a penalty as provided for in §§ 2107 and 2108 of the Public Utilities Code. If you have any question concerning this matter,please call (415) 703-1961. 000017 R.95-04-043, I.95-04-040ALJ/TRP/ays • APPENDIX A Page 2 of 2 Information Requested_ of California Competitive Local Carriers and Interexchange Telephone Utilities. To be filed with the California Public Utilities Commission,505 Van Ness Avenue, Room 3251,San Francisco,CA 94102-3298,no later than March 31st of the year following the calendar year for which the annual report is submitted. 1. Exact legal name and U#of reporting utility. 2. Address. 3. Name,title, address, and telephone number of the person to be contacted concerning the reported information. 4. Name and title of the officer having custody of the general books of account and the address of the office where such books are kept. S. Type of organization (e.g.,corporation,partnership,sole proprietorship,etc.). If incorporated,specify: a. Date of filing articles of incorporation with the Secretary of State. b. State in which incorporated. 6. Commission decision number granting operating authority and the date of that decision. 7. Date operations were begun. 8. . Description of other business activities in which the utility is engaged. 9. A list of all affiliated companies and their relationship to the utility.State if affiliate is a: a. Regulated public utility. b. Publicly held corporation. 10. Balance sheet as of December 31st of the year for which information is submitted. 11. Income statement for California operations for the calendar year for which information is submitted. (END OF APPENDIX A) 000018 R.95-04-043, 1.95-0440 ALJ/TRP/ays • - APPENDIX B , Page 1 of 1 i LISTING OF PETITIONERS GRANTED CPCN AUTHORITY, Requested Authorit�� Granted % Statewide Name of Petitioner Petition Utility Local Exch azi el Inter/Intra-' No. U-No. Facilities-based Resale LATA 1. Eagle Communications of 132 U-6182C X X California, LLC 2. US Data Highway Corp.; 133 U-6183C X 3. Seren Innovations, Inc. 2 1 U-6184C X X X 4. HTC Communications, LLC 2 135 U-61853Z X X X S. Network Plus, Inc. 136 U-61§6C X X X 6. Campuslink Communications 137 U-6 87C X X X Systems, Inc.2 7. XL Networks, Inc. 138 /U-6188C X X X 8. Triad Communications 139 U-6189C X X X Corporation- 9. NTC Network, LLC2 1 C U-6190C X X X 10. DSLnet Communications, 42 U-6191C X LLC 3 1 Un/ities-based ' indicated, the authorized local exchange service territory of each CLC 'ted to the ILEC service territories of Pacific,GTEC. 2 Thlocal exchange territory for this carrier encompasses the ILEC service terrcific,GTEC,RTC,and CTC. 3 Thased portion of the DSLnet petition shall be considered during the next quaperiod. 000019 " 1 OCT-12-99 08:57 FROM:P.A.C. • 415-291-9165 T0: 7 POSE:004/032 R.95-04-043, 1.95-04-044 ALJ/TRP/ays APR 10 2001 APPENDIX B (Corrected) COUNTY Page 1 MARTIN COUNSEL g �. CALIF. LISTING OF PETITIONERS GRANTED CPCN AUTHORITY Requested Authority Granted Statpwide Name of Petitioner Petition Utility Local Exchange' Inter/Intra- No. U No. Facilities-based Resale LATA 1. Eagle Communications of 132 U-61820 X X California,LLC 2. US Data Highway Corp.', 133 U-6183C X X 3. Seren Innovations,Inc. 134 U-6184C X X X 4. HTC Communications,LLC135 U-6185C X X X 5. Network Plus,Inc. 136 U-6186C X X X 6. Campuslink Communications 137 U-6187C X X X Systems, Inc.' 7. XL Networks, Inc. 138 U-6188C X X X 8. Triad Communications 139 U 6189C X X X Corporation' 9. NTC Network, LW 140 U-6190C X X X 10. DSLnet communications,LLC' 142 U-61910 x 'Unless otherwise indicated,the authorized local exchange service territory of each CLC petitoner is limited to the ILEC service territories of Pacific,GTEC. 'The authorized local exchange territory for this carrier encompasses the 1LEC service territories of Pacific,GTEC,RTC,and CTC. 'Thee facilities-based portion of the DSLnet petition shall be considered during the next quarterly review period. (END OF APPENDIX B) 000020 R.95-04-043, I.95-04-AALJ/TRP/ays* • APPENDIX C LIST OF CLC Tariff Deficiencies Page 1 of 4 Eagle Communications, Pet. 132 Eagle Communications was to file a supplement to its petition as previously requested by the Telecommunications Staff to correct the many deficiencies to its tariffs. To date,it has not filed a supplement to correct the identified deficiencies. Eagle must file a revised set of tariffs that fully comply with D.95-07-054, D.95-12-056, D.95-12-057,D:96-04-049. Network Plus — Pet. 136 Deficiencies in Network Plus's Proposed Tariffs 1. On each tariff sheet, (1) replace the phrase above the top horizontal line "Local Exchange Services" to "Competitive Local Carrier Tariff" and (2) add a vertical line on both the left and right margins. 2. Sheet No. 3, Preliminary Statement, 1.1, last paragraph. Replace the phrase "to resell local exchange telecommunications services within the State of California" to "to provide facilities-based and resale local exchange services as a competitive local carrier in the service areas of Pacific BeII, GTEC, Citizens and Roseville Telephone Companies." 3. Sheet No. 13, Rule 1, Definitions. Include the definitions adopted in Decision 95-07-054 for: (1) Major Rate Increase, and (2) Minor Rate Increase. 4. Sheet No. 17,Rule 3, Customer Application for Service. Revise tariffs to fully comply with the provisions of Rule 2,Appendix B of Decision 95-07-054, (e.g.,service initiation based on a written or oral agreement; confirmation letter 000021 R.95-04-043, 1.95-04-A ALJ/TRP/ays* • APPENDIX C LIST OF CLC Tariff Deficiencies Page 2 of 4 5. briefly describing services, in case of an oral agreement;statement of terms/conditions for all new customers,etc.). 6. Sheet No. 18, Rule 5,Contracts and Agreements. Delete language re effectivity on five days' notice for "subsequent completed contracts." All contracts shall be subject to the 40-day notice until revised by the Commission. 7. Sheet No. 19. (1) Rule 6, Special Information Required on Forms. Revise tariff language to fully comply with the provisions of Rule 3 (A) and (B), Appendix B of Decision 95-07-054. (2) Rule 7, Establishment and Re-establishment of Credit. Include language on situations when deposits are not required. (See Rule 4, Appendix B of Decision 95-07-054.) 8. Sheet No. 20. (1) Rule 8, Advance Payments. Revise tariff language to indicate that advance payments shall be credited on the customer's first bill. (2) Deposits. Include language on the interest rate to be added to deposits. (See Rule 5, Appendix B of Decision 95-07-054.) 9. Sheet No. 21, Rule.9, Notices. (1) Revise tariff to indicate that cancellation of service by customers may be either verbal or written. (2) Include tariff language on rates and rate revisions and information on notices of discontinuance by a competitive local carrier. (See Rule 6,Appendix B of Decision 95-07-054.) 10. Sheet No. 22,Rule 10,Cancellation of Service by Company. Revise tariff to indicate that notice of discontinuance of service by a company for nonpayment of bills shall be provided in writing by first class mail to the customer not less than 7 calendar days prior to termination. 000022 R.95-04-043, I.95-A ALJ/TRP/ays* APPENDIX C LIST OF CLC Tariff Deficiencies Page 3 of 4 11. Sheet No. 25,Rule 16,Rendering and Payment of Bills. Note that a five-month back billing period for error files and one and one-half years back billing period for fraud are applicable only to interexchange service providers. Revise tariff accordingly. (See Decision 88-09-061.) 12. Sheet Nos. 27 through 31, Liability of the Company. Adopt either Pacific Bell's or GTEC's limitation of liability. The limitation of liability of these companies are appended to Decision 95-12-057. 13. Sheet 36,Rule 25, Additional Provisions, etc.,Section D. Include language, to indicate that deposits will be refunded with interest within 30 days after discontinuance of service or 12 months of service,whichever comes first. 14. Sheet 37,Rule 26, Additional Provisions, etc. Comply with the back billing provisions of Decision 88-09-061 for local exchange service providers. 15. Sheet 68,Custom Calling Services. Briefly describe each feature. Delete any reference to Caller ID service. This service can only be provided upon compliance with the customer notification and education rules adopted in Decision 96-04-049. 16. Sheet 72,Taxes and Surcharges. Update the applicable California surcharges. The current surcharges are: (1) Reimbursement Fee-0.11%; (2) LILTS -0.00%; (3) CHCF-A-0.00%; (4) CHCF-B -3.8%; (5) California Relay Service&Communications Devices Fund-0.192%; (6) California Teleconnect Fund-0.05%. 17. Include tariffs on: (1) Directories, (2) Non-published service, (3) Demarcation points, (4) Pro-rating of bills, (5) Change of service provider, 000023 R.95-04-043,1.95-04-044 ALJ/TRP/ays* APPENDIX C LIST OF CLC Tariff Deficiencies Page 4 of 4 18. (6) Blocking of 976/900 calls, (7) Access to 911 by residential customers disconnected for nonpayment, (8) Switched access, (9) Number portability, (10) Privacy, (11) Universal Lifeline Telephone Service (ULTS) rates and income limitations, and (12) Sample forms. The forms may be filed with the company's initial tariff filing. (See Decision 95-07-054.) NTC Network, LLC — Pet. 140 NTC has to file a full set of tariffs in compliance with D.95-07-054,etc. (END OF APPENDIX Q 000024 R.95-04-043, I.95-04-041►LJ/TRP/ays APPENDIX D 00002, NEGA'T'IVE DECLARATION (14) Competitive Local Carriers' (CLCs) Projects for Local Exchange Telecommunications Service throughout California. The subject of this Negative Declaration are nine current petitions/applications for authorization to provide facilities based local telephone services. (See Appendix B). The California Public Utilities Commission is the lead agency in approving these petitioners' intent to compete in the local exchange market. Additional approvals by other agencies may be' required depending upon the scope and type of construction proposed by the petitioner(e.g. federal, other state agencies, and ministerial permits by local agencies). Because the subject projects of the nine current petitioners are similar,with some modifications, to the projects proposed by the past petitioners,the Commission incorporates, in whole,Negative Declaration 13 for these nine petitionstapplications, and will refer to the incorporated documents as"Negative Declaration 14"(Section 15150 of CEQA Guidelines). The public comment period for the Draft Negative Declaration 14 begins on April 29, 1999 and expires on May 28, 1999. Comments should be addressed to: John Boccio, Project Manager, California Public Utilities Commission,Energy Division, 505 Van Ness Avenue, San Francisco, CA 94102,Fax: (415) 703-2200, E-Mail:jbx@cpuc.ca.gov. For further information call Mr. Boccio at(415) 703-2641. BACKGROUND The California Public Utilities Commission's Decision 95-07-054 enables telecommunications companies to compete with local telephone companies in providing local exchange service. . Previous to this decision, local telephone service was monopolized by a single utility per service territory. The Commission initially received 66 petitions from companies to provide competitive local telephone service throughout areas presently served by Pacific Bell and GTE California. The 66 petitioners included cable television companies,cellular(wireless)companies,' long- distance service providers, local,telephone service providers, and various other telecommunication companies that specialize in transporting data. Forty of the sixty-six petitions were for approval of facilities-based services,which means that the petitioners proposed to use their own facilities in providing local telephone service. The remaining 26 petitions were strictly for approval of resale-based services,meaning that telephone 1 Wireless companies covered in the Negative Declarations adopted by the Commission for entry in the local telephone market are also subject to Commission General Order(G.O. 159A). G.O. 159A..delegates to local governments the authority to issue discretionary permits for the approval of proposed sites for wireless facilities. Commission adoption of the Negative Declarations is not intended to supersede or invalidate the requirements contained in General Order 159A. 1 F 00002G" service will be resold using another competitor's facilities. (Most of the facilities-based petitioners offer resale-based services as well.) The 40 facilities-based petitions indicated that physical modifications to existing facilities may be required, and construction of new facilities was a possibility in the long-term. The 26 resale-based petitions were strictly financial and billing arrangements that involved no construction and were therefore considered to be exempt from the California Environmental Quality Act(CEQA)(Public Resources Code Sections 21000 et seq.). The Commission issued a draft Negative Declaration for the initial 40 facilities-based petitioners in October 1995. Comments on the draft Negative Declaration covered issues such as traffic congestion,public safety, cumulative impacts, aesthetic impacts,and physical wear on streets. These comments were addressed and the Negative Declaration was modified to some extent in response to the comments. In December 1995, Commission Decision D.95-12-057 adopted a final mitigated Negative Declaration finding that the proposed projects of the initial 40 facilities- based petitioners would not have potentially significant environmental effects with specified mitigation measures incorporated by the.projects. Following the adoption.of D.95-12-057,the Commission received eight additional petitions for facilities-based services. The eight petitioners included cable television companies, resale-based providers approved by D.95-12-057,and other telecommunication companies. Following the public comment period,the Commission made minor modifications to the first Negative Declaration, and in September 1996,the Commission adopted the second Negative Declaration for these eight companies(D.96-09-072). (This Negative Declaration is sometimes referred to as "Negative Declaration II"). In January 1997,the Commission adopted a third Negative Declaration for eight more facilities-based petitioners. "Negative Declaration III"is virtually the same document as Negative Declaration II because the proposed projects of the eight petitioners were no different from the projects proposed by the two groups of petitioners that preceded them. Following the issuance of Negative Declaration III,ten subsequent Negative Declarations, Negative Declaration IV(D.97-04-011),Negative Declaration V(D.97-06-100),Negative Declaration VI (D.97-09-110),Negative Declaration VII (D97-12-084),Negative Declaration IX (D.98-03-066),Negative Declaration X(D.98-06-067),Negative Declaration I I (D.98-09-66), and Negative Declaration 12(D.98-12-083)and Negative Declaration 13 (D.99-03-050)have been adopted by the Commission in granting authority to provide facilities based local telecommunication services under essentially the same circumstances. (Negative Declaration VIII addressed telecommunication companies petitioning to provide services in the Roseville Telephone Company and Citizens Telephone Company of California service areas only). Negative Declaration IV addressed nine petitioners,Negative Declaration V addressed six petitioners,Negative Declaration VI addressed eight petitioners Negative Declaration VII addressed five petitioners,Negative Declaration VIII addressed eleven petitioners,Negative Declaration IX addressed eleven petitioners,Negative Declaration X addressed, two petitioners and Negative Declaration 11 addressed eight petitioners and Negative Declaration 12 addressed twelve petitioners. 2 000027 PROJECT DESCRIPTION Following the adoption of Negative Declaration 13, the Commission received nine more ped tions/applications for facilities-based services. These petitioners are the subject of this Negative Declaration. (See Appendix B for a list of the current facilities-based petitioners.) Similar to the earlier petitioners, most of the current petitioners are initially targeting local telephone service for areas where their telecommunications infrastructure is already estabrshed, and therefore only minor construction is envisioned. Services provided will include but not be limited to voice, data, video,.intemet and other telecommunications services. The petitioners will need to make some modifications to their existing facilities; these modifications are minor in nature, the most common being the installation of a switch that connects potential customers to outside systems. Switch installation is necessary because customers.receiving a particular type of service may not have access to local telephone networks. For example,customers receiving cable television service are presently unable to connect to local telephone networks because of the differences in modes of service. A switch installation by a cable television provider is one step that makes the connection possible. Switch installation is considered a minor modification because it typically involves a single installation within an existing central communication facility or building. Besides the minor modifications,some of the companies are planning to install their own fiber optic cables-to provide adequate service. Cables will be installed within existing utility underground conduits or ducts,or attached to utility poles with existing overhead lines whenever posse c ca es are extremely thin,and existing conduits will likely be able to hold multiple cables. However, if existing conduits or poles are unable to accommodate additional cables,then new conduits or poles will need to be constructed by the petitioner. In this case,the petitioners will construct within existing utility rights-of-way. There is also the possibility that the petitioners may attempt to access other rights-of-way(such as roads)to construct additional conduits. Extension of existing rights-of-way into undisturbed area is not likely,but a possibility. The installation of fiber optic cables into underground conduits will vary in complexity depending upon the conditions of the surrounding area. For example,in urban,commercial areas,utility conduits can be accessible with minimal groundbreaking and installation simply requires stringing the cable through one end-oft a conduit and connecting it to the desired end. In this case,major excavation of the right-of-way is unnecessary. However,there may also be conditions where access to the conduit will require trenching and excavation. Some of the petitioners have plans to construct service boxes or cabinets which contain batteries for the provision of power or emergency power. The dimensions of the boxes vary,but basically range from three to five feet in height. Depending upon the type of technology and facilities operated by the petitioner,smaller service boxes(approximately 3 inches in height)would be used for power supply and backup power. Those petitioners who have no plans to use such 3 000028 . boxes already have capable power and backup power within their existing facilities. The petitioners who will need such boxes,have committed to placing the boxes in existing buildings, or in underground vaults. If conditions do not permit building or underground installation,the petitioners.would use small low-profile boxes that are landscaped and fenced. While most of the petitioners will initially compete for customers in urban,commercial and residential zones where telecommunication infrastructure is already in place, some petitioners state their intention or right to compete on a state wide basis wherever competition is permitted. However it is unclear at this time if all areas will be affected by the projects because many petitioners are not specific where they intend to compete in the long-run. ENVIRONMENTAL DETERMINATION An Initial Study was prepared to assess the projects'potential effects on the environment, and the respective significance of those effects. Based on the Initial Study,the CLCs'projects for competitive local exchange service have the potential to cause significant adverse effects-on the environment in the area of Land Use and Planning,Geological Resources, Water,Air Quality, Transportation and Circulation, Hazards,Noise,Public Services,Aesthetic and Cultural Resources. The projects will have less than a significant effect in other resource areas of the checklist. It should be noted that Findings 2 through 10 are for those projects which require work within existing utility rights-of-way for the purpose of modifying existing facilities or installing new facilities. Finding I is applicable for work outside of the existing utility rights-of- way. In response to the Initial Study, the following specific measures should be incorporated into the projects to assure that they will not have any significant adverse effects on the environment. (See Public Resources Code Section 21064.5.) As a general matter,many of the mitigation measures rely on compliance with local standards and the local ministerial permit process. Although local safety and aesthetic input is essential in minimizing the,impact of the petitioner's construction,local jurisdictions cannot impose standards or permit requirements which would prevent petitioners from developing their service territories,or otherwise interfere with the statewide interest in competitive telecommunication service. Therefore,the petitioners'required.compliance with local permit requirements is subject to this limitation. The findings of the draft Negative Declaration were modified in response to comments filed during the public comment period from Negative Declarations Il and IV. Changes aremarked by italics. 1.The proposed projects could have potentially significant environmental effects for all environmental factors if a proposed project extends beyond the utility right-of-way into undisturbed areas or into other rights-of-way. ("Utility right-of-way" means any utility 4 000029 right-of-way,not limited to only telecommunication utility right-of-way.) For the most part, the petitioners do not plan to conduct projects that are beyond the utility right-of- way. However, should this occur, the petitioner shall file a Petition to Modify it's, Certificate for Public Convenience and Necessity (CPCN`). An appropriate environmental analysis of the impacts of these site specific activities shall be done. 2. The proposed projects will not have any significant effects on Population and Housing, Biological Resources, Energy and Mineral Resources, and Recreation if the proposed projects remain within existing utility right-of-way. Vere are no potential environmental effects in these areas, or adequate measures are incorporated into the projects to assure that significant effects will not occur. 3.The proposed projects could have potentially significant environmental effects on Geological Resources because possible upgrades or installations to underground conduits may induce erosion due to excavation, grading and fill. It is unclear as to how many times underground conduits may be accessed by the petitioners,but it is reasonable to assume that constant excavation by various providers could result in erosion in areas where soil containment is particularly unstable. In order to mitigate any potential effects on geological resources,the petitioners shall comply with all local design,construction and safety standards by obtaining all applicable ministerial permits from the appropriate local agencies. In particular, erosion control plans shall be developed and implemented for areas identified as particularly unstable or susceptible to erosion. If more than one petitioner plans to excavate geologically sensitive areas, coordination of their plans shall'be necessary to minimize the number and duration of disturbances. 4.The proposed projects could have potentially significant environmental effects on Water Resources because possible upgrades or installation to underground conduits may be in close proximity to underground or surface water sources. While the anticipated construction will generally occur within existing utility rights-of-way,the projects have the potential to.impact nearby water sources if heavy excavation is required as the method of access to the conduits. In order to mitigate any potential effects on water resources,the petitioners shall comply with all local design,construction and safety standards. This will include consultation with all appropriate local,state and federal water resource agencies for projects that are in close proximity to water resources, underground or surface. The petitioners shall comply with all applicable local,state and federal water resource regulations. Appropriate site specific mitigation plans shall be developed by the petitioners if the projects impact water quality,drainage, direction, flow or quantity. If there is more than one petitioner for a particular area that requires excavation,coordination plans shall be required to minimize the number and duration of disturbances. S 000030 • 5. The proposed projects could have potentially significant environmental effects on Air Quality because possible excavation efforts for underground conduits may result in vehicle emissions and airborne dust for the immediate area of impact. This is especially foreseeable if more than one petitioner should attempt such work in the same locale.. While the impact will be temporary,the emissions and dust could exceed air quality standards for the area. The petitioners shall develop and implement appropriate dust control measures during excavation as recommended by the applicable air quality management district. The petitioners shall comply with all applicable air quality standards as established by the affected air quality management districts. If there is more than one petitioner for a particular area that requires excavation,coordination plans shall be required to minimize the number and duration of disturbances. 6.The proposed projects could have potentially significant environmental impacts on Transportation and Circulation and Public Services because uncoordinated efforts by the petitioners to install fiber optic cable could result in a cumulative impact of traffic congestion, insufficient parking and hazards or barriers for pedestrians. This is foreseeable if the competitors choose to compete in the same locality and desire to install their own cables. If the selected area is particularly dense with heavy vehicular or pedestrian traffic,the impacts could be enormous without sufficient control and coordination. Uncoordinated efforts may also adversely impact the quality and longevity of public street maintenance because numerous excavation activity depreciates the life of the surface pavement. Impacts from trenching activity may occur in utility rights-of-way that contain other Public Services such as irrigation water lines. The petitioners'shall coordinate their efforts to install fiber optic cables or additional conduits so that the number of encroachments to the utility rights-of-way are minimized. These coordination efforts shall also include affected transportation and planning agencies to coordinate other projects unrelated to the petitioners'projects. For example, review of a planning agency's Capital Improvement Plan (CIP)to identify impacted street projects would be an expected part of the coordination effort by the petitioner. Besides coordinating their efforts,the petitioners shall abide by all local construction, maintenance and safety standards (and state standards, if applicable)by acquiring the necessary ministerial pemaits from the appropriate local agency or CalTrans(iwithin a State right-of-way). Examples of these permits are excavation,encroachment and building permits. Appropriate construction start and end times,and dates if appropriate, 2 The petitioners discussed in this Negative Declaration shall coordinate withIg_I CLCs including those listed in the first Negative Declaration adopted by the Commission(D.95-12-057)and all CLCs in future Negative Declarations. CLCs covered in the first Negative Declaration shall likewise be expected coordinate with those CLCs listed in this Negative Declaration or any subsequent one adopted by the Commission. 6 00003.1. shall be employed to avoid peak traffic periods and to minimize disruption,especially if the petitioners' work encroaches upon transportation rights-of-way. Petitioners shall consult with local agencies on appropriate restoration of public service facilities that are damaged by the construction and shall be responsible for such restoration. 7. The proposed projects could have potentially significant hazard-related effects because uncoordinated construction efforts described above could potentially interfere with emergency response or evacuation plans. There is also potential for an increase in overhead lines and poles which carry hazard-related impacts. The same mitigation plan as described in the previous section is applicable here as well, and shall be augmented by notice to and consultation with emergency response or evacuation agencies if the proposed project interferes withroutes used for emergencies or evacuations. The coordination efforts shall include provisions so that emergency or evacuation plans are not hindered. If the projects result in an increase in overhead communication lines,the petitioner shall obtain the necessary ministerial permits.to erect the necessary poles to support the lines. The Commission shall include these facilities as part of its overhead line regular inspections so that the requirements of G.O.95 are met. 8. The proposed projects could have potentially significant environmental effects on Noise because it is possible some projects may require excavation or trenching. Although the effect is likely to be short-term,existing levels of noise could be exceeded. If the petitioner requires excavation,trenching or other heavy construction activities which would produce significant noise impacts,the petitioner shall abide by all applicable local noise standards and shall inform surrounding property owners and occupants(particularly school districts,hospitals and the residential neighborhoods)of the day(s)when most construction noise would occur. Notice shall be given at least two weeks in advance of the construction. 9. The proposed projects could have potentially significant environmental effects on aesthetics because it is possible that additional lines on poles in utility rights-of-way could become excessive for a particular area Aesthetic impacts may also occur in utility rights-of-way that are landscaped Moreover,there is potential for an increase in above grade utility service boxes or cabinets which also carry aesthetic impacts. Local aesthetic concerns shall be addressed by the petitioners for all facilities that are above-ground, in particular all types of service boxes or cabinets. The local land use or planning agency shall be consulted by the petitioner soldw any site-specific aesthetic impacts are assessed and properly mitigated. For example, this may include restoration of the landscaped utility rights-of-way. 10. The proposed projects could have potentially significant environmental effects on 7 000032 cultural resources because situations involving additional trenching may result in disturbing known or unanticipated archaeological or historical resources. The petitioners shall conduct appropriate data research for known cultural resources in the proposed project area, and avoid such resources in designing and constructing the project. Should cultural resources be encountered during construction, all earthmoving activity which would adversely impact such resources shall be halted or altered so as to avoid such impacts, until the petitioner retains the service of a qualified archaeologist who will do the appropriate examination and analysis. The archeologist shall consult with appropriate federal, state and local agencies concerned with cultural resources,so that any potential impacts upon cultural resources are assessed and properly avoided or mitigated. The archeologist shall, in coordination with agencies,develop a plan for avoiding or mitigating any potential impacts upon those resources encountered. In summary,the Mitigation Measures recommended in this environmental determination are: A)All Environmental Factors: if a proposed project extends beyond the utility right-of- way into undisturbed area or other right-of-way, the petitioner shall file a Petition to Modify its Certificate for Public Convenience and Necessity (CPCN). ("Utility right-of- way" means any utility.right-of-way,not limited to only telecommunications utility right- of-way.) An appropriate environmental analysis of the impacts of these site specific .activities shall be done. If the projects remain within the utility right-of-way,the'following Mitigation Measures are recommended: B)General Cumulative Impacts: in the event that more than one petitioner seeks modifications or additions to a particular locality,the petitioners shall coordinate their plans with each other,and consult with affected local agencies so that any cumulative effects on the environment are minimized. These coordination efforts shall reduce the number and duration of disturbance to existing utility right-of-way. Regardless of the number of petitioners for a particular locality,the petitioner shall consult with,and abide by the standards established,by all applicable local agencies. Each petitioner shall file a quarterly report,one month prior to the beginning of each quarter,that summarizes the construction projects that are anticipated for the coming quarter. The sumo y will contain a description of the type of construction and the location for each project so that the local planning agencies can adequately coordinate multiple projects if necessary. The reports will also contain a summary of the petitioner's compliance with all Mitigation Measures for the projects listed. The quarterly reports will be filed with the local planning agencies where the projects are expected to take place and the Commission's Telecommunications Division. The Commission filing will be in the form of an informational advice leiter. Subsequent quarterly reports shall also summarize the status 8. 000033 of the projects listed in previous quarterly report, until they are completed. C) Geological Resources: the petitioners shall comply with all local design construction and safety standards by obtaining all applicable ministerial permits from the appropriate local agencies including the development and approval of erosion control plans. These shall be developed and implemented for areas identified as particularly unstable or susceptible to erosion. If more than one petitioner plans to excavate sensitive areas, coordination of their plans shall be necessary to minimize the number of disturbances. The petitioner's compliance with this Mitigation Measure shall be included in its quarterly report. D) Water Resources:the petitioners shall consult with all appropriate local, state and federal water resource agencies.for projects that are in close proximity to water resources, underground or surface. The petitioners shall comply with all applicable local, state and federal water resource regulations including the development of site-specific mitigation plans should the projects impact water quality,drainage, direction, flow or quantity. If there is more than one petitioner for a particular area that requires excavation, coordination plans shall be required to minimize the number of disturbances. The petitioner's compliance with this Mitigation Measure shall be included in its quarterly reporL E)Air Quality: the petitioners shall develop and implement appropriate dust control measures during excavation as recommended by the applicable air quality management district. The petitioners shall comply with all applicable air quality standards as established by the affected air quality management districts. If there is more than one petitioner for a particular area that requires excavation, coordination plans shall be required to minimize the number of disturbances. The petitioner's compliance with this Mitigation Measure shall be included in its quarterly report. F)Transportation and Circulation and Public Services: the petitioners'shall coordinate their efforts to install fiber optic cables or additional conduits so that the number of disturbances to the utility rights-of-way are minimized. These coordination efforts shall include affected transportation and planning agencies to coordinate other projects unrelated to the petitioners'projects.For example, review of a planning agency's Capital Improvement Plan (CIP)to identify impacted street projects would be an expected part of the coordination effort by the petitioner. Besides coordinating their efforts,the petitioners shall abide by all local construction, maintenance and safety standards (and state standards, if applicable) by acquiring the necessary ministerial permits from the appropriate local agency and/or CalTrans(if within State right-of-way). Examples of these permits are excavation,encroachment and building permits. Appropriate construction start and end times,and dates if appropriate, shall be employed 3 See Footnote#2. 9 00034 to avoid peak traffic periods,especially if the petitioners'work encroaches upon transportation rights-of-way. Notice to the affected area(surrounding property owners and occupants) shall be given at least two weeks in advance of the construction. The notice will provide the time and dates of the proposed construction and discussion of potential impacts on traffic and circulation.Petitioners shall consult with local agencies on appropriate restoration of public service facilities that are damaged by the construction and shall be responsible for such restoration The notice required for Mitigation Measures F and H shall be consolidated. The petitioner's compliance-with.this Mitigation Measure shall be included in its quarterly report. G) Hazards:the petitioners shall use the Transportation and Circulation mitigation measure and augment it by informing and consulting with emergency response or evacuation agencies if the proposed project interferes with routes used for emergencies or evacuations. The coordination effort shall include provisions so that emergency or evacuation plans are not hindered. If the projects result in an increase in overhead communication lines,the petitioner shall obtain the necessary ministerial permits to erect the necessary poles to support the lines. The Commission shall include these facilities as part of its overhead line regular inspections so that the requirements of G.O. 95 are met. The petitionees,compliance with this Mitigation Measure shall be included in its quarterly report. I)Noise: the petitioner shall abide by alI applicable local noise standards and shall inform surrounding property owners and occupants,particularly school districts,hospitals and the residential neighborhoods, of the day(s)when most construction noise would occur if the petitioner plans excavation,trenching or other heavy.construction activities which would cause any significant noise. Notice shall be given at least two weeks in advance of the construction. The notice required for Mitigation Measures F and H shall be consolidated. The petitioner's compliance with this Mitigation Measure shall be included in its quarterly report. I)Aesthetics:All applicable local aesthetic standards will be addressed by the petitioners for all facilities that are above-ground, in particular all types of service boxes or cabinets.- The abinets:The local land use agency shall be consulted by the petitioner so that any site-specific aesthetic impacts are assessed and properly mitigated by the petitioner. For example, this may include restoration of the landscaped utility rights-of-way- Petitioner's compliance with this Mitigation Measure shall be included in its quarterly report. J)Cultural Resources: The petitioners shall conduct appropriate data research for known cultural resources in the proposed project area, and avoid such resources in designing and constructing the project. Should cultural resources be encountered during construction,all earthmoving activity which would adversely impact such resources shall be halted or altered until the petitioner retains the service of a qualified archaeologist who will do the appropriate examination and analysis. The archaeologist will provide 10 1 000035 proposals for any procedures to mitigate the impact upon those resources encountered. The treatment plan will be designed through coordination with the appropriate federal, state and local agencies. The petitioner's compliance with this Mitigation Measure shall be included in its quarterly report. General Statement for all Mitigation Measures: Although local safety and aesthetic input is essential in minimizing the impact of the petitioner's construction, local jurisdictions cannot impose standards or permit requirements which would prevent petitioners from developing their service territories, or otherwise interfere with the . statewide interest in competitive telecommunication service. Therefore, the petitioners'required compliance with local permit requirements is subject to this limitation. With the implementation of the mitigation measures listed in A)-J)above,the Commission should conclude that the proposed projects will not have one or more potentially significant environmental effects. The Commission should also adopt a Mitigation Monitoring Plan which will ensure that the Mitigation Measures listed above will be followed and implemented. The Mitigation Monitoring Plan is included with this Negative Declaration as Appendix C. Natalie Walsh, Program Manager Analysis Branch Energy Division Date ll 000030" INITIAL STUDY CHECKLIST 3vironmental Factors Potentially Affected: The environmental factors checked below would be potentially affected by this project, involving at least one impact that is a "Potentially Significant Impact"as indicated by the checklist on the following pages. 0 Land Use and Planning 0 Transportation/Circulation 0 Public Services ❑ Population and Housing ❑ Biological Resources 0 Utilities and Service Systems 0 Geological Problems ❑ Energy and Mineral Resources 0 Aesthetics 0 Water 0 Hazards 0 Cultural Resources © Air Quality 0 Noise ❑ Recreation 0 Mandatory Findings of Significance Note: For construction outside of the utility rights-of-way,potential environmental impacts are too variable and uncertain to be specifically evaluated in this Initial Study,but are addressed in Environmental Determination I and Mitigation Measure(A)in the Negative Declaration. .mtermination: On the basis of this initial evaluation: 1 find that the proposed projects COULD NOT have a significant effect on the environment,and a NEGATIVE DECLARATION will be prepared. ❑ 1 find that although the proposed project could have a significant effect on the environment,there will not be-a significant effect in this case be- cause the mitigation measures described on an attached sheet have been added to the projects. A NEGATIVE DECLARATION will be prepared. I find that the proposed projects MAY have a significant effect on the environment,and an ENVIRONMENTAL IMPACT REPORT is required. O I find that the proposed projects MAY have a significant effect(s)on the environment,but at least one effect 1)has been adequately analyzed in an earlier document pursuant to applicable legal standards,'and 2)has been addressed by mitigation measures based on an earlier analysis as described on attached sheets,if the effect is a"potentially significant impact"or "potentially significant unless mitigated." An ENVIRONMENTAL IMPACT REPORT is required,but it must analyze only the effects that remain to be addressed. O l 000037 I find that although the proposed project could have a significant effect on the environment, there WILL NOT be a significant effect in this case because all 3tentially significant effects(a)have been analyzed adequately in an earlier EIR pursuant to applicable standards and(b)have been avoided or mitigated pursuant to that earlier EIR, including revisions or mitigation measures that are imposed upon the proposed project. Q Signature C,✓ N- WaIS L. Date Natalie Walsh Program Manager Printed Name Analysis Branch" Energy Division California Public Utilities Commission 4382 0000, Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact 1. LAND USE AND PLANNING. Would the proposal: a) Conflict with general plan designation or zoning? ❑ p ❑ ❑ b) Conflict with applicable environmental plans or policies adopted by agencies with jurisdiction over the project? ❑ ® ❑ ❑ c) Be incompatible with existing land use in the vicinity? ❑ O ❑ ❑ d) Affect agricultural resources or operations (e.g. impacts to soils or farmlands,or impacts from incompatible land uses)? ❑ p ❑ . ❑ e) . Disrupt or divide the physical arrangement of an established community(including a low- income or minority community)? ❑ O ❑ ❑ The proposed projects are not anticipated to have any significant impacts on general or environmental plans, zoning,existing land usage,or agricultural resources. The projects are essentially modifications to existing facilities within established utility rights-of-way. Since these rights-of-way are already designed to be in compliance with zoning and land use plans,disruption of such plans are not foreseeable. In the event that the petitioners need toconstruct facilities that extend beyond the rights-of-way, see Mitigation Measure A in the Negative Declaration. If.POPULATION AND HOUSING. Would the proposal: a) Cumulatively exceed official regional or local population projections? ❑ ❑ ❑ b) Induce substantial growth in an area either directly or indirectly(e.g.through projects in an undeveloped area or extension of major infrastructure? O ❑ ❑ c) Displace existing housing,especially affordable housing? ❑ ❑ ❑ '-e proposed projects will not have impacts upon population or housing. The purpose of the projects is to 3 000039 • • introduce competition into the local telephone service market. Since competition will be generally statewide and not centered in one locale, it is not anticipated that the projects will have an effect on population projections or `.,)using availability of any particular area. The arras that will not initially receive the competition are rural, less ,pulated areas; it cannot be seen that the initial lack of competitive services in these areas will result in significant movements of people to areas where competition will be heavy. Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact Ill.GEOLOGIC PROBLEMS. Would the proposal result in or expose people to potential impacts involving: a) Fault rupture? O ❑ O EI b) Seismic ground shaking? ❑ ❑ O Im c) Seismic ground failure, including liquefaction? ❑ ❑ ❑ a d) Seiche,tsunami,or volcanic hazard? ❑ ❑ ❑ Im e) Landslides or mudflows? ❑ 1XI ❑ ❑ Erosion,changes in topography or unstable soil conditions from excavation,grading,or fill? ❑ ® ❑ O g) Subsidence of land? ❑ ❑ O h) Expansive soils? ❑ ❑ ❑ i) Unique geologic or physical features? O O ❑ l7 The projects will be constructed within existing utility facilities or established utility rights-of-way and will therefore not expose people to new risks for any of these impacts,except possibly erosion. Should additional cable facilities require the installation of new or upgraded conduits,trenching,excavation,grading and fill could be required. For appropriate mitigation,see Mitigation Measures (B)and(C) for details in the Negative Declaration. IV.WATER. Would the proposal result in: a) Changes in absorption rates;drainage patterns, or the rate and amount of surface runoff? O O O b) Exposure of people or property to water related hazards such as flooding? ❑ ❑ O 4 . 000040 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact c) Discharge into surface waters or other alteration of surface water quality(e.g. temperature,dissolved oxygen or turbidity)? ❑ Q ❑ ❑ d) Changes in the amount of surface water in any .water body? Q O ❑ e) Changes in currents,or the course or direction of water movements? ❑ ❑ (3. f) Change in the quantity of ground waters,either through direct additions or withdrawals,or 'through interception of an aquifer by cuts or excavations or through substantial loss of groundwater recharge capability? ❑ © ❑ O g) Altered direction or rate of flow of groundwater? ❑ El ❑ ' ❑ h) Impacts to groundwater quality? . O D ❑ ❑ i) Substantial reduction in the amount of groundwater otherwise available for public water supplies? ❑ O ❑ The projects will involve alterations to existing telecommunication facilities(underground conduits or overhead poles)but could expose additional risks if more than one petitioner decide to compete in the same locality. Efforts to install cables,or if necessary, 'new conduits, in utility rights-of-way that are in close proximity to an underground or surface water sources could carry significant effects for quality.flow,quantity,direction or drainage if done improperly and without coordination. See Mitigation Measures(B)and(D) in the Negative Declaration for details. V.AIR QUALITY. Would the proposal: a) Violate any air quality standard or contribute to an existing or projected air quality violation? O ® ❑ ❑ b) Expose sensitive receptors to pollutants? O ® O 0 S 000041 Potentially Significant Potentially Unless Less Than Significant Mitigation. Significant No Impact Incorporated Impact Impact c) Alter air movement,moisture,or temperature,or cause any change in climate? O ❑ O 0 d) Create objectionable odors? ❑ ❑ O O If the projects do not require excavation or trenching of underground conduits,they will not have an effect upon air quality,movement,temperature or climate. However,should the projects require such work and, if more than one petitioner decide to work in the same locale,there is potential for an increase in dust in the immediate area. See Mitigation Measures(B)and(E)in the Negative Declaration for details. VI.TRANSPORTATION/CIRCULATION. Would the proposal result in: a) Increased vehicle trips or traffic congestion? ❑ ® ❑ O b) Hazards to safety from design features(e.g. sharp curves or dangerous intersections)or incompatible uses(e.g. farm equipment)? ❑ ® ❑ ❑ c) Inadequate emergency access or access to nearby uses? ❑ ® O ❑ d) insufficient parking capacity on-site or off-site? O ® ❑ O e) Hazards or.barriers for pedestrians or bicyclists? O ® O ❑ f) Conflicts with adopted policies supporting alterriative transportation(e.g.bus turnouts, bicycle racks)? O ❑ O g) Rail,waterborne or air traffic impacts? O ® O O The petitioners plan to medify existing utility conduits or poles within existing utility rights-of-way initially in urban,commercial zones and residential areas. Modification of these facilities by a single party does not present significant impacts upon traffic or circulation since the installation process is not expected to be lengthy. However,if more than one of the petitioners decide to compete in the same locality,their efforts to install their own cables will have a significant cumulative effect on circulation,especially in dense,urban commercial areas. As a result, increases in traffic congestion,insufficient parking,and hazards or barriers for pedestrian are possible. See Mitigation Measures(B)and(F)in the Negative Declaration for details. 6 00004.2 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact VI1. BIOLOGICAL RESOURCES. Would the proposal result in impacts to: a) Endangered,threatened,or rare species or their habitats(including but not limited to plants,fish, insects,animals,and birds)? O O O b) Locally designated species(e.g.heritage trees)? O O O c) Locally designated natural communities(e.g.oak -- forest,coastal habitat,etc.)? O O ❑ d) Wetland habitat(e.g. marsh, riparian and vernal pool)? O O ❑ e) Wildlife dispersal or migration corridors? O O ❑ 0 The projects will not affect any biological resources since all anticipated work will occur within existing utility facilities or established utility rights-of-way. Established utility rights-of-way are assumed to be outside of :ally designated natural communities,habitats or migration corridors. VIII. ENERGY AND MINERAL RESOURCES. Would the proposal result in: a) Conflict with adopted energy conservation plans? ❑ ❑ ❑ b) Use non-renewable resources in a wasteful and inefficient manner? O O O c) Result in the loss of availability of a known mineral resource that would be of future value to the region and the residents of the State? O ❑ ❑ m The projects will no impact upon mineral resources or the use of energy. The projects provide competitive telecommunication services that have no direct relationship to efficient.energy use or mineral resources. The installation of additional fiber optic cables are within existing facilities or rights-sof-way that are assumed to have adequate mitigation designs to avoid impacts on any mineral resources within proximity. 7 00004 ,3 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact IX. HAZARDS. Would the proposal involve: a) A risk of accidental explosion or release of hazardous substances(including, but not limited to: oil, pesticides,chemicals or radiation)? O O ❑ b) Possible interference with an emergency response plan or emergency evacuation plan? ❑ ❑ ❑ c) . The creation of any health hazard or potential health hazard? O ❑ O 0 d) Exposure of people to existing sources of potential health hazards? ❑ O ❑ O e) increased fire hazard in areas with flammable brush,grass,or trees? ❑ p ❑ 0 to installation of fiber optic cables can be a quick,clean and simple procedure with little use of heavy machinery. However there may be situations where excavation and trenching of underground conduits is necessary if the conduits are not easily accessible. Should this occur, uncoordinated efforts by the.petitioners in one concentrated area could potentially affect emergency response or evacuation plans for that locale.-See Mitigation Measures(B)and(G)in the Negative Declaration for details. Once the project is completed,the additional cables do not represent any additional hazards to people nor do they increase the possibility of fires. X.NOISE. Would the proposal result in: a) Increases in existing noise levels? ❑ ®., O O b) Exposure of people to severe noise levels? Cl ® O ❑ The anticipated projects can be a quick and simple procedure,but in some cases could require heavy machinery or construction activity such as excavation,trenching,grading and refill. There is also the possibility that uncoordinated efforts by the petitioners in one locale could increase existing noise levels, if their activities involve the construction described. See Mitigation Measures(B)and(H) in the Negative Declaration for details. 8 000044 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact X1.PUBLIC SERVICES. Would the proposal have an effect upon,or result in a need for new or altered government services in any of the following areas: a) Fire protection? ❑ O O p b) Police protection? ❑ ❑ ❑ p c) Schools? ❑ ❑ ❑ d) Maintenance of public facilities,including roads? O © ❑ O e) Other government services? ❑ O ❑ The proposed projects will increase competition in the local telephone service. The construction associated with the projects have potential impacts on the maintenance of public streets and roads. Numerous disturbances-to the street surfaces depreciates the quality and longevity of the pavement. Trenching projects may also impact other existing public service facilities(e.g. irrigation lines) in the utility rights-of-way. Mitigation Measure F addresses this impact. XII.UTILITIES AND SERVICE SYSTEMS. Would the proposal result in a need for new systems or supplies, or substantial alterations to the.following utilities: a) Power or natural gas? ❑ ❑ O b) Communication systems? ❑ p ❑ Cl c) Local or regional water treatment or distribution facilities? ❑ ❑. ❑ p d) Sewer or septic tanks? ❑ ❑ O e) Storm water drainage? ❑ ❑ ❑ f) Solid waste disposal? ❑ ❑ ❑ O g) Local or regional water supplies? ❑ ❑ ❑ The proposed projects could substantially alter communication systems in the event that existing facilities are unable to accommodate all of the participants in the market. If this should occur,additional conduits or poles for •-lecommunication equipment will need to be inserted in existing utility rights-of-way or the petitioners may seek ay to other rights-of-way. if the petitioners are forced to constrict outside of the existing utility rights-of-way, 9 000045 Mitigation Measure A is applicable. For work within the rights-of-way,see Mitigation Measure B in the Negative . Declaration. Potentially : Significant Potentially Unless Less Than Significant: Mitigation Significant No Impact Incorporated Impact Impact XIII. AESTHETICS. Would the proposal: a) Affect a scenic vista or scenic highway? O © ❑ O b) Have a demonstrated negative aesthetic effect? ❑ © ❑ ❑ c) Create light or glare? ❑ O O The proposed projects will occur within utility rights of way that will be either be undergrounded or on existing poles. Undergrounded facilities will have no demonstrated negative aesthetic effects. However, landscaped utility rights-of-way may be impacted by trenching activities. Additional lines on the poles may be a concern,but the proposed cables are not easily discernible and will unlikely have a negative impact. The only scenario where an aesthetic effect can occur is if the number of competitors for a particular area become so heavy that the cables on the poles become excessive. There is potential for an increase in service.boxes if the boxes cannot be installed within buildings or underground. Should this occur,the petitioners should follow Mitigation Measures(B)and (1) as described in the Negative Declaration. XIV.CULTURAL RESOURCES. Would the proposal: a) Disturb paleontological resources? O 0 O O b) Disturb archaeological resources? ❑ © O ❑ c) Affect historical resources? O ® O O d) Have potential to cause a physical change which would affect unique ethnic cultural values? ❑ ® ❑ O e) Restrict existing religious or sacred uses within the potential impact area? ❑ 0 . ❑ ❑ The projects will involve existing utility facilities or established rights-of-way that are assumed to be clear from any paleontological,historical or archaeological resources. However,some projects may require excavation or trenching of utility rights-of-way,or outside the rights-of-way. if known or unanticipated cultural resources are encountered during such work,then the Mitigation Measures(B)and(J)should be followed. See Negative Declaration for details. 10 000049 Potentially Significant Potentially Unless less Than Significant Mitigation Significant No Impact Incorporated Impact Impact XV. RECREATION. Would the proposal: a) Increase the demand for neighborhood or regional parks or other recreational facilities? Cl ❑ ❑ p b) Affect existing recreational opportunities? ❑ ❑ ❑ p The projects will have no impact on recreational facilities or opportunities since these resources have no direction relationship to increased competition in local telephone services. XVI. MANDATORY FINDINGS OF SIGNIFICANCE. a) Does the project have the potential to degrade the quality of the environment,substantially reduce the habitat of a fish or wildlife species,cause a fish or wildlife population to drop below self-sustaining levels,threaten to eliminate a plant or animal community,reduce the number or restrict the range of a rare or endangered plant or animal,or eliminate important examples of the major periods of California history or prehistory? O ❑ ❑ b) Does the project have the potential to achieve short-term,to the disadvantage of long-term, environmental goals? ❑ ❑ ❑ c) Does the project have impacts that are individually limited,but cumulatively considerable?("Cumulatively considerable"means that the incremental effects of a project are considerable when viewed in connection with the effects of past projects,the effects of other current projects,and the effects of probably future projects-) ❑ © ❑ ❑ d) Does the project have environmental effects which will cause substantial adverse effects on human beings, either directly or indirectly? ❑ ❑ ❑ II 00004'7 Appendix A .TELEPr uric tAC HANGE 11REAS CALIFORNIA PUBLIC UTILITIES COMMISSION 1.EOE114 1 - fr�-- =csLpo"i IlM C"WIR T8.XP IC G=UPANIES �--�_,,.r'-� -•eta':= =,r-�i.oac.+_4 Hut�El1.w+AaEAEOUuoyMfi(mPA)-.ftfJccoEs LATA socmoA"S ("! �w L..•.: ( P.*Va1,IGS 04119[T AA*A , COUkrY WAMES MAl Y.M COOROWl WrVWCTX*S `'��.., tAia j V ♦'j 4av Vis+ �f_ }Y .p"'.."�._.�la,"'r•L v.�r��1 O*'IIOI 1�„o.Idlt CIi�1ui1 M4 �i .. "'�` e,1,. M•+.+ .w.r .,Yw aYw+ YYYt++ Y.YY� I _ d r =. y 3T—' /"� ,til^ ,rri� wY•n._ +1n+rtv�./.�IAeae,�ww..� Wil dp— dilli ""� w111�IpI1sSI_�1111lr_.p '�� . _ .Mw.Yw airs i.+w • •`� -�_ `---��---�l � �� ""-'1 � = ._.;..."'..."'111# 1 ��.,,P I •1 � to .. '�E��_3! - die- � ( I a APPENDIX B PROJECT SPONSORS AND ADDRESSES 1. Eagle Communications of California, LLC 60 East 56"Street 1.95-04-044 (Pet 132) New York,NY 10022 2. US Data Highway Corp. 111.3 Hopkins Way 1.95-04-044 (Pet. 133) Pleasanton,CA 94566 3. Seren Innovations,Inc. IS South Sm Street,Suite 500 1.95-04-044 (Pet. 134) Minneapolis,MN 55402 4. HTC.Communications,LLC 2131 N.Lamer Street 1.95-04-044 (Pet 135) Burbank,CA 91504 5. Network Plus,Inc. 234 Copeland Street 1.9544-044 (Pet 136) Quincy,MA 02169 6. Campuslink Communications Systems, Inc. 1530 Eisenhower Place 1.95-04-044 (Pet 137) Ann Arbor,MI 48108 7. XL Networks,Inc. 909 Via Mirola 1.95-04-044 (Pet 138) Palos Verdes Estates,CA 90274 8. Triad Communications Corporation 2420 Sand Hill Road 1.95-04-044 (Pet 139) Menlo, Park,CA 94025 9. NTC Network,LLC 700 Wilshire Boulevard,7*Floor 1.95-04-044 (Pet. 140) Los Angeles,CA 90017 000049 Appendix C Mitigation Monitoring Plan Competitive Local Carriers (CLCs) Projects for Local Exchange Telecommunication Service throughout California Introduction: The purpose of this section is to describe the mitigation monitoring process for the CLCs' proposed projects and to describe the roles and responsibilities of government agencies in implementing and enforcing the selected mitigation measures. California Public Utilities Commission(Commission): The Public Utilities Code confers authority upon the Commission to regulate the terms of service and safety,practices and equipment of utilities subject to its jurisdiction. It is the standard practice of the Commission to require that mitigation measures stipulated as conditions of approval be implemented properly,monitored, and reported on. Section 21081.6 of the Public Utilities Code requires a public agency to adopt a reporting and monitoring program when it approves a project that is subject to the adoption of a mitigated negative declaration. The purpose of a reporting and monitoring program is to ensure that measures adopted to mitigate or avoid significant environmental impacts are implemented. The Commission views the reporting and monitoring program as a working.guide to facilitate not only the implementation of mitigation measures by the.project proponents,but also the monitoring, compliance and reporting activities of the Commission and any monitors it may designate. The Commission will address its responsibility under Public Resources Code Section 21081.6 when it takes action on the CLCs'petitions to provide local exchange telephone service. If the Commission adopts the Negative Declaration and approves the petitions,it will also adopt this Mitigation Monitoring Plan as an attachment to the Negative Declaration. Project Description: The Commission has authorized various companies to provide local exchange telephone service in competition with Pacific Bell,GTE California, Roseville Telephone Company and Citizens Telephone Company of California. The current petitioners notified the Commission of their intent to compete in the territories throughout California,all of which are facilities-based services meaning that they propose to use their own facilities to provide service. 000050 Since many of the facilities-based petitioners are initially targeting local telephone service for areas where their telecommunications infrastructure is already established,very little construction is envisioned. However,there will be occasion.where the petitioners will need to install fiber optic cable within existing utility underground conduits or attach cables to overhead lines. There is the possibility that existing utility conduits or poles will be unable to accommodate all the planned facilities,thereby forcing some petitioners to build or extend additional conduits into other rights-of-way, or into undisturbed areas. For more details"on the project description please see Project Description in the Negative Declaration. Roles and Responsibilities: As the lead agency under the California Environmental Quality Act(CEQA),the Commission is required tomonitor this project to ensure that the required mitigation measures are implemented. The Commission will be responsible for ensuring full compliance with the provisions of this monitoring program and has primary responsibility for implementation of the monitoring program. The purpose of this monitoring program is to document that the mitigation measures required by the Commission are implemented and that mitigated environmental impacts are reduced to insignificance or avoided outright. Because of the geographic extent of the proposed projects,the Commission may delegate duties and responsibilities for monitoring to other environmental monitors or consultants as deemed necessary. For specific enforcement responsibilities of each mitigation measure,please refer to the Mitigation Monitoring Table attached to this plan. The Commission has the ultimate authority to halt any construction, operation,or maintenance activity associated with the CLC's local telephone service projects if the activity is determined to .be a deviation from the approved project or adopted mitigation measures. For details refer to the mitigation monitoring plan discussed below. Mitigation Monitoring Table: The table attached to this plan presents a compilation of the Mitigation Measures in the Negative Declaration. The purpose of the table is to provide the monitoring agencies with a single comprehensive list of mitigation measures,effectiveness criteria,the enforcing agencies, and timing. Dispute Resolution Process: The Mitigation Monitoring Plan is expected to reduce or eliminate many potential disputes. However,in the event that a dispute occurs,the following procedure will be observed: 000051 Step 1: Disputes and complaints(including those of the public) shall be directed first to the Commission's designated Project Manager for resolution. The Project Manager will attempt to resolve the dispute. Step 2: Should this informal process fail, the Commission Project Manager may initiate enforcement or compliance action to address deviation from the proposed project or adopted Mitigation Monitoring Program. Step. 3: If a dispute or complaint regarding the implementation or evaluation of the Mitigation Monitoring Program or the Mitigation Measures cannot be resolved informally or through enforcement or compliance action by the Commission,any affected participant in the dispute or complaint may file a written "notice of dispute" with the Commission's Executive Director. This notice shall be filed in.order to resolve the dispute in a timely manner,with copies concurrently served on other affected participants. Within 10 days of receipt,the Executive Director or designees)shall meet.or confer with the filer and other affected participants for purposes of resolving the dispute. The Executive Director shall issue an Executive Resolution describing his decision,and serve it on the filer and the other participants. Parties may also seek review by the Commission through existing procedures specified in the Commission's Rules of Practice and Procedure,although a good faith effort should first be made to use the foregoing procedure. Mitigation Monitoring Program: 1. As discussed in Mitigation Measure B, the petitioners shall file a quarterly report which summarizes those projects which they intend to construct for the coming quarter. The report will contain a description of the project and its location,and a summary of the petitioner's compliance with the Mitigation Measures described in the Negative Declaration. The purpose of the report is to inform the local agencies of future projects so that coordination of projects among petitioners in the same locality can be done. The quarterly report shall be filed with the appropriate planning agency of the locality where the project(s)will occur. The report shall also be filed as an informational advice letter with the Commission's Telecommunications Division so that petitioner compliance with the Mitigation Measures are monitored.. .In order to ensure that the Mitigation Measures are fulfilled,the Commission will make periodic reviews of the projects listed in quarterly reports. The projects will be generally chosen at .random,although the Commission will review any project at its discretion. The reviews will follow-up with the local jurisdictions so that all applicable Mitigation Measures are addressed. 3 000052 If any project is expected to go beyond the existing utility rights-of-way, that project will require a separate petition to modify the CPCN. The petitioner shall file the petition with the Commission and shall also inform the affected local agencies in writing. The local agencies are also responsible for informing the Commission of any project listed in the quarterly reports which may potentially go out of the existing utility right-of-way. As discussed in Mitigation Measure A,a complete environmental review of the project will be triggered under CEQA, with the Commission as the lead agency. .2. In the event that the petitioner and the local agency do not agree if a project results in work outside of the utility rights-of-way, the Commission will review the project and make the final determination. See Dispute Resolution Process discussed above. 3. For projects that are in the utility rights-of-way,the petitioners shall abide by all applicable local standards as discussed in the Mitigation Measures. If a petitioner fails to comply with local regulatory standards by either neglecting to obtain the necessary permits,or by neglecting to follow the conditions of the permits,the local agency shall notify the Commission and Dispute Resolution Process begins.. 4. The Commission is the final arbiter for all unresolvable disputes between the local agencies and the petitioners. If the Commission finds that the petitioner has not complied with the Mitigation Measures in the Negative Declaration,.it may halt and terminate the project. 4 000053 ' 2 2 k k 2J 2k . ■ � ■ § ■ Z . . _ . . ' u . . . . � \ j �\ $ . § � o t _ §6 cr � C. C. ■ I a a a B2 f " % k& % k $ I 2 7 m £ k C C § r r « . § ID k c ' \ o k . k , ? § � . 2 2 � f TL t k ® - ■ � 2 2 8 �� §_ � � � § § a § ■ eCL 2 § �§ .5 . �2 l ) �_� � � a 3 I § © E CL. 9 ID � k 2 7 f « . 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AYPE�DI1 D) EXHIBIT B BEFORE THE PUBLIC UTILITIES COMMISSION ' OF THE STATE OF CALIFORNIA In the Matter of the Petition ) of Serer Innovations,Inc. for a ) Certificate of Public Convenience and ) I.95-04-044 Necessity to provide Competitive Local ) Petition No. Exchange,IntraLATA and InterLATA ) Service ) PETITION FOR CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY Peter Glass,Esq. Peter A. Casciato General Counsel A Professional Corporation Seren Innovations,Inc. 8 Califomia Street,Suite 701 15 South 5t°Street, Suite 500 San Francisco CA 94111 Minneapolis MN 55402 Telephone:(415)291-866f. Telephone: (612)330-6648 Facsimile: (415)291-8165<_. Facsimile: (612)330-5827 rn c DATED: March 4, 1999 00005'7 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA In the Matter of the Petition ) of Seren Innovations,Inc. for a ) Certificate of Public Convenience and ) I.95-04-044 Necessity to provide Competitive Local ) Petition No. Exchange,IntraLATA and InterLATA ) Service ) PETITION FOR CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY Seren Innovations,Inc. ("Petitioner"),hereby respectfully requests a Certificate of Public Convenience and Necessity("CPCN")for authority to provide competitive local exchange ("CLC'),intraLATA and inter-State interLATA services in those geographical areas opened for local exchange competition as determined by this Commission. This Petition is filed pursuant to California Public Utilities Code Section 1001,Articles 4 and 5 of the Rules of Practice and Procedure of the Public Utilities Commission,and relevant Commission Decisions. By this Petition, Petitioner demonstrates that it possesses the sufficient technical experience and financial ability to provide the subject services,and that it complies with all legal and regulatory requirements for the requested CPCN. Pursuant to D.95-07-054,subsequent orders in R.95-04-043/1.95-04-044 to develop a competitive telecommunications market,Article I of Chapter 5 of the Public Utilities Code,and Sections 15-18 of the Commission's Rules of Practice and Procedure,Petitioner provides the following information: 1. IDENTITY OF PETITIONER[Rule 15(a)] Petitioner's name is Serea Innovations,Inc. It is a corporation created,organized and 1 000058 existing under the laws of the State of Minnesota, with its principal place of business located at 15 South 5'Street,Suite 500,Minneapolis, MN 55402. 2. CORRESPONDENCE [Rule 15(b)] Correspondence and communications regrading this Petition should be sent to: Peter A. Casciato A Professional Corporation 8 California Street, Suite 701 San Francisco CA 94111 Telephone: (415)291-8661 Facsimile:(415)291-8165 With a copy to: Peter Glass,Esq. General Counsel Seren Innovations,Inc. 15 South 5'h Street,Suite 500 Minneapolis MN 55402 Telephone: (612)330-6648 Facsimile: (612) 330-5827 3. DESCRI MON OF SERVICE [Rule 151 Consistent with the requirements of D.95-07-054 and other decisions in 8.95-04- 043/1.95-04-044,as well as Commission decisions pertinent to intraLATA toll and interLATA resale,Petitioner intends to provide the following services: 1. Local Exchange Service-This service will give residential and business users the ability to originate and terminate calls to other users with access to the local exchange network. The local exchange service provided by Petitioner will also enable users to select the interexchange carrier of their choice. 2. Interexhange Carrier Access Service-This service will allow 2 000059 interexchange carriers to interconnect on a switched and dedicated basis with the local exchange network to originate and terminate calls. 3. Interexchange Service-This service will enable residential and business users to complete calls between exchanges within Petitioner's service territories. 4. Long Distance Resale-This service will be provided via the purchase of long distance service from facilities-based interexchange carriers. That service will then be resold to residential and business users. 4. CERTIFICATE OF QUALIFICATION AS FOREIGN CORPORATION [Rule 16(a)] A certified copy of the Petitioner's current Certificate of Qualification as a Foreign Corporation authorized to do business in California is attached to this Petition as Exhibit 1,as is a copy of its Articles of Incorporation. Petitioner is a wholly owned subsidiary of Northern States Power Company("NSP")which, among other things,provides electric generation, transmission and distribution facilities in Minnesota, Wisconsin,North Dakota, South Dakota and Michigan. 5. DESCRIPTION OF THE PROPOSED CONSTRUCTION OR EXTENSION [Rule 18(a)] Petitioner initially proposes to construct a hybrid fiber coaxial("HFC")network in Contra Costa County capable of providing its customers the full range of telecommunications services,including those sought herein,as well as other communications not regulated by this Commission,such as cable television. The geographical extent of Petitioner's planned facilities- 3 000060 based network is illustrated by the service area map attached as Exhibit 2A to this Petition.' Petitioner, initially,will lease switching equipment and associated facilities to provide local exchange service. Thus,there will be virtually no construction or installation activities associated with that equipment,which will becarried out within existing commercial office space and will be routine in nature. 6. LIST OF COMPETING CARRIERS AND LOCAL AUTHORITIES [Rule 18(6)] As indicated by the appended certificate of service,Petitioner certifies that a dopy of this Petition has been mailed to the official service list in R95-04-043/1.95-04-044 as well as those facilities-based CLCs presently authorized by the Commission known to the Petitioner. Petitioner requests relief from the provisions of Rule 15(b)that require service of this Petition on cities and counties in California where its services will be provided given that Petitioner will not construct or extend any facilities to provide the proposed services. That relief has been granted for similar Petitions in D.91-04-046(April 24, 199 1) and has routinely been allowed for other statewide telecommunications certificate Petitions filed before this Commission and in R.95-04- 043/1.95-04-044. 7. PROPOSED AREA OF SERVICE [Rule 18(c)] Attached to this Petition as Exhibit 2A is a neap showing the approximate location of Petitioner's planned facilities-based local exchange service area. Exhibit 2B encompasses To the extent Petitioner cannot extend its local exchange services to a bonafide prospective customer over Petitioner's own network facilities,Petitioner may purchase bundled services or unbundled network elements from other ILECs or CLECs,if available at economical prices. 4 000061 Petitioner's projected resale area. 8. IDEN'T'IFICATION OF REQUIRED FRANCHISES AND HEALTH AND SAFETY PERMITS [Rule 18(d)] No municipal franchise will be required by Petitioner to provide the proposed local exchange and intrastate interexchange telecommunications services. In accordance with applicable state and local requirements,Petitioner will secure any necessary health and safety permits for the provision of services as described above in connection with the deployment of its network. Additionally,Petitioner's cable television operations, in accordance with applicable state and local law,will obtain the requisite health and safety_permits related to the cable television plant to be made available for the use of Petitioner. 9. STATEMENT OF PUBLIC INTEREST [Rule 15(e)] By its issuance of Decisions 95-07-054,95-12-056 and 96-02-072,the Commission recognizes the benefits of competition for local exchange and intraLATA services. As a result, the Commission has granted Petitions for certificates to over 100 facilities-based and resale CLECs to provide local exchange and intraLATA and related services. Petitioner's proposed operations will serve the public interest by providing users of local exchange, intraLATA and interLATA service a further choice of carriers and high quality service,expanding the availability of technologically-advanced communications facilities in the state. 10. ESTIMATED ANNUAL FIXED AND OPERATING COSTS,ECONOMIC FEASIBILITY&FINANCIAL STATEMENT AND QUALIFICATIONS [Rules 17 and 18(fl,(g,)] Petitioner has set forth its most recent financial statement as part of Exhibit 3. Pursuant to General Order 66-C,Petitioner has requested confidential treatment of its financial statement. 5 000062 0 Petitioner also submits, as Exhibit 4,the most recent SEC Form l OQ of its ultimate parent,NSP. Thus,Petitioner has cash or cash equivalents in excess of$100,000,as required by Commission Local Rule 4(B)as defined in Appendix C,thereto, and is,therefore, financially qualified to offer its services. 11. PROPOSED RATES [Rule 18(h)] Petitioner will offer its services pursuant to its tariffs,on a non-dis6rim natory basis. Attached as Exhibit 5 are Petitioner's illustrative tariffs relating to the rates,terms and conditions of its proposed local exchange telecommunications and other services: The illustrative tariff contains tentative rates and terms for all services to be offered,and consistent with the August 17, 1995 ALJ Ruling in R.95-04-043/1.95-04-044,these placeholder rates are specified in the tariff by *. Final rates will be filed before service is commenced. 12. GENERAL ORDER 104-A STATEMENT [Rule 18(i)] As previously noted,attached as Exhibit 4 is a copy of the December 31, 1997 Form 10- K of NSP,Petitioner's parent company which satisfies the requirements of General Order 104-A and Rule 18(i),because Petitioner,itself,prepares no reports required under that General Order or Rule. 13. EXPECTED CUSTOMER BASE [Rule 18(j)] Pursuant to Rule 180),Petitioner's estimates of the number of customers who will subscribe to its proposed local exchange service at the end of its first and fifth years of service are set forth in Exhibit 6. Pursuant to General Order 66-C,Petitioner has requested confidentiality for these estimates due to their competitively sensitive and proprietary nature. 6 000063 14. TECHNICAL EXPERTISE [EWTIAL RULE 4.A] Petitioner is currently authorized to provide local exchange services in Minnesota. Glynis Hinschberger,president and CEO of Petitioner,has more than 20 years of technical and management experience in the creation,marketing and maintenance of advanced communications systems. Jerry Compagnoli is Petitioner's Director of Network Operations and also has more than 2.0 years of management experience in the computer, aerospace and communications industries. Similarly,Brad Zuehlke,Petitioner's Manager,Telephony Implementation and Integration,also brings 21 years of telecommunications experience to Petitioner's management team. Thus,Petitioner has the requisite technical expertise.to receive the requested CPCN. 15. COMPLIANCE WITH RULE 17.1 (CEQA) -PROPONENT'S ENVIRONMENTAL ASSESSMENT Pursuant to Rule 17.1,and Initial Rule 4.C(2), a Proponent's Environmental Assessment ("PEA")meeting the requirements of the California Environmental Quality Act is provided as Exhibit 7. 16. DEMONSTRATION OF COMPLIANCE WITH COMMISSION RULES Exhibit 8 demonstrates Petitioner's compliance with Rule 18 of the Commission's Rules of Practice and Procedure governing the issuance of certificates of public convenience and necessity. 17. REQUEST FOR EXEMPTION Petitioner respectfully requests that,in connection with its authorization as a CLEC,it be accorded the same streamlined regulatory treatment previously accorded to other CLECs as a 7 000064 • non-dominant interexchange carrier as set forth in D.96-02-075 and as adopted by non-dominant interexchange carriers("NDIECs"),and including the following: 1. Petitioner seeks exemption from the provisions of PU Code Section 816-830 (pertaining to the issuance of stocks and securities)and PU Code Section 851 (pertaining to the transfer or encumbrance of utility assets when such transfer or encumbrance is for the purpose of securing debt). The Commission has previously concluded that NDIECs should be exempt from the provisions and requirements of PU Code Sections 816-830 and 851 (insofar as these sections pertain to the issuance of securities and transfer or encumbrance of utility property for purposes of securing debt) in D.85-07-081,D.85-11444 and D.86-08-057,as confirmed by D.90-09-032- This exemption was extended to CLECs in D.96-02-072,ordering paragraph 18. 2. Petitioner also requests that it be accorded the exemptions afforded NDIECs from the requirements of General Order No.96-A regarding tariff pagination and the setting forth of each rule on a separate page,as granted by D.90-09-032. D 3. Petitioner further requests that it be exempted from any requirement to maintain its books and records in accordance with the Uniform System of Accounts specified in Title 47 C.F.R. Part 32 consistent with D.99-02-038. 18. EX PARTE AUTHORIZATION AUTHORITY Petitioner requests that this Petition be granted upon an ex parte basis. Petitioner is prepared to offer its proposed telecommunications service at reasonable rates within a reasonably short period following Commission authorization. Such exa�rte action would enable Petitioner to meet competition. Petitioner is further requesting that ally decision granting Petitioner the authority herein 8 000065 requested become effective on date of issuance;that Petitioner be authorized to file tariffs five days after the effective date of the Commission's decision; and that such tariffs become effective one day after filing. Petitioner believes that the introduction of its proposed competitive innovative service provides ample public interest justification for its request. - 19. AUSCELLANEOUS This Petition is fully verified and contains the evidence which Petitioner believes fully supports the request authorization. If additional data or information are desired,Petitioner will promptly submit the same in verified form. 9 000066 20. CONCLUSION WHEREFORE,Petitioner requests that the California Public Utilities Commission authorize it to provide,to the extent previously determined by this Commission,(1)-local exchange telecommunications service as a competitive local exchange carrier and(2)intraLATA and interLATA telecommunications services,within California DATED: March 4, 1999 Respectfully Submitted, SEREN INNOVATIONS,INC. Peter Glass, Esq. General Counsel Seren Innovations,Inc. 15 South 5'h Street,Suite 500 Minneapolis MN 55402 Telephone: (612)330-6648 Facsimile: (612) 330-5827 Email: glsp02@nspco.com ZAZ XAProfessional Casciato Co rporation California Street,Suite 701 San Francisco CA 94111 Telephone: (415)291-8661 Facsimile: (415)291-8165 Email:casciato@dnai.com Attorney for Seren Innovations,Inc. 10 00006'7 VERIFICATION I,Glynis Hinschberger,President of Seren Innovations, Inc., do hereby verify that the information in the foregoing "Petition for a Certificate of Public Convenience and Necessity to Provide Competitive Local Exchange Service" and its exhibits are true, correct and complete to the best of my.lmowledge and belief. I verify that the foregoing is true under penalty of perjury. _ Dated this day of March, 1999 at Minneapolis,MN. /wo y�f C'Ylyyfs Hinschberger Pregident Seren Innovations,Inc. 000068 a� Sem` I� • S�i�Ate` t)- � � �if• r ',1trr'�`{�.. �i}��1•�'�[+-?�!'Lrx.,?• � F' ::��Kiii" •, .ta � :} t' � ��`' a .t •M''►� �``:�• i •C'.��"}' t�i.�i►Vr�� '.��(�,O}�I�j•�@yi,�.. �:�•� .r��:'•t'-.,y�^ •�= •Y"riG7 �• �'. Y - 4 .. "R�*• �k',i ;��', t, • t�:�•Jew ��-r.• �t� ��E(;��1r t; � � w}:>�•',jr.ti�p�, _a.�1��1r .�„�,, ,, .* • � � (�Jd!� i^' �f r.at�..i�G �"'�*``'%1T}o - � R:�-r�'.� L tiY` f x •ri�:,� '�I�i:...ti+�'... •�• 3T !�. .� p •,j;6 tl ..r pTT1 a.,,,, ,r Qtr i�;1 T••i0rt � '•�{,� hjMl1� �•.• �•.• �'.•tl' \ 'SSM .►�• ''i 'ry�'/. 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Z=�`,. �+ ted,•.` .: \ .� �.r. y....^- C � ..,•. ,i �/ "��r�' ^.�� '�" .�i •��:�;r'�4ti: .,s.• • �It� '•... +'\Y. f\a 1. �k!�• J - +�� ' s , .`• ''q .t` • � i�t>�•= �� a,,•'i a; 1 RT � �� t' .,. Sal+ ;�.. _� t}�1`, Jzt -�' � c'xi i ti".`J� •�•• + _' .. ..`. 'S. 1��`{��! `� ,...• :rte (f t �•_ •/�/• • '• :tai% ' r t i � D •:tet�� _ � `'�`t a lr�s tis•• F i •F ._� _j tom? .;:��'r .. .�•.,'� ••'i+• Slr 7 r-_ c"7G s.`'� �� ''�}• s�`. a4j :�rt,�:�st?.ti. - fir:. III 1 � + �F{ { �.-�1I • � Fa ��s�, ins fit •�,L�'�.i��;�' -1-:� �:-. /i y., f� BEFORE THE PUBLIC UTILITIES COhMSSION OF THE STATE OF CALIFORNIA In the Matter of the Petition ) of Seren Innovations,Inc. for a ) Certificate of Public Convenience and ) I.95-04-044 Necessity to provide Competitive Local ) Petition No. Exchange,IntraLATA and InterLATA ) Service ) Exhibit 7 PROPONENT'S ENVIRONMENTAL ASSESSMENT OF SEREN INNOVATIONS,INC. Pursuant to Rule 17.1 of the Rules of Practice and Procedure of the Public Utilities Commission,Applicant submits this assessment of the environmental impacts that would accompany the grant of its Petitioner. 1. Petitioner seeks a Certificate of Public Convenience and Necessity to provide local exchange and related services,as a competitive exchange carrier authorized by this Commission. The Commission determined,in Decision No. 95-07-054(July 24, 1995), that competition in local exchange services is in the public interest and will promote the public convenience and necessity. 2. Petitioner's facilities-based telephone services will be provided using a hybrid fiber coaxial network built to provide cable television services. Initially, switching facilities will be leased from an existing provider. Petitioner's cable operations will address with local authorities the environmental issues applicable to such infrastructure 0000'72 prior to making such facilities available for telephony, as authorized by this Commission. In addition, Petitioner's cable operations will secure any required ministerial permits from the appropriate local entities. Petitioner's network facilities will be limited to existing rights of way and the use of existing conduits or ducts in existing utility rights of way. If Petitioner ever intends to extend its construction local exchange facilities beyond the utility right-of-way into undisturbed areas or other right-of-way, Petitioner will file a Petition to Modify its Certificate of Public Convenience and Necessity,to the extent such modification is required by the Commission. 3. For these reasons,a grant of this Petition is reasonably certain to have no significant environmental impacts,within the meaning of the California Environmental Quality Act of 1970, Public Resources Code Sections 21000,et se4. and the petition fits within the "common sense"exception to CEQA,warranting a Negative Declaration. Similarly,no purpose would be served by completing the"Environmental Checklist Form"attached to Decision 89905 (January 30, 1979),as every item would be checked "no." The Commission should issue a Negative Declaration to that effect. 2 000073 TO: Board of Supervisors CONTRA FROM: John Sweeten, County Administrator `3 COSTA .. . P - Silvano B. Marchesi, County Counsel '��-`L��-��' COUNTY S. 'rrq-c)unT' DATE: November 6, 2001 SUBJECT: Appeal of Seren Innovations, Inc. from denial of Encroachment Permit SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION(S): Deny the appeal of Seren Innovations, Inc. from denial of an encroachment permit by the County Administrator. .BACKGROUND/REASON(S) FOR RECOMMENDATIONS): Seren appeals County staff's denial of Seren's application for an encroachment permit to install its cable/telecommunications facilities in the County's road rights of way. Seren asserts that because it has a Certificate of Public Convenience and Necessity("CPCN") from the California Public Utilities Commission, _.the County must issue it an encroachment permit to install its facilities in the County's road rights of way. Upon reviewing Seren's CPCN and associated documents, including Seren's representation that it would not be installing its facilities under the authority of the CPCN, staff has concluded that the CPCN does not allow Seren to install its facilities in the County's rights of way. County staff's reason and authority for recommending denial of the appeal are set forth in detail in the County Staff Report and Recommendation, filed under separate cover. CONTINUED ON ATTACHMENT: YES SIGNATURE: ^RECOMMENDATION OF COUNTY ADMINISTRATOR_RECOMMENDATION OF BOARD COMMITTEE -APPROVE OTHER SIGNATURE(S): r ACTION OF BOA ON December 18, 2002 APPROVED AS RECOMMENDEDXX OTHER XX ;a SEE ATTACHED ADDENDUM FOR BOARD"S ACTION y VOTE OF SUPERVISORS: I HEREBY CERTIFY THAT THIS IS A XX UNANIMOUS (ABSENT None TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ABSENT: . ABSTAIN: ON THE MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. ATTESTED: December 18, 2002 JOHN SWEETEN, CLERK OF THE BOARD OF SUPERVISORS Contact: County Counsel (L. Fujii) AND COUNTY ADMINISTRATOR cc: John Sweeten, County Administrator Pat Burke, CATV Administrator Catherine Kutsuris, Deputy Director ' Community Development Department Maurice Shiu, Public Works Director B I , DEPUTY I:VOANN\l FF�tierenbdmem.wpd • • ADDENDUM TO ITEM D.6 December 18, 2001 On this date, the Board of Supervisors considered the administrative appeal by Seren Innovatrions, from denial of an encroachment permit by the County Administrator, as continued from November 6, 2001. Present were Silvano Marchesi, County Counsel and Lillian Fuji, County Counsel. The following people addressed the Board on behalf of Seren Innovations (Appellents): Peter Casciato, Seren Innovations, 8 California Street, #701, San Francisco, Debra Keller., Shapiro, Buchman, Provine &Patten, 1333 N. California Blvd., #350, Walnut Creek; Patty Friesen, Seren Innovations, 215 Mason Circle, Concord; William Minyard, Seren Innovations, 215 Mason Circle, Concord. After further discussion, the Board took the following action: DECLARED the Board's intent to deny the administrative appeal of Seren Innovations, Inc. from the decision of the Contra Costa County, Office of the County Administrator denying the application of Seren Innovations for encroachment permits; DIRECTED County Counsel to prepare findings on the matter, for placement on the consent section of the January 8, 2002 Board of Supervisors Agenda. • REQUEST TO SPEAR FORM (THREE (3) MINUTE LIMIT) 0 Complete this form and place it in the box near the speakers' rostrum before addressing the Board. Name: la4er &SGi' a-'J phone: qlS"- o l.'gu, Address: :? 6174 (Oin)--t Slree.*t A-70 City: Sg� ��G�tCiSCo I am speaking for myself or organization: ��-✓ (name of organization) CHECK ONE: I wish to speak on Agenda Item # b 6, Date: 12 119 0 My comments will be: general for against I wish to speak on the subject of I do not wish to speak but leave these comments for the Board to consider: • (p.asaq aq Asuz suosied TTP os suoigequasead 3o g4buaT 4TUITT APUI aTsgD aqs) •saaxsads snoTna.zd Aq apsut squammoo buTgsadaj pTonV •SagnuTia aaigq 04 uoT4squasead jnoA 4TMTq •S •buTxsads ajojaq aTgsTTsns 3T uoT4s4uamnoop q.aoddns JO uoTqu4uasaad anoA 3o Mod s Xa9lD aqq 9nT9 •� •uoT4szTusbJO us 30 8nT4s4u9s9ad9.a aq4 ss aO 3T9sanoA jo3 buTxsads aas noA jag4agm pus sseapps pus auisu anoA buT4s4s Aq uTbag •ucnTpod aq4 4s auogdojDTM 9q4 04UT Needs assaTd •uoT4s4uasajd jnoA axsui o4 uo paTTso aq TTTM nod • Z •pajapTsuoo aq o4 sT utagT spuabs anoA eaojaq auogdoaDTut s,jaxsads aqq o4 4xau xoq aq4 UT (apTs as.zanOa aqq UO) uuoj „xsadg o-4 gsanbag„ aq4 4Tsodaa •T SHaxy3dS REQUEST TO SPEAR FORM (THREE (3) MINUTE LIMIT) 0 Complete this form and place it in the box near the speakers' rostrum before addressing the Board. ''// Name: �E'� �� / Phone: �o1s /�/Y /- 7� (� �� a �u.ol�-,rte �✓uz`r�,�-e� v Address: /.�33/ll. �'a/�� 1 �SO City: lN�� Cly I am speaking for myself or organization: � °�� -7- ft-d (name of organization) CHECK ONE: I wish to speak on Agenda Item # -T)-6_ Date: 1,2110161 My comments will be: general for ✓ against s t s f G � I wish o peak on the subject of I do not wish to speak but leave these comments for the Board to consider: • (papaq aq Aeu suosaad lie os suoTgeguesead jo ggbuaT gTUXTT Apuz aTpgD aqs) •saaxpads snOTnaad Aq opum squammoo buTgeadaa pTOAV 'sagnuTz aaagg Og uOTgequesead anOA gTMTq 'S 'buTxpads aaojaq aTgeTTene 3T uOTgeguauznOop gaoddns ao uoTgeguasaad anoA jo Add.0 p xaaTo aqg aAtD *v 'uOTgpZTuebaO ue JO anTgpguasaadaa aqg se ao 3TasanOA ao3 buTxpads aap noA aaggagM pup sseappp pup ameu anoA buTgegs Aq uTbag 'C 'MnTpod aqg gp auogdoaOTM aqg 04UT xpads aspaTd •uoTgpquasajd anoA axpm og uo paTTpo aq TITM nOA ' Z •peaepTsuoo aq og ST u194T ppuabp anoA eaojaq euogdoaOTM s,aaxpads aqg og gxau xoq aqg UT (apTs asaanaa aqg UO) iuzoj ,,xpadS Oq gsanbag„ aqg gTsodea •T S2IRXvadS REQUEST TO SPEAR FORM (THREE (3) MINUTE LIMIT) ( 3 J Complete this form. and place it in the box near the speakers'/ rostrum before addressing the Board. Name: �/'� T / �— R S S N Phone• L/1"S C Address: a � I" 1 CA 5O1n GLV Lie City: CO R.6o�4 I am speaking for myself or organization: e,Y-e-V1 (name of organization) CHECK ONE: I wish to speak on Agenda Item # -b Date: My comments will be: general for against I wish to -speak on the subject of I do not wish to speak but leave these comments for the Board to consider: • (papaq aq Apm suosaad TTe os suoTgeguasa.zd jo ggbuaT 4TMTT Aeuz JlvgD aqs) •s.zaXeads snoTABad Aq apeut sguaunuoo buTgsadaj pTonV •sagnuTM e92gg og uoT4e4u9s9Jd .anon gTUITq •5 •buTXeads ejojeq ajgeTTene 3T uoTgegueuinoop gjoddns Jo uoTgeguesaid jnoA jo M60 a X.zaTD aq-4 anTE • t, •uoTgezruebJO us 3o 9nT4e4u9s9adaa aqg ss a0 3jasznoA X03 buTXeads eje noA aaggagM pus ssaippe pup ameu .znoA buTgEgs Aq uTbag • £ •uinTpod aqg ge auogdo.zoTut aqg 04UT Xeads aseaja •uoTgeguasa.zd anoA aXeuz og uo pajjeo aq jjTM no • Z •pa.aaptsuoo aq og ST MagT epuabe .znoA ajojaq auogdoaDTM s,aaXeads aqg og gxau xoq aq-4 UT (apTs 9s.z9n9J agg UO) UUOj „Xeadg og gsanbag,, aqg gTsodea •T sxsx�r�as • REQUEST TO SPEAR FORM (THREE (3) MINUTE LIMIT) Complete this form. and place it in the box near the speakers' /J rostrum before addressing the Board. L� Name: / � 1 Phone: Address: Z�S i`�/'¢�°'`i �,�¢ �� :CitY I am speaking for myself or organization: (name of organization) CHECK ONE: I wish to speak on Agenda Item # D69 Date: My comments will be: general for against I wish to speak on the subject of I do not wish to speak but leave these comments for the Board to consider: • (pavaq aq Aelm suosaad TTP os suoTgsguasaad 3o ggbuaT gTMTT QPM aTEgD Oqy) •Saaxsads snOTnOid Aq apsuz sguammoo buTquadaa pTOAV •sagnuTm aasgg og u0Tgs4u9s9ad anoA gTmTZ •5 •buTxeads eaojaq aTgsTTene JT uoTgsguamnoop gaoddns JO uoTgsguasa.zd anoA go Adoo s XaOID aqg anTO • t •uoTgszTusbzo us 3o OAT gsguasaid9a aqg ss ao 3 TasanoA .ao3 buTxeads a as noA aeg4agm pus sseapps pus auieu anoA buTgegs Aq uTbag C •uinTpod aqg ge auogdoaDTM aqg 04UT xeads assaTd •uoTgeguasa.zd .znoA axem og uo paTTso aq TTTM noA •z •pa.zapTsuoo aq og sT uiagT epuabe anoA eaojaq auogdo.zoTM s,.zaxsads aqg og gxau xoq aqg UT (OPTS OS.zana.z aqg UO) uz703 „xsadg og gsanbag„ aqg gTsodaa •T sxsx�r�as v 1, • BEFORE THE BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA, CALIFORNIA Ian the Matter of the Appeal of SEREN INNOVATIONS, INC. Hearing Date: November 6, 2001 COUNTY STAFF REPORT AND RECOMMENDATION SILVANO B. MARCHESI COUNTY COUNSEL By: Lillian T. Fujii Deputy County Counsel ORIGINAL . 3A&1t��Ap TABLE OF CONTENTS I. RECOMMENDATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I II. BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I III. ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 A. Seren's CPCN Does Not Allow it to Install its Infrastructure in the County's Road Rights of Way Because Seren Represented That it Would Not Be Doing So under the CPCN; Therefore, Such Activity Was Not Part of the Project Covered by the CPCN, and Environmental Review of Such Activity Was Not Conducted. . . . . . . . . . . . . . . . . . . . . . . . . . 3 1. Public Utilities Code Section 7901 Allows Telephone Corporations, But Not Cable Companies, to Construct Facilities in Road Rights of Way Pursuant to a CPCN. . . . . . . . . . . . . . . . . . . . . . . . . . 3 2. Seren's CPCN Does Not Authorize it to Install its Infrastructure in Road Rights of Way Because Such Activity Was Not Part of the Project That the PUC Approved. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3. At a Minimum, Further CEQA Review Is Required. . . . . . . . . . . . . . . 5 B. The Qwest Cases Do Not Apply. The County Is Merely Following StateLaw. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 C. The CPCN Does Not Give Seren Carte Blanche to Say One Thing and Do Another. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 -i- I. RECOMAWNDATION. Deny the appeal of Seren Innovations, Inc. II. BACKGROUND. Seren Innovations, Inc. ("Seren") is, first and foremost, a cable company. In late July and September 1999, Seren entered cable franchises with the cities of Concord and Walnut Creek.' Around that time, Seren approached the Cities of Clayton and Pleasant Hill, the Town of Danville, and the County (jointly, "Communities") requesting cable franchises from the Communities.' Since that time, until about the end of 2000, Seren and the Communities actively pursued a cable franchise agreement. The Communities believed that the terms of a franchise agreement had more or less been reached. However, in July or August, 2000, following the decision in the case of AT&T v. City of Portland (2000) 216 F.3d 871 ("Portland"), Seren's position changed with respect to franchise fees on cable internet revenue. Relying on the Portland case, Seren took the position that it would not pay franchise fees on cable internet revenues.' Meaningful negotiations stopped in late 2000.4 The Communities do not agree with Seren on the interpretation of the Portland case.' Neither do the Cities of Concord and Walnut Creek, which cities expect to receive franchise fees on cable internet revenues, as provided in their franchise agreements with Seren.' In addition, AT&T is currently paying franchise fees on cable internet revenue to 'Declaration of Patricia Burke in Support of County Staff Report and Recommendation ("Burke Declaration"), ¶ 2, See 114, Exhibit D (Walnut Creek Franchise). `Burke Declaration, 2, 5. 'Burke Declaration, 4, Exhibit A (8/31/00 Seren letter). `'Burke Declaration, 4, see Exhibit C (10/6/00 WE letter). 'Burke Declaration, 4, Exhibit B (9/7/00 WE letter). Burke Declaration, ¶ 3, 4, Exhibit D (Walnut Creek Franchise Agreement, pages 4, 36). Page 1 the County and to other Contra Costa cities. However, the Communities acknowledge that rapid changes are taking place in the cable/telecommunications industry, and proposed an addendum to the draft franchise, which would excuse Seren's obligation to pay franchise fees on cable internet revenue if such payment is, in the future, determined to be prohibited by any (particularly federal) law.' This compromise did not satisfy Seren, which continued to demand that the cable franchise agreement provide that Seren is not required to pay franchise fees on cable internet revenue, irrespective of any future change or clarification in the law. Under current federal, state and local law, the Communities are entitled to receive franchise fees and other compensation (e.g., I-net) from cable providers. The Communities' staffs were not willing to make concessions to Seren, were not willing to accept less than what the Communities are or may be entitled to receive under the law, and also were not willing possibly to undermine all Central County communities in current joint cable negotiations with AT&T.$ In any case, upon cable negotiations having stalemated, Seren approached the County for encroachment permits to install its infrastructure in various unincorporated locations. At this time, Seren's immediate goal is to access such unincorporated area roads necessary to complete connections required by its current design to meet its cable franchise obligations to Walnut Creek and Concord. Seren has a Certificate of Public Convenience and Necessity ("CPCN") for the provision of phone service from the California Public Utilities Commission ("PUC").9 A CPCN generally allows a telephone corporation to install its facilities in road rights of way, pursuant to its terms. Seren asserts that its CPCN gives it the right to install its facilities in the County's road rights of way. As discussed below, after reviewing Seren's 'Burke Declaration, ¶ 4, Exhibit B (9/7/00 MVE letter, page 3). Burke Declaration, see 114, Exhibit B (9/7/00 MVE letter),15. 'Declaration of Lillian T. Fujii in Support of Staff Report and Recommendation ("Fujii Declaration"),¶ 3, Exhibit A (CPCN). Page 2 CPCN, including the application and CEQA documents, County staff has determined that Seren's CPCN does not grant it the right to install its infrastructure in the County's road rights of way. Seren's encroachment permit application was denied by letter written by Assistant County Administrator Sara Hoffman. Pursuant to Ordinance Code sections 14-4.002 and 14-4.004 (added by Ordinance No. 70-36), Seren appeals that denial to the Board. For the reasons set forth below, staff recommends that the Board deny Seren's appeal. III. ARGUMENT. A. Seren's CPCN Does Not Allow it to Install its Infrastructure in the County's Road Rights of Way Because Seren Represented That it Would Not Be Doing So under the CPCN; Therefore, Such Activity Was Not Part of the Project Covered by the CPCN, and Environmental Review of Such Activity Was Not Conducted. 1. Public Utilities Code Section 7901 Allows Telephone Corporations, But Not Cable Companies, to Construct Facilities in Road Rights of Way Pursuant to a CPCN. Public Utilities Code section 7901 ("Section 7901") provides: "Telegraph or telephone corporations may construct lines of telegraph or telephone lines along and upon any public road or highway, along or across any of the waters or lands within this State, and may erect poles, posts, piers, or abutments for supporting the insulators, wires, and other necessary fixtures of their lines, in such manner and at such points as not to incommode the public use of the road or highway or interrupt the navigation of the waters." (Emphasis added.) Section 7901 has been construed to grant broad rights to telephone corporations to place facilities in and upon road rights of way (Pacific Tel. & Tel. Co. v. City & County of San Francisco (1961) 197 Ca1.App.2d 133), subject to the authority vested in the PUC (Pacific Tel. & Tel. Co. v City of Los Angeles (1955) 44 Cal.2d 272, 276). Section 7901 does not allow cable companies to place cable facilities in road rights of way. (46 Ops.Cal.Atty.Gen 23, 23-24 (1965).) A cable television company is required to obtain a Page 3 franchise (license) from the County before installing its cable infrastructure. (47 U.S.C. § 541(b)(1); Gov. Code, § 53066; County Ordinance Code § 58-4.004.) A CPCN issued to a telephone company by the PUC grants the company authority to provide telephone service, and grants authority and sets the terms of the company's right to construct facilities in road rights of way under Section 7901.10 Seren is both a cable company and a telephone company." A court may agree that under Section 7901, Seren has the right to construct its telephone and related telecommunications facilities (but not purely cable facilities) in the County's road rights of way. However, this right is subject to the scope of and Seren's compliance with the requirements of its CPCN.` 2. Seren's CPCN Does Not Authorize it to Install its Infrastructure in Road Rights of Way Because Such Activity Was Not Part of the Project That the PUC Approved. Seren's CPCN documents do not authorize it to install its infrastructure in the County's road rights of way, because such construction was not a part of the project for which the PUC issued the CPCN to Seren. Issuance of a CPCN is a"project" subject to review.under the California Environmental Quality Act ("CEQA"). (Public Resources Code, §§ 21.000 et seq., 21065.) In its Environmental Assessment, which is a part of its CPCN application, Seren represented that its facilities would first be built to provide cable television service, and made available for telephone service only after facilities have been installed under cable authorities and permits, as follows: "2. Petitioner's facilities-based telephone services will be provided using a hybrid fiber coaxial network built to provide cable television services. Initially, switching facilities will be leased from an existing provider. Petitioner's cable operations will address tivith local authorities the environmental issues applicable to such 10Fujii Declaration, ¶ 3, Exhibit A, p. 11 (CPCN, Order 11). 11The PUC has accepted Seren's representation that it is a telephone company as evidenced by its issuing Seren a CPCN. ''Fujii Declaration, ¶ 3, Exhibit A, p. 11 (CPCN, Order 1). Page 4 ti infrastructure prior to making such facilities available for telephony, as authorized by this Commission. In addition, Petitioner's cable operations will secure any required ministerial permits from the appropriate local entities. Petitioner's network facilities will be limited to existing rights of way and the use of existing conduits or ducts in existing utility rights of way. If Petitioner ever intends to extend its construction local exchange facilities beyond the utility right-of-way into undisturbed areas or other right-of-way, Petitioner will file a Petition to Modify its Certificate of Public Convenience and Necessity, to the extent such modification is required by the Commission."" As noted above, Seren represented that installation of its infrastructure would be under the environmental scrutiny of cable officials, and that only minimal construction would be undertaken under the CPCN. Consequently, installation of Seren's facilities was not envisioned by the CPCN, not a part of the project for which environmental review was conducted, and therefore not authorized by the CPCN. 3. At a Minimum, Further CEQA Review Is Required One of the basic purposes of CEQA is to inform governmental decision-makers and the public about the potential, significant environmental effects of proposed activities. (CEQA Guidelines (14 Cal.0 ode Regs.), § 15002(a)(1).) This cannot be done if governmental decision-makers do not know what activities are proposed. A negative declaration may be defective if it mischaracterizes the project and fails to acknowledge evidence that significant impacts may occur. (Christward Ministry v. Superior Court (1986) 184 Cal.App.3rd 180; Remy, Thomas et al., Guide to the California Environmental Quality Act (Solano Press 1999 [10"Ed.]), Page 236.) "Fujii Declaration, 11 3, Exhibit B, p. 72-73 (Proponent's Environmental Assessment of Seren Innovations, Inc., 112). See also, Fujii Declaration 11 3, .Exhibit B, p. 60-62 (CPCN Application,JJJJ 5, g). Page 5 As a result of Seren's (and probably other applicants'') representations of minimal or no construction, the PUC did not do an Environmental Impact Report, and approved the CPCNs on the basis of a mitigated negative declaration ("MND"). Indeed, the MND's project description states that "only minor construction is envisioned."15 The environmental impacts of Seren's installing its entire cable infrastructure were not considered. Even if Seren's infrastructure installation could be covered by the CPCN, at the very least, further environmental review is required. Under CEQA, further environmental review is required if: "...substantial changes are proposed in the project which will require major revisions of the previous EIR or negative declaration due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects...." (CEQA Guidelines, § 15162.) (See also, Public Resources Code, § 21166; CEQA Guidelines, §§ 15163, 15164.) Inasmuch as infrastructure installation was not part of the project that was reviewed and considered, this possibly new project may involve new impacts, and certainly involves a substantial increase in the severity of significant effects, not covered by the MND. At a minimum, further environmental review is required if Seren is to install its infrastructure under Section 7901 pursuant to its current CPCN. B. The Qwest Cases Do Not Apply. The County Is Merely Following State Law. Seren asserts that the County's denial of an encroachment permit violates federal telecommunications law because such denial is an attempt to require Seren to obtain a cable franchise, or otherwise impose local requirements on a telecommunications provider. Seren's arguments have no merit. First, Ms. Hoffman's letter merely 14 In the recent past, the PUC issued many CPCNs, and considered numerous applications on a joint basis. Fujii Declaration,Exhibit A, p. 26-27 (Background discussion in Mitigated Negative Declaration). "Fujii Declaration,¶ 3, Exhibit A, p. 28 (MND, ¶ 2). Page 6 • acknowledges the fact that Seren and the County had been negotiating over a cable franchise for a long period of time. It is also clear from Ms. Hoffman's letter that denial of the encroachment permit was based on the fact'that its infrastructure construction was not allowed under the CPCN. Seren cites two cases to support its assertion that federal law prohibits the County's denial of the encroachment permit. However, the two cited cases and federal telecommunications law do not prohibit the County's actions in this case. Section 253 of the federal Telecommunications Act of 1996, provides in relevant part that: "(a) No state or local statute or regulation, or legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications services.16 Both cases cited by Seren involve local ordinances requiring telecommunications companies to obtain telecommunications franchises or special permits that ran afoul of subdivision (a) of section 253. The case of City of Auburn v. Qwest Corporation (9'Cir., 2001, Nos. 99-36173, 99-36219; opinion attached to Seren's September 28, 2001 letter of appeal to the Board), involved a city ordinance requiring a telecommunications franchise as a way to manage telecommunications facilities in rights of way. (City of Auburn v. Qwest Corporation, first paragraph of opinion.) Qwest Communications Corp. v. The City of Berkeley (copy of Order Granting Preliminary Injunction attached to Seren's 16 47 U.S.C. § 253 (b) and(c) provides (subdivisions (d)-(f) not duplicated): "(b) Nothing in this section shall affect the ability of a State to impose, on a competitively neutral basis and consistent with section 254 of this section, requirements necessary to preserve and advance universal service, protect the public safety and welfare, insure the continued quality of telecommunications services, and safeguard the rights of consumers. "(c) Nothing in this section affects the authority of a State or local government to manage the public rights-of-way or to require fair and reasonable compensation fi-om telecommunications providers, on a competitively neutral and nondiscriminatory basis, for the use of public rights-of-way on a nondiscriminatory basis, if the compensation required is publicly disclosed by such government." Page 7 September 28, 2001 letter), involved a Berkeley ordinance requiring telecommunications companies with CPCNs from the PUC to obtain City "Special Telecommunications Permits" and pay additional fees. Unlike the communities in the two Qwest cases, the County has not adopted an ordinance placing additional "franchising" or"special fee or permit" requirements on (non-cable) telecommunications.companies. On the contrary, the County is following State law. Under State law, Seren must obtain and comply with the terms of a CPCN to exercise rights granted by Section 7901. The County is merely insisting that Seren do so. In fact, in Qwest Communications Corp. v. The City of Berkeley, one of Qwest's arguments was that the City of Berkeley's ordinance was preempted by Section 7901. Here, the County is merely following Section 7901, as implemented by the PUC. The two Qwest cases cited by Seren do not apply, and if anything, support the County's position. C. The CPCN Does Not Give Seren Carte Blanche to Say One Thing and Do Another. Seren boldly states that "[t]he CPUC decision exists as a matter of law and the County does not have the authority to overturn [it]." (September 28, 2001 letter, page 3, paragraph l.) However, as discussed above, the County is following State law, not trying to overturn it. Even more confounding is Seren's statement that "Seren's CPCN and the PU Code specifically entitle Seren to construct the noted facilities for telecommunications uses." (September 28, 2001 letter, page 2, paragraph 2.) While Seren's application did state that it will be constructing a hybrid fiber coaxial network in Contra Costa County, its Environmental Assessment, which is the basis of the PUC's environmental review, represented that its infrastructure will be installed under the scrutiny of cable authorities. It is probably on this basis that the PUC did minimal environmental review before issuing the CPCN to Seren. Seren cannot be allowed to state to State authorities that the cable authorities will oversee installation of its infrastructure, then use the same CPCN as authority to install its Page 8 infrastructure when it elects not to enter a cable franchise. It is inconceivable that the law would allow Seren to play State regulatory authorities against the County, by allowing Seren to represent one thing and do the opposite. That cannot be, and is not, the law. Lastly, Seren's appeal alleges that the financial consequences of the County's denial of an encroachment permit will be in the millions of dollars "in costs to re-design the network to avoid the county areas," etc. Seren has only itself to blame. If it had represented to the PUC that it was going to be using the CPCN to install its network, as it now proposes to do, the PUC probably would have at least required a more thorough environmental review of the project. Perhaps Seren would not have been issued a CPCN. In any case, Seren's complaint is without merit. Its appeal should be denied. Dated: rQ�C1M,LY ( 1) 2Do Respectfully submitted, Silvano B. Marchesi County Counsel i: Lillian T. Fu' Deputy County Counsel H:kablc%sad\DD AppAps&—pd Page 9 PROOF OF SERVICE BY MAIL (Code Civ. Proc., §§ 1012, 1013a, 2015.5; Fed. Rules Civ. Proc., rule 5(b)) Re: Appeal of Seren Innovations, Inc. declare that my business address is the County Counsel's Office of Contra Costa County, Administration Building, P.O. Box 69, Martinez, CA 94553; that I am a citizen of the United States, over 18 years of age, employed by the County of Contra Costa and not a party to the within action; and, that I am readily familiar with the County Counsel's office business practice for collection and processing of correspondence for mailing with the United States Postal Service, and know that in the ordinary course of the County Counsel's office business practice the document described below will be deposited with the United States Postal Service on the same date that it is sealed and placed at the County Counsel's office with fully prepaid postage thereon. further declare that I served true copies of: 1. COUNTY STAFF REPORT AND RECOMMENDATION 2. DECLARATION OF PATRICIA BURKE IN SUPPORT OF COUNTY STAFF REPORT AND RECOMMENDATION 3. DECLARATION OF LILLIAN T. FUJII IN SUPPORT OF COUNTY STAFF REPORT AND RECOMMENDATION by placing said copy in an envelope(s) addressed as follows: Debra E. Keller, Esq. Peter A. Casciato, Esq. Shapiro, Buchman, Provine Law Offices of Peter A. Casciato Patton, LLP 8 California Street, Suite 701 1333 N. California Blvd., Ste. 350 San Francisco, CA 94111 Walnut Creek, CA 94596 which place(s) has(have) mail service, which envelope(s) was(were) then sealed, postage fully prepaid thereon, and deposited today for mailing either by directly depositing said envelope in the United States Mail or by following ordinary business practices of the County Counsel's office for collection for processing in the United States Mail at Martinez/Concord, Contra Costa County, California. declare under penalty of perjury that the foregoing is true and correct. Executed at Martinez, California on November 1, 2001. oAnn eredia PROOF OF SERVICE BY MAIL PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT MEDIAONE GROUP, INCORPORATED; MEDIAONE OF VIRGINIA, INCORPORATED; AT&T CORPORATION, Plaintiffs-Appel lees, V. COUNTY OF HENRICO,VIRGINIA, Defendant, BELL ATLANTIC CORPORATION;BELL ATLANTIC-VIRGINIA, INCORPORATED; BELL ATLANTIC INTERNET SOLUTIONS, INCORPORATED, Intervenors/Defendants. No. 00-1680 and GTE INTELLIGENT NETWORK SERVICES, INCORPORATED, d/b/a GTE.net, Intervenor-Appellant. VIRGINIA CITIZENS CONSUMER COUNCIL; CONSUMER FEDERATION OF AMERICA; CENTER FOR MEDIA EDUCATION; DISTRICT OF COLUMBIA; CITY OF TACOMA, WASHINGTON; MONTGOMERY COUNTY, MARYLAND; U.S. CONFERENCE OF MAYORS; NATIONAL LEAGUE OF CITIES; NATIONAL ASSOCIATION OF COUNTIES; NATIONAL ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS;VIRGINIA ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS;TEXAS ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS; MINNESOTA ASSOCIATION OF COMMUNITY TELECOMMUNICATIONS ADMINISTRATORS; OPENNET COALITION; HANDS OFF THE INTERNET; FEDERAL COMMUNICATIONS COMMISSION; NATIONAL CABLE TELEVISION ASSOCIATION; VIRGINIA TELECOMMUNICATIONS ASSOCIATION; WEST VIRGINIA TELECOMMUNICATIONS ASSOCIATION; CABLE TELECOMMUNICATIONS ASSOCIATION OF MARYLAND,DELAWARE AND THE DISTRICT OF COLUMBIA, INCORPORATED;NORTH CAROLINA CABLE TELECOMMUNICATIONS ASSOCIATION, SOUTH CAROLINA TELEVISION ASSOCIATION, Amici Curiae. 2 MEDIAONE GROUP,INCORPORATED; AT&T CORPORATION;MEDIAONE OF VIRGINIA, INCORPORATED; Plaintiffs-Appellees, V. COUNTY OF HENRICO,VIRGINIA, Defendant, GTE INTELLIGENT NETWORK -SERVICES, INCORPORATED, d/b/a GTE.net, Intervenor/Defendant, and No. 00-1709 BELL ATLANTIC CORPORATION; BELL ATLANTIC-VIRGINIA, INCORPORATED; BELL ATLANTIC INTERNET SOLUTIONS, INCORPORATED, Intervenors-Appellants. VIRGINIA CITIZENS CONSUMER COUNCIL;CONSUMER FEDERATION OF AMERICA; CENTER FOR MEDIA EDUCATION; CITY OF TACOMA, WASHINGTON;MONTGOMERY COUNTY, MARYLAND;DISTRICT OF COLUMBIA; U.S. CONFERENCE OF MAYORS; NATIONAL LEAGUE OF CITIES; 3 NATIONAL ASSOCIATION OF COUNTIES; NATIONAL ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS;VIRGINIA ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS;TEXAS ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS;MINNESOTA ASSOCIATION OF COMMUNITY TELECOMMUNICATIONS ADMINISTRATORS; OPENNET COALITION;HANDS OFF THE INTERNET; FEDERAL COMMUNICATIONS COMMMISSION; NATIONAL CABLE TELEVISION ASSOCIATION;VIRGINIA TELECOMMUNICATIONS ASSOCIATION; WEST VIRGINIA TELECOMMUNICATIONS ASSOCIATION; CABLE TELECOMMUNICATIONS ASSOCIATION OF MARYLAND,DELAWARE AND THE DISTRICT OF COLUMBIA, INCORPORATED; NORTH CAROLINA CABLE TELECOMMUNICATIONS ASSOCIATION; SOUTH CAROLINA TELEVISION ASSOCIATION, Amici Curiae. 4 MEDIAONE GROUP, INCORPORATED; MEDIAONE OF VIRGINIA, INCORPORATED; AT&T CORPORATION, Plaintiffs-Appel lees, V. COUNTY OF HENRICO,VIRGINIA, Defendant-Appellant. and GTE INTELLIGENT NETWORK SERVICES, INCORPORATED,d/b/a GTE.net; BELL ATLANTIC No. 00-1719 CORPORATION; BELL ATLANTIC- VIRGINIA,INCORPORATED;BELL ATLANTIC INTERNET SOLUTIONS, INCORPORATED, Intervenors/Defendants. VIRGINIA CITIZENS CONSUMER COUNCIL; CONSUMER FEDERATION OF AMERICA; CENTER FOR MEDIA EDUCATION; CITY OF TACOMA, WASHINGTON;MONTGOMERY COUNTY, MARYLAND;DISTRICT OF COLUMBIA; U.S. CONFERENCE OF MAYORS; NATIONAL LEAGUE OF CITIES; 5 NATIONAL ASSOCIATION OF COUNTIES; NATIONAL ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS;VIRGINIA ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS; TEXAS ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS; MINNESOTA ASSOCIATION OF COMMUNITY TELECOMMUNICATIONS ADMINISTRATORS; OPENNET COALITION; HANDS OFF THE INTERNET; FEDERAL COMMUNICATIONS COMMMISSION; NATIONAL CABLE TELEVISION ASSOCIATION;VIRGINIA TELECOMMUNICATIONS ASSOCIATION; WEST VIRGINIA TELECOMMUNICATIONS ASSOCIATION; CABLE TELECOMMUNICATIONS ASSOCIATION OF MARYLAND, DELAWARE AND THE DISTRICTOF COLUMBIA, INCORPORATED; NORTH CAROLINA CABLE TELECOMMUNICATIONS ASSOCIATION; SOUTH CAROLINA TELEVISION ASSOCIATION, Amici Curiae. Appeals from the United States District Court for the Eastern District of Virginia, at Richmond. Richard L. Williams, Senior District Judge. (CA-00-33-3) Argued: September 27, 2000 Decided:July 11, 2001 Before WIDENER,WILKINS, and MICHAEL,Circuit Judges. 6 Affirmed by published opinion.Judge Michael wrote the opinion, in which Judge Wilkins joined.Judge Widener wrote a concurring opin- ion. COUNSEL ARGUED: Edward Joseph Fuhr, HUNTON&WILLIAMS, Rich- mond,Virginia; Andrew Gerald McBride, COOPER, CARVIN& ROSENTHAL, P.L.L.C., Washington, D.C., for Appellants. David William Carpenter,SIDLEY&AUSTIN, Chicago,Illinois, for Appellees. ON BRIEF: Stacy C.Taylor, Eric H. Feiler, HUNTON &WILLIAMS, Richmond,Virginia;Joseph P. Rapisarda,Jr.,Joseph T. Tokarz, II, Karen M.Adams, COUNTY ATTORNEY'S OFFICE, Richmond,Virginia, for Appellant Henrico. Michael A. Carvin, Noel J. Francisco, COOPER, CARVIN &ROSENTHAL, P.L.L.C., Wash- ington, D.C., for Appellant GTE; Brett M. Kavanaugh,Theodore W. Ullyot, KIRKLAND &ELLIS, Washington, D.C., for Appellant Bell Atlantic. Peter D. Keisler, David L. Lawson, SIDLEY&AUSTIN, Chicago, Illinois;James C. Roberts, Carter Glass, IV, Dabney Carr, IV, MAYS &VALENTINE,L.L.P., Richmond,Virginia; Mark C. Rosenblum, Laura A. Kaster,AT&T CORPORATION, Basking Ridge, New Jersey; Sean Lindsay, David White, MEDIAONE GROUP, INC., Englewood, Colorado, for Appellees. Andrew Jay Schwartzman, Cheryl A. Leanza, Harold J. Feld,MEDIA ACCESS PROJECT, Washington, D.C., for Amici Curiae Consumer Council, et al. Nicholas P. Miller,William Malone,Joseph Van Eaton,John F. Noble,James R. Hobson, MILLER&VAN EATON, P.L.L.C., Washington,D.C., for Amici Curiae NATOA, et al. William P. Cook, . Pamela J. Marple, MANATT, PHELPS&PHILLIPS, L.L.P., Wash- ington, D.C., for Amicus Curiae OpenNET. Christopher Wolf, Bruce E. Boyden, PROSKAUER ROSE,L.L.P.,Washington,D.C.;Tanya L. Forsheit, PROSKAUER ROSE, L.L.P., Los Angeles, California, for Amicus Curiae Hands Off. William B. Schultz,Acting Assistant Attorney General,Jacob M. Lewis, Mark Davies, UNITED STATES DEPARTMENT OF JUSTICE,Washington, D.C.; Christopher J. Wright, General Counsel,Jonathan E. Nuechterlein, Deputy General Counsel,James M. Carr, FEDERAL COMMUNICATIONS COM- MISSION, Washington,D.C., for Amicus Curiae Commission. How- 1 and J. Symons, Tara M. Corvo, MINTZ, LEVIN, COHN, FERRIS, GLOVSKY&POPEO, P.C., Washington, D.C., for Amici Curiae National Cable Television, et al. OPINION MICHAEL, Circuit Judge: AT&T Corporation is still the largest long distance telephone com- pany in the country, and this case is about its recent entry into the broadband telecommunications market that provides high-speed access.to the Internet. AT&T has acquired MediaOne Group, Inc. (MediaOne), which has a cable franchise in Henrico County, Virginia. In approving the transfer of control of the franchise, the Henrico County Board of Supervisors (the County) required MediaOne to pro- vide any requesting Internet Service Provider (ISP) with access to its cable modem platform. AT&T and MediaOne sued the County in fed- eral court, arguing that the open access provision was preempted by federal law (the Communications Act) and, in any event, violated state law. The district court agreed and granted summary judgment for AT&T and MediaOne. We affirm as follows. Under Bell Atlantic Md., Inc. v. Prince George's County, 212 F.3d 863 (4th Cir. 2000), we must consider the state law question first. However, because Vir- ginia law does not provide an independent ground for disposition of the case, we proceed to the preemption question. Henrico County's open access provision violates the federal Communications Act, 47 U.S.C. § 541(b)(3)(D), by forcing MediaOne to provide its telecom- munication facilities (its cable modem platform) to any ISP as a con- dition for the County's approval of the transfer of control of the franchise. Because the open access provision is inconsistent with the federal Communications Act, it is preempted and superceded. I. Most residential and small business consumers gain access to the Internet through slower narrowband technology, specifically, through the traditional dial-up telephone modem that is connected to copper lines. Broadband technology is beginning to provide many of these 8 consumers with a high-speed alternative to Internet access, and ana- lysts are forecasting substantial growth in the demand for broadband services.The most common forms of broadband technology are cable modem platforms and digital subscriber lines (DSLs). A broadband pipeline, like the basic telephone infrastructure, serves as a conduit between an Internet user and an ISP,such as America Online,Juno, or Prodigy. In 1998 and 1999 AT&T began a major effort to establish a foot- hold in broadband markets around the country.AT&T sought to enter these markets by acquiring existing cable television companies. One of its first acquisition targets was MediaOne, a large cable company with a franchise in Henrico County,Virginia. Like most cable opera- tors, MediaOne provides traditional cable television service.How- ever, the company has upgraded its cable systems, including the one in Henrico County, to include a cable modem platform that provides a high-speed link to the Internet. In connection with this upgrade MediaOne joined with others to form a company doing business as "Road Runner."Road Runner provides a"bundled"service that com- bines MediaOne's broadband pipeline (the cable modem platform) with the Internet services usually offered by an ISP. MediaOne cus- tomers who want Internet access over cable do not have the option of usingjust MediaOne's cable modem platform; rather, they must sub- scribe to Road Runner and take the Internet services it offers. Although Road Runner customers may subscribe to an ISP unaffili- ated with MediaOne, most customers have no incentive to do that because the features offered by most outside ISPs are nearly identical to those offered by Road Runner. Instead of paying for a duplicative Internet service from an outside ISP,most MediaOne customers sim- ply stick with the bundled service provided by Road Runner. On May 6, 1999, AT&T and MediaOne entered into an agreement to merge. The merger, which has now been finalized, gives AT&T control of all of MediaOne's cable television systems, including the system that holds a franchise in Henrico County. In July 1999 AT&T and MediaOne applied to the County for formal approval of the trans- fer of control.The County gave its approval in an ordinance adopted in December 1999.The County's approval, however,was conditioned on the requirement that"[n]o later than December 31, 2000, [Medi- aOne] shall provide any requesting Internet Service Provider (ISP) 9 access to its cable modem platform (unbundled from the provision of content) on rates, terms, and conditions that are at least as favorable as those on which it provides such access to itself, to its affiliates, or to any other person."This open access condition would require Medi- aOne to open its broadband pipeline to unaffiliated ISPs. MediaOne customers would thus be able to access the Internet over MediaOne's cable modem platform without subscribing to the bundled Road Run- ner service.* AT&T and MediaOne chafed under the open access condition mandated by Henrico County.They sued the County in federal court in the Eastern District of Virginia, seeking a declaratoryjudgment that the condition violates the First Amendment and the Commerce Clause, is preempted by federal law, and is void under Virginia law. AT&T and MediaOne also asked for an injunction against the enforcement of the condition. They moved promptly for summary judgment on the grounds that the open access requirement is pre- empted by the Communications Act of 1934, as amended by the Tele- communications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996), and is unenforceable under Virginia law. GTE Intelligent Net- work Services, Inc., Bell Atlantic Corp., Bell Atlantic Virginia, Inc., and Bell Atlantic Internet Solutions, Inc. (collectively"Verizon") were allowed to intervene as defendants on the side of the County. Verizon, of course, offers a DSL service that competes with Medi- aOne's Road Runner service.The County and Verizon filed a cross- motion for summary judgment asserting that the open access condi- tion was not preempted by federal law and that it was a valid exercise of the County's authority under Virginia law. *In its order approving the transfer of control of MediaOne's federal licenses to AT&T, the.Federal Communications Commission noted that MediaOne has"committed to open [its] cable modem platform to unaffil- iated ISPs as soon as . . . its exclusive contract with Road Runner expires in December 2001."In the Matter of Applications for Consent to the Transfer of Control of Licenses and Section 214 Authorizations from MediaOne Group, Inc.,Transferor, to AT&T Corp.Transferee, 15 F.C.C.R. 9816, 1 120 (2000). Specifically,MediaOne has agreed to negotiate, upon the expiration of its exclusive contract with Road Run- ner, mutually acceptable access agreements with unaffiliated ISPs. See id. 1121. 10 The district court granted AT&T and MediaOne's motion for sum- maryjudgment. See MediaOne Group, Inc. V. County of Henrico, 97 F. Supp. 2d 712 (E.D. Va. 2000).The court concluded that the open access condition was preempted by several provisions of the Commu- nications Act. First, it held that the condition violates 47 U.S.C. § 541(b)(3)(D) by requiring MediaOne to provide its telecommunica- tions facilities "to any requesting ISP"as a condition for the County's approval of the transfer of control. Id. at 714. Second, the court held that the open access condition violates 47 U.S.C.§ 544(e) because it would condition and restrict the use of MediaOne's transmission tech- nology. Id. at 715. Third, after concluding that Road Runner is a "cable service,"the court held that the open access condition is also barred by 47 U.S.C. §§ 541(c) and 544(f)(1). Because the condition would require MediaOne to provide all ISPs nondiscriminatory access to its cable modem platform, the court concluded that the County was attempting to regulate MediaOne as a"common carrier"in violation of§ 541(c). Id. at 715-716.The court also held that the condition is contrary tc'§_7544(f)(1)'s prohibition against"requirements regarding the provision or content of cable services."Id. at 716. Finally, the dis- trict court held that the open access requirement is void under Vir- ginia law because nothing in the Virginia Code (as it relates to the regulation of cable systems) expressly or impliedly authorizes the County to impose such a condition. The County and Verizon appeal the district court's order granting MediaOne and AT&T's motion for summaryjudgment.We review a summary judgment decision de novo. See AT&T Communications of Va. v. Bell Atlantic-Va., Inc., 197 F.3d 663, 668 (4th Cir. 1999). II. This case boils down to two questions: (1) the federal constitutional question of whether the Communications Act preempts any power Henrico County has under the Virginia Code to enact an open access provision and (2) the state law question of whether the County has the authority under the Virginia Code to enact such a provision. Recently, in Bell Atlantic Md., Inc. v. Prince George's County, 212 F.3d 863 (4th Cir. 2000), we observed that the question of"whether a federal statute preempts a state statute . . . is a constitutional ques- 11 tion."Id. at 865. We went on to hold that when a court is faced with a constitutional question of federal preemption and a question of state law, the court should"decide only"the state law question if it pro- vides an independent"ground upon which the case may be disposed of."Id. at 866 (quoting Ashwander v. Tenn. Valley Auth., 297 U.S. 288,746-47 (1936) (Brandeis,J., concurring)).This rule is based on the principle that"courts should avoid deciding constitutional ques- tions unless they are essential to the disposition of a case."Id. at 865. To complete the point, we state the obvious: an independent state law ground is one that allows us to avoid deciding a constitutional ques- tion. See id. at 865 (noting that the federal statute at issue reserved to local governments "specific powers"that might provide grounds for deciding the case). In sum, according to Bell Atlantic, if a case with a constitutional question of preemption also presents an independent and dispositive question under state law, we should confine ourselves to the latter. We turn, then, to Virginia law to see whether it provides an independent ground for disposition of this case. A Virginia county's authority under state law to license and regu- late cable television operators is found in Va. Code Ann. § 15.2-2108 (the"cable statute").The General Assembly's grant of regulatory authority to the county (or locality) under the cable statute is broad: Localities may by ordinance exercise all the regulatory pow- ers over cable television systems granted by the Cable Tele- vision Consumer Protection and Competition Act of 1992 (P.L. 102-3085, 1992). These regulatory powers shall include the authority (i) to enforce customer service stan- dards in accordance with the Act, (ii) to enforce more strin- gent standards as agreed upon by the cable television system operator through the terms of the franchise, and (iii) to regu- late the rates for basic cable service in accordance with the Act. Va.Code Ann. § 15.2-2108(F). A Virginia county must exercise this regulatory power in a way that prevents cable operators from taking unfair advantage of their franchises. Specifically, a county must regu- late in a manner consistent"with the policy of the Commonwealth to provide for the adequate, economical, and efficient delivery of[cable] systems to the consuming public [and] to protect the public from 12 excessive prices and unfair competition."Id. § 15.2-2108(E). Again, the Virginia cable statute confers broad authority on counties to regu- late cable television systems, and there is no specific provision in the statute that prevents a county from enacting an open access ordinance. The Virginia statute does have a catchall provision that limits a coun- ty's authority to regulate cable operators: section 15.2-2108(E) of the Virginia Code prohibits any cable regulation or ordinance that is"in- consistent with either the laws of the Commonwealth or federal law." We have searched and have not found any Virginia statute or any decision of the courts of the Commonwealth that would prohibit the County's open access provision. The provision is thus not inconsistent with the laws of the Commonwealth. Because the open access provi- sion is not prohibited by either the Virginia cable statute or by other laws of the Commonwealth, we do not (thus far) have any indepen- dent state law ground that allows us to avoid the federal preemption question. The Virginia cable statute does, of course, prohibit any cable regu- lation or ordinance that is "inconsistent . . . with federal law."Va. Code Ann. § 15.2-2108(E). This raises the question of whether Vir- ginia law, by embracing federal law, provides an independent state law ground for decision, thereby requiring us to avoid the constitu- tional question of federal preemption under the rule of Bell Atlantic Md., Inc. v. Prince Georize's County, 212 F.3d 863 (4th Cir. 2000). If we were to decide this case under§ 15.2-2108(E) of the Virginia cable statute, the question would be whether Henrico County's open access provision is"inconsistent . . . with federal law,"that is, the Communications Act. This is the same question we would ask under a federal preemption analysis. See 47 U.S.C.§ 556(c) ("[A]ny provi- sion of law of any . . . franchising authority. . . which is inconsistent with [the Communications Act] shall be deemed to be preempted and superceded."). If we were to decide the state law question first, we would in effect be deciding the federal preemption question as well: Thus,the state law ground in this case is not independent because it does not allow us to"avoid deciding [the] constitutional question[]" of federal preemption. Bell Atlantic, 212 F.3d at 865.We are there- fore free under Bell Atlantic to proceed to the question of federal pre- emption and determine whether Henrico County's open access provision"is 'inconsistent with"the Communications Act. See 47 U.S.C. §556(c). 13 • • The district court held that the open access provision is inconsistent with 47 U.S.C. § 541(b)(3)(D) because it would require MediaOne to provide telecommunications facilities as a condition for approving transfer of control of MediaOne's cable franchise to AT&T. See MediaOne Group, Inc.v. County of Henrico, 97 F. Supp. 2d 712, 714 (E.D.Va. 2000). Section 541(b)(3)(D) says that"a franchising author- ity may not require a cable operator to provide any telecommunica- tions service or facilities, other than institutional networks, as a condition of the initial grant of a franchise, franchise renewal, or a transfer of a franchise."47 U.S.C. § 541(b)(3)(D) (emphasis added). The term"telecommunications"is defined as"the transmission, between or among points specified by the user,of information of the user's choosing, without change in the form or content of the informa- tion as sent and received."Id. § 153(43). Although the Communica- tions Act does not define the word"facilities"as used in "telecommunications facilities," it is evident from the language of the statute that these facilities are the physical installations or infrastruc- ture necessary for transmission. MediaOne's Road Runner service combines the use of a cable modem platform with access to the Internet. Road Runner's cable modem platform, separated from its Internet service component, is a telecommunications facility because it is a pipeline for telecommuni- cations, that is, for"the transmission . . . of information of the user's choosing, without change in the form or content." Id. § 153(43) . (defining"telecommunications"). As a condition for approving the change in control of the MediaOne franchise,the County required MediaOne to provide its "cable modem platform (unbundled from the provision of content)"to"any requesting Internet Service Provider." The provision unbundles Road Runner's Internet access service from its cable modem platform and compels MediaOne to offer the plat- form to unaffiliated ISPs for use as a transmission pipeline for their services.The open access provision therefore requires MediaOne to provide "telecommunications . . . facilities . . . as a condition of. . . a transfer of a franchise"in violation of§541(b)(3)(D). The County and Verizon argue that even if the cable modem plat- form is a telecommunications facility, § 541(b)(3)(D) still does not outlaw the open access provision. Section 541(b)(3)(D), they say, only prohibits localities from requiring cable operators to construct 14 new telecommunications facilities, and the provision here does not impose any such requirement.That argument ignores the statute's plain language. Again, § 541(b)(3)(D) declares that franchising authorities may not require cable operators"to provide any telecom- munications . . . facilities"as a condition to the transfer of a franchise. The section does not limit itself to new construction. Rather, it bars any condition that requires a cable operator to provide telecommuni- cations facilities regardless of whether the facilities are in existence or must be built. The County makes a separate argument that MediaOne's facilities qualify as a"cable system"that cannot be said to include any tele- communications facilities. Under the Communications Act a cable system is defined as"a facility . . . that is designed to provide cable service which includes video programming and which is provided to multiple subscribers within a community."47 U.S.C. §522(7).The County points out that MediaOne offers traditional"cable services," like video programming, over its facilities. It therefore asserts that because its system is"designed to provide cable service"it cannot be considered a telecommunications facility. According to the County, providing Internet access over its cable system does not magically transform the cable system into a telecommunications facility. We disagree with the County.The Communications Act recognizes that some facilities can be used to provide more than one type of ser- vice.The Act therefore contemplates that multi-purpose facilities will receive different regulatory classification and treatment depending on the service they are providing at a given time. For example, under 47 U.S.C. § 522(7)(C) the definition of"cable system'does not include a facility of a common carrier that offers telecommunications services "except that such facility shall be considered a cable system . . . to the extent that such facility is used in the transmission of video program- ing directly to subscribers, unless the extent of such use is solely to provide interactive on-demand services:"In addition, under 47 U.S.C. § 153(46) the term"telecommunications service"is defined as"the offering of telecommunications for a fee directly to the public . . . regardless of the facilities used." (emphasis added).Therefore, although MediaOne maintains a"cable system ,"its facilities can be properly classified as telecommunications facilities when they pro- vide a transmission path to the Internet. 15 Because the open access condition violates§ 541 (b)(3)(D) of the Communications Act, our analysis of federal law may stop at that. Some of the parties want us to go further, however, and determine the specific regulatory classification of MediaOne's Road Runner service. The County argues that Road Runner is a"cable service"under the Communications Act. See 47 U.S.C. § 522(6) (defining the term "cable service"as "(A) the one-way transmission to subscribers of(i) . video programming, or (ii) other programming service, and (B) sub- scriber interaction, if any, which is required for the selection or use of such video programming or other programming service"). It is very much in the County's interest to have Road Runner classified as a cable service. This would allow the County to regulate a cable opera- tor's provision of Internet access over cable lines. See 47 U.S.C. §§541-49 (authorizing localities to establish and enforce require- ments for cable facilities, equipment, and customer service).Verizon, on the other hand, urges us to hold that the Road Runner service is a"telecommunications service."47 U.S.C.§ 153(46) (defining the term"telecommunications service" as"the offering of telecommuni- cations for a fee directly to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used"). Verizon has an incentive to make this argument. Any determination that Road Runner is a"telecommunications service" could have significant regulatory consequences. Certain federal com- mon carrier obligations could arise,see, e.g. , 47 U.S.C. §§201(b), 251, and all providers of"interstate telecommunications services" must contribute to the universal service fund supporting affordable telephone service, see 47 U.S.C. §§ 153(44), 202, 254. At bottom, Verizon seeks regulatory parity because its DSL service is already regulated as a telecommunications service. See, e.g., In re Deploy- ment of Wireline Servs. Offering, Advanced Telecommunications Capability, 15 F.C.C.R. 385, 19 (1999). Finally, although no one makes the argument here, Road Runner might even be considered an "information service"under the Communications Act. See 47 U.S.C. § 153(20) (defining"information service"as"the offering of a capa- bility for generating, acquiring, storing, transforming, processing, retrievin , utilizing, or making available information via telecommu- nications'l. If Road Runner is classified as an information service, it would not be subject to local franchising or common carrier regula- tion. See Federal-State Joint Bd. on Universal Serv., Report, 13 F.C.C.R. 11,501, 39 (1998). 16 • • As the preceding paragraph illustrates, the issue of the proper regu- latory classification of cable modem service, such as Road Runner, is_ . complex and subject to considerable debate.The outcome will have a marked effect on the provision of Internet services.The FCC, in its amicus brief, has diplomatically reminded us that it has jurisdiction over all interstate communications services, including high-speed broadband services. The FCC also advises'us that it has initiated a proceeding, through a notice of inquiry, to examine classification and open access issues. See Inquiry Concerning High-Speed Access to the Internet Over Cable and Other Facilities, 65 Fed. Reg. 60,441 (2000). The FCC's notice seeks comment on whether cable modem technol- ogy should be classified as a cable service, a telecommunications ser- vice, or an information service, and it also seeks comment on the implications of adopting any particular classification. See In the Mat- ter of Inquiry Concerning High-Speed Access to the Internet Over Cable and Other Facilities, No. 00-355, 2000 WL 1434689, 1 15 (Sept. 28, 2000). In addition, the notice indicates that the FCC is interested in determining whether open access to cable modem plat- forms is necessary to further the"goals of promoting competition, deregulation, innovation,and the deployment of high-speed services." Id. 132. Of course, the merits of open access are not before us.And, as we have already indicated, we do not have to reach the question of whether MediaOne's bundled Road Runner service is a cable ser- vice, a telecommunications service, or an information service. For the time being, therefore, we are content to leave these issues to the expertise of the FCC. We simply hold that Henrico County violated§ 541(b)(3)(D) when . it conditioned the transfer of control of MediaOne's cable franchise by requiring MediaOne to unbundle its Road Runner service and pro- vide open access to its telecommunications facilities, that is, its cable modem platform. Because the open access provision is inconsistent with the federal Communications Act, it is preempted. We therefore affirm the judgment of the district court. AFFIRMED WIDENER,Circuit Judge,concurring: I concur in the result. I arrive at that result, however, by a different route from that of the majority. 17 In this case, Henrico County, by ordinance, required open access to its cable modem platform, which requirement is in violation of the. Federal Communications Act, 47 U.S.C. § 541(b)(3)(D), slip op. at 8. A Virginia statute,Virginia Code§ 15.2-2108(E) (1998), provides, in pertinent part, that"[n]o locality may regulate cable television sys- tems by regulations inconsistent with either laws of the Common- wealth or federal law relating to cable television operations." (italics added) Thus,Virginia has tried, as best as she may, even by specific stat- ute, to prevent her counties from running afoul of the Federal Com- munications Act. The determination of whether or not a local law has been pre- empted by federal law is a Constitutional question. It"is essentially a two-step process of first ascertaining the construction of the two statutes and then determining the Constitutional question of whether they are in conflict."Chicago &NWTR Co. v. Kalo Brick&Tile Co., 450 U.S. 311, 317 (1981) (internal quotations omitted). In Virginia, a county has only the powers expressly granted to it by the Commonwealth, or necessarily implied, and a local ordinance in violation thereof is invalid. Bd. of Supervisors of Augusta County v. Countryside Inv. Co., 522 S.E.2d 610, 613 (Va. 1999). The second rule of construction in Ashwander v. TVA, 297 U.S. 288, 346-47 (Brandeis,J., concurring) (1936), is:"The court will not anticipate a question of Constitutional law in advance of the necessity of deciding it . . . . It is not the habit of the Court to decide questions of a Constitutional nature unless absolutely necessary to a decision of the case." (internal quotations omitted) And the fourth rule of Ash- wander is: "The Court will not pass upon a Constitutional question, although properly presented by the record, if there is also present some other ground upon which the case may be disposed of."Ash- wander, 297 U.S. at 346-47. I suggest the majority decision violates both these rules. In my opinion, the Henrico County ordinance is in violation of state law, being"inconsistent with. . . federal law"under Virginia 18 Code§ 15.2-2108(E). Thus, our decision should rest on the fact that the Henrico County ordinance is contrary to state law, that ground having presented itself, instead of, contrary to Ashwander, deciding a Constitutional question which gets the same result. What purpose is served by States trying to cooperate, as here, if their statutes are to be routinely Constitutionally preempted? 19 Page 1 of 2 Peter Casciato From: Jeffrey Sinsheimer<JS@calcable.org> To: <bill.rosendahl@adelphia.com>; <janet.spatz@adelphia.com>; <[brown @adelphia.net>; <rfisher@adelphia.net>; <dan.deutsch@adelphiacom.com>; <gmtele@aol.com>; <hancock@aol.com>; <mel4ccta@aol.com>; <bdevine@att.com>; <davidjmiller@att.com>; <deutsch@att.com>; <kmcneely@att.com>; <mhurst@att.com>; <Susanritchie@att.com>; <witherington@att.com>; <dpicciolo@broad band.aft.corn>; <jha rkman @broad band.aft.corn>; <leacock.kent@broadband.att.com>; <molina-amparan.bea@broadband.att.com>; <odum.joni@broad band.aft.com>; <pparks@broad band.aft.corn>; <schena.don@broad band.aft.com>; <cj@calcable.org>; <frank@calcable.org>; <gsemow@calcable.org>; <jerome@calcable.org>; <jerry@calcable.org>; <jsinsheimer@calcable.org>; <julie@calcable.org>; <lesla@calcable.org>; Sent: Thursday, July 12, 2001 8:37 AM Attach: . MediaOne Group v. County of Henrico, Virginia.pdf Subject: AT&T Wins Forced Access Case in 4th Circuit Memorandum Date: July 12, 2001 To: CCTA Board of Directors CCTA Law& Public Policy Committee Communications Services Committee From: Jeffrey Sinsheimer Lesla Lehtonen Re: MediaOne v. Henrico County Attached please.find a copy of AT&T's forced access victory case: MediaOne Group v. Henrico County. If you have any questions, please do not hesitate contact our Oakland office. js/ll:sew Attachment Jeffrey Sinsheimer Vice President, Law& Public Policy California Cable Television Association 4341 Piedmont Avenue Oakland, California 94611 (510) 428-2225 (510) 652-3749 fax j sinsheimer@calcable.org Lesla Lehtonen Vice President, Legal & Regulatory Affairs California Cable Television Association 4341 Piedmont Avenue Oakland, California 94611 (510)428-2225 (510) 652-3749 fax lesla@calcable.org Statement of Confidentiality 7/12/01 Page 2 of 2 The information in this electronic message may be confidential and/or legally privileged information only for the use of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that any copying, dissemination or distribution of confidential or privileged information is strictly prohibited. If you receive this communication in error, please immediately notify us by telephone. For problems or questions relating to this electronic message, please contact Sylvia Wiggins at 510.428.2225, or by electronic mail at sylvia@calcable.org. Our facsimile number is 510.652.3749. 7/12/01 F— �C W v ar+sc° r �! o SE -0 m —'-- W o Z o 19 l.JD g pq>k \ h O V) w d tA � e O LOsa 6 Q h o � s -- I I N O N z 0 N \ \n w ` b 4 1 aJ f � I • 1 P Y_ � P i m s� • � � N � u i p o CSW _ o x LU C O 0 <• 0 U > 0 0 C C_ N ----------- co 5XI crj r V? oo" tv Li ".T!A' X ',L J"' • _7_n�-__ - — :11 N, IV-0 1. U :1 1) J1 I 1. LLLJJJ Tt 01 j'j r:,Ir /__ (f r-A 00 0 11 it N CN 1�Y�7. \ \:F, i \ \:� : A 5' if to Is k 'o X4t4— F 1 HU14P�Z_.- �'•x lid .. .....p Vi`I /11V If U_S 4j' 0", Jr CN c\j it ��'_- , �is'...•d�'1 �:I.._.=\-j;'`:,i.\ �y c/ ✓1��'.�,��1� ��_ .'�,.. •� �;:ti;, >J- 9i y 17 )v J T'� YL 0 I CO Do co 0) CIO rN.) to , •4 co 0) 0) 71 0) Ct 8) EZ F- ........... X-5T cot, IN IN I.0 A' o') ol r 4 0,3 U` I X. - ,-, .I 1 1. t7•l.-_� - �_i', . "." ;r _Y ll'�,ct UP— UY IQ co 11 '� ,�l a, 0 pe �ZM IN 99 -y Y/ -',k, I ff-7 011 LO X. n, W-�p 14 "IV IMe! Yx IMF r__7 YT '06 7�WAK RRI V/1 x%x\- _Tj N....... NK 6 A-V u pq),IF �EZ X.,-` 71 JQL; J\ ui CIV -2 :i A n� - , ,r-� �_� i'` I, r�tjni,,� ``' �..4:p_ �:`,Ic�;•'•ii7.� •:r:�•�'�+�'i:;h_—`, ':i•:• '\'�:�1 :� e1 ! , -jL(( , X 3 -7r - -W, - j"I z 3 Al" Vol, ml CO 00 CY) 00 co F- _m x W u u .Duro mioaw I a p z F- � F m � � as \ fa z u \ O m O p U � p O FO a Z a C U O O F O CL m O U 0. 4.Z 10 A /y N O U U N N r" O h m r � \ J' \ N 0 OD \ N rmj m O r (. r1 • m t N - � m m Dmr 8. BEFORE THE BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA, CALIFORNIA In the Matter of the Appeal of SEREN INNOVATIONS, INC. Hearing Date: November 6, 2001 COUNTY STAFF REPORT AND RECOMMENDATION SILVANO B. MARCHESI COUNTY COUNSEL By: Lillian T. Fujii Deputy County Counsel TABLE OF CONTENTS I. RECOMMENDATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 II. BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 III. ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 A. Seren's CPCN Does Not Allow it to Install its Infrastructure in the County's Road Rights of Way Because Seren Represented That it Would Not Be Doing So under the CPCN; Therefore, Such Activity Was Not Part of the Project Covered by the CPCN, and Environmental Review of Such Activity Was Not Conducted. . . . . . . . . . . . . . . . . . . . . . . . . . 3 1. Public Utilities Code Section 7901 Allows Telephone Corporations, But Not Cable Companies, to Construct Facilities in Road Rights of Way Pursuant to a CPCN. . . . . . . . .. . . . . . . . . . . . . . . . . 3 Z Seren's CPCN Does Not Authorize it to Install its Infrastructure in Road Rights of Way Because Such Activity Was Not Part of the Project That the PUC Approved. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3. At a Minimum, Further CEQA Review Is Required. . . . . . . . . . . . . . . 5 B. The Qwest Cases Do Not Apply. The County Is Merely Following StateLaw. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 C. The CPCN Does Not Give Seren Carte Blanche to Say One Thing and Do Another. . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 -i- I. RECOMMENDATION. Deny the appeal of Seren Innovations, Inc. II. BACKGROUND. Seren Innovations, Inc. ("Seren") is, first and foremost, a cable company. In late July and September 1999, Seren entered cable franchises with the cities of Concord and Walnut Creek.' Around that time, Seren approached the Cities of Clayton and Pleasant Hill, the Town of Danville, and the County (jointly, "Communities") requesting cable franchises from the Communities.' Since that time, until about the end of 2000, Seren and the Communities actively pursued a cable franchise agreement. The Communities believed that the terms of a franchise agreement had more or less been reached. However, in July or August, 2000, following the decision in the case of AT&T v. City of Portland(2000) 216 F.3d 871 ("Portland"), Seren's position changed with respect to franchise fees on cable internet revenue. Relying on the Portland case, Seren took the position that it would not pay franchise fees on cable internet revenues.3 Meaningful negotiations stopped.in late 2000.4 The Communities do not agree with Seren on the interpretation of the Portland case.' Neither do the Cities of Concord and Walnut Creek, which cities expect to receive franchise fees on cable internet revenues, as provided in their franchise agreements with Seren.' In addition, AT&T is currently paying franchise fees on cable internet revenue to 'Declaration of Patricia Burke in Support of County Staff Report and Recommendation (`Burke Declaration"),12, See 14, Exhibit D(Walnut Creek Franchise). 'Burke Declaration,¶12, 5. 'Burke Declaration,¶4, Exhibit A(8/31/00 Seren letter). 4Burke Declaration,¶4, see Exhibit C (10/6/00 MVE letter). 'Burke Declaration,¶4, Exhibit B (9/7/00 MVE letter). 'Burke.Declaration,¶ 3,4, Exhibit D (Walnut Creek Franchise Agreement, pages 4, 36). Page 1 the County and to other Contra Costa cities. However, the Communities acknowledge that rapid changes are taking place in the cable/telecommunications industry, and proposed an addendum to the draft franchise, which would excuse Seren's obligation.to pay franchise fees on cable internet revenue if such payment is, in the future, determined to be prohibited by any (particularly federal) law.' This compromise did not satisfy Seren, which continued to demand that the cable franchise agreement provide that Seren is not required to pay franchise fees on cable internet revenue, irrespective of any future change or clarification in the law. Under current federal, state and local law, the Communities are entitled to receive franchise fees and other compensation (e.g., I-net) from cable providers. The Communities' staffs were not willing to make concessions to Seren, were not willing to accept less than what the Communities are or may be entitled to receive under the law, and also were not willing possibly to undermine all Central County communities in current joint cable negotiations with AT&T.' In any case, upon cable negotiations having stalemated, Seren approached the County for encroachment permits to install its infrastructure in various unincorporated locations. At this time, Seren's immediate goal is to access such unincorporated area roads necessary to complete connections required by its current design to meet its cable franchise obligations to Walnut Creek and Concord. Seren has a Certificate of Public Convenience and Necessity ("CPCN") for the provision of phone service from the California Public Utilities Commission ("PUC").' A CPCN generally allows a telephone corporation to install its facilities in road rights of way, pursuant to its terms. Seren asserts that its CPCN gives it the right to install its facilities in the County's road rights of way. As discussed below, after reviewing Seren's 'Burke Declaration,14, Exhibit B (9/7/00 WE letter, page 3). 'Burke Declaration, see 14, Exhibit B (9/7/00 WE letter),15. 9Declaration of Lillian T. Fujii in Support of Staff Report and Recommendation("Fujii Declaration'),13, Exhibit A(CPCN). Page 2 CPCN, including the application and CEQA documents, County staff has determined that Seren's CPCN does not grant it the right to install its infrastructure in the County's road rights of way. Seren's encroachment permit application was denied by letter written by Assistant County Administrator Sara Hoffman. Pursuant to Ordinance Code sections 14-4.002 and 14-4.004 (added by Ordinance No. 70-36), Seren appeals that denial to the Board. For the reasons set forth below, staff recommends that the Board deny Seren's appeal. III. ARGUMENT. A. Seren's CPCN Does Not Allow it to Install its Infrastructure in the County's Road Rights of Way Because Seren Represented That it Would Not Be Doing So under the CPCN; Therefore, Such Activity Was Not Part of the Project Covered by the CPCN, and Environmental Review of Such Activity Was Not Conducted. 1. Public Utilities Code Section 7901 Allows Telephone Corporations, But Not Cable Companies, to Construct Facilities in Road Rights of Way Pursuant to a CPCN. Public Utilities Code section 7901 ("Section 7901") provides: "Telegraph or telephone corporations may construct lines of telegraph or telephone lines along and upon any public road or highway, along or across any of the waters or lands within this State, and may erect poles, posts, piers, or abutments for supporting the insulators, wires, and other necessary fixtures of their lines, in such manner and at such points as not to incommode the public use of the road or highway or interrupt the navigation of the waters." (Emphasis added.) Section 7901 has been construed to grant broad rights to telephone corporations to place facilities in and upon road rights of way (Pacific Tel. & Tel. Co. v. City & County of San Francisco (1961) 197 Cal.App.2d 133), subject to the authority vested in the PUC (Pacific Tel. & Tel. Co. v City of Los Angeles (1955) 44 Cal.2d 272, 276). Section 7901 does not allow cable companies to place cable facilities in road rights of way. (46 Ops.Cal.Atty.Gen 23, 23-24 (1965).) A cable television company is required to obtain a -- - Page 3 • franchise (license) from the County before installing its cable infrastructure..(47 U.S.C. § 541(b)(1); Gov. Code, § 53066; County Ordinance Code § 58-4.004.) A CPCN issued to a telephone company by the PUC grants the company authority to provide telephone service, and grants authority and sets the terms of the company's right to construct facilities in road rights of way under Section 7901.10 Seren is both a cable company and a telephone company." A court may agree that under Section 7901, Seren has the right to construct its telephone and related telecommunications facilities (but not purely cable facilities) in the County's road rights of way. However, this right.is subject to the scope of and Seren's compliance with the requirements of its CPCN.12 2. Seren's CPCN Does Not Authorize it to Install its Infrastructure in Road Rights of Way Because Such Activity Was Not Part of the Project That the PUC Approved Seren's CPCN documents do not authorize it to install its infrastructure in the County's road rights of way, because such construction was not a part of the project for which the PUC issued the CPCN to Seren. Issuance of a CPCN is a"project" subject to review under the California Environmental Quality Act ("CEQA"). (Public Resources Code, §§ 21000 et seq., 21065.) In its Environmental Assessment, which is a part of its CPCN application, Seren represented that its facilities would first be built to provide cable television service, and made available for telephone service only after facilities have been installed under cable authorities and permits, as follows: "2. Petitioner's facilities-based telephone services will be provided using a hybrid fiber coaxial network built to provide cable television services. Initially, switching facilities will be leased from an existing provider. Petitioner's cable operations will address with local authorities the environmental issues applicable to such "Fujii Declaration,¶3, Exhibit A, p. 11 (CPCN, Order¶ 1). "The PUC has accepted Seren's representation that it is a telephone company as evidenced by its issuing Seren a CPCN. 12Fujii Declaration,13, Exhibit A,p. 11 (CPCN, Order¶ 1). Page 4 infrastructure prior to making such facilities available for telephony, as authorized by this Commission. In addition, Petitioner's cable operations will secure any required ministerial permits from the appropriate local entities. Petitioner's network facilities will be limited to existing rights of way and the use of existing conduits or ducts in existing utility rights of way. If Petitioner ever intends to extend its construction local exchange facilities beyond the utility right-of-way into undisturbed areas or other right-of way, Petitioner will file a Petition to Modify its Certificate of Public Convenience and Necessity, to the extent such modification is required by the Commission.s13 As noted above, Seren represented that installation of its infrastructure would be under the environmental scrutiny of cable officials, and that only minimal construction would be undertaken under the CPCN. Consequently, installation of Seren's facilities was not envisioned by the CPCN, not a part of the project for which environmental review was conducted, and therefore not authorized by the CPCN. 3. At a Minimum, Further CEQA Review Is Required One of the basic purposes of CEQA is to inform governmental decision-makers and the public about the potential, significant environmental effects of proposed activities. (CEQA Guidelines (14 Cal.0 ode Regs.), § 15002(a)(1).) This cannot be done if governmental decision-makers do not know what activities are proposed. A negative declaration may be defective if it mischaracterizes the project and fails to acknowledge evidence that significant impacts may occur. (Christward Ministry v. Superior Court (1986) 184 Cal.App.3rd 180; Remy, Thomas et al., Guide to the California Environmental Quality Act (Solano Press 1999 [10'Ed.]), Page 236.) 13Fujii Declaration,¶ 3, Exhibit B, p. 72-73 (Proponent's Environmental Assessment of Seren Innovations, Inc.,12). See also, Fujii Declaration 13, Exhibit B, p. 60-62 (CPCN Application,¶¶ 5, 8). Page 5 As a result of Seren's (and probably other applicants"') representations of minimal or no construction, the PUC did not do an Environmental Impact Report, and approved the CPCNs on the basis of a mitigated negative declaration ("MND"). Indeed, the MND's project description states that"only minor construction is envisioned.s15 The environmental impacts of Seren's installing its entire cable infrastructure were not considered. Even if Seren's infrastructure installation could be covered by the CPCN, at the very least, further environmental review is required. Under CEQA, further environmental review is required if: "...substantial changes are proposed in the project which will require major revisions of the previous E1R or negative declaration due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects...." (CEQA Guidelines, § 15162.) (See also, Public Resources Code, § 21166; CEQA Guidelines, §§ 15163, 15164.) Inasmuch as infrastructure installation was not part of the project that was reviewed and considered, this possibly new project may involve new impacts, and certainly involves a substantial increase in the severity of significant effects, not covered by the MND. At a minimum, further environmental review is required if Seren is to install its infrastructure under Section 7901 pursuant to its current CPCN. B. The Qwest Cases Do Not Apply. The County Is Merely Following State Law. Seren asserts that the County's denial of an encroachment permit violates federal telecommunications law because such denial is an attempt to require Seren to obtain a cable franchise, or otherwise impose local requirements on a telecommunications provider.. Seren's arguments have no merit. First, Ms. Hoffman's letter merely 14In the recent past, the PUC issued many,CPCNs, and considered numerous applications on a joint basis. Fujii Declaration, Exhibit A, p. 26-27 (Background discussion in Mitigated Negative Declaration). "Fujii Declaration,¶ 3, Exhibit A, p. 28 (MND,¶ 2). Page 6 acknowledges the fact that Seren and the County had been negotiating over a cable franchise for a long period of time. It is also clear from Ms. Hoffman's letter that denial of the encroachment permit was based on the fact that its infrastructure construction was not allowed under the CPCN. Seren cites two cases to support its assertion that federal law prohibits the County's denial of the encroachment permit. However, the two cited cases and federal telecommunications law do not prohibit the County's actions in this case. Section 253 of the federal Telecommunications Act of 1996, provides in relevant part that: "(a) No state or local statute or regulation, or legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications services.16 Both cases cited by Seren involve local ordinances requiring telecommunications companies to obtain telecommunications franchises or special permits that ran afoul of subdivision (a) of section 253. The case of City of Auburn v. Qwest Corporation (9'h Cir., 2001, Nos. 99-36173, 99-36219; opinion attached to Seren's September 28, 2001 letter of appeal to the Board), involved a city ordinance requiring a telecommunications franchise as a way to manage telecommunications facilities in rights of way. (City of Auburn v. Qwest Corporation, first paragraph of opinion.) Qwest Communications Corp. v. The City of Berkeley (copy of Order Granting Preliminary Injunction attached to Seren's 16 47 U.S.C. § 253 (b) and(c)provides (subdivisions(d)-(f) not duplicated): "(b)Nothing in this section shall affect the ability of a State to impose, on a competitively neutral basis and consistent with section 254 of this section, requirements necessary to preserve and advance universal service, protect the public safety and welfare, insure the continued quality of telecommunications services, and safeguard the rights of consumers. "(c)Nothing in this section affects the authority of a State or local government to manage the public rights-of-way or to require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis, for the use of public rights-of-way on a nondiscriminatory basis, if the compensation required is publicly disclosed by such government." Page 7 September 28, 2001 letter), involved a Berkeley ordinance requiring telecommunications companies with CPCNs from the PUC to obtain City "Special Telecommunications Permits" and pay additional fees. Unlike the communities in the two Qwest cases, the County has not adopted an ordinance placing additional "franchising" or"special fee or permit"requirements on (non-cable) telecommunications companies. On the contrary, the County is following State law. Under State law, Seren must obtain and comply with the terms of a CPCN to exercise rights granted by Section 7901. The County is merely insisting that Seren do so. In fact, in Qwest Communications Corp. v. The City of Berkeley, one of Qwest's arguments was that the City of Berkeley's ordinance was preempted by Section 7901. Here, the County is merely following Section 7901, as implemented by the PUC. The two Qwest cases cited by Seren do not apply, and if anything, support the County's position. C. The CPCN Does Not Give Seren Carte Blanche to Say One Thing and Do Another. Seren boldly states that "[t]he CPUC decision exists as a matter of law and the County does not have the authority to overturn [it]." (September 28, 2001 letter, page 3, paragraph 1.) However, as discussed above, the County is following State law, not trying to overturn it. Even more confounding is Seren's statement that"Seren's CPCN and the PU Code specifically entitle Seren to construct the noted facilities for telecommunications uses." (September 28, 2001 letter, page 2, paragraph 2.) While Seren's application did state that it will be constructing a hybrid fiber coaxial network in Contra Costa County, its Environmental Assessment, which is the basis of the PUC's environmental review, represented that its infrastructure will be installed under the scrutiny of cable authorities. It is probably on this basis that the PUC did minimal environmental review before issuing the CPCN to Seren. Seren cannot be allowed to state to State authorities that the cable authorities will oversee installation of its infrastructure, then use the same CPCN as authority to install its Page 8 infrastructure when it elects not to enter a cable franchise. It is inconceivable that the law would allow Seren to play State regulatory authorities against the County, by allowing Seren to represent one thing and do the opposite. That cannot be, and is not, the law. Lastly, Seren's appeal alleges that the financial consequences of the County's denial of an encroachment permit will be in the millions of dollars "in costs to re-design the network to avoid the county areas," etc. Seren has only itself to blame. If it had represented to the PUC that it was going to be using the CPCN to install its network, as it now proposes to do, the PUC probably would have at least required a more thorough environmental review of the project. Perhaps Seren would not have been issued a CPCN. In any case, Seren's complaint is without merit. Its appeal should be denied. Dated: {' O WA4, �� 2ZO Respectfully submitted, Silvano B. Marchesi County Counsel By: Lillian T. FuV' Deputy County Counsel H:Ya�D ApplFa -pd Page 9 PROOF OF SERVICE BY MAIL (Code Civ. Proc., §§ 1012, 1013a, 2015.5; Fed. Rules Civ. Proc., rule 5(b)) Re: Appeal of Seren Innovations, Inc. I declare that my business address is the County Counsel's Office of Contra Costa County, Administration Building, P.O. Box 69, Martinez, CA 94553; that I am a citizen of the United States, over 18 years of age, employed by the County of Contra Costa and not a party to the within action; and, that I am readily familiar with the County Counsel's office business practice for collection and processing of correspondence for mailing with the United States Postal Service, and know that in the ordinary course of the County Counsel's office business practice the document described below will be deposited with the United States Postal Service on the same date that it is sealed and placed at the County Counsel's office with fully prepaid postage thereon. I further declare that I served true copies of: 1. COUNTY STAFF REPORT AND RECOMMENDATION 2. DECLARATION OF PATRICIA BURKE IN SUPPORT OF COUNTY STAFF REPORT AND RECOMMENDATION 3. DECLARATION OF LILLIAN T. FUJII IN SUPPORT OF COUNTY STAFF REPORT AND RECOMMENDATION by placing said copy in an envelope(s) addressed as follows: Debra E. Keller, Esq. Peter A. Casciato, Esq. Shapiro, Buchman, Provine Law Offices of Peter A. Casciato Patton, LLP 8 California Street, Suite 701 1333 N. California Blvd., Ste. 350 San Francisco, CA 94111 Walnut Creek, CA 94596 which place(s) has(have) mail service, which envelope(s) was(were) then sealed, postage fully prepaid thereon, and deposited today for mailing either by directly depositing said envelope in the United States Mail or by following ordinary business practices of the County Counsel's office for collection for processing in the United States Mail at Martinez/Concord, Contra Costa County, California. I declare under penalty of perjury that the foregoing is true and correct. Executed at Martinez, California on November 1, 2001. oAnn eredia P R O O F OF SERVICE BY MAIL BEFORE THE BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA In the Matter of the Appeal of DECLARATION OF PATRICIA BURKE IN SUPPORT OF COUNTY STAFF SEREN INNOVATIONS, INC. REPORT AND RECOMMENDATION November 6, 2001 I, Patricia Burke, declare as follows: 1. I am employed by the County of Contra Costa. My title and position is Cable TV Administrator, and have held that position at all times mentioned herein. My responsibilities include administration of cable television franchises in the unincorporated area of the County as well as supervision of Contra Costa Television operations. 2. In July and September 1999, the Cities of Concord and Walnut Creek entered cable television franchise agreements with Seren Innovations, Inc. ("Seren"). Since late 1999, the Cities of Clayton and Pleasant Hill, the Town of Danville, and the County ("Communities") have been jointly negotiating with Seren on a cable franchise, including the joint engagement of the law firm of Miller & Van .Eaton ("MVE") to represent them. The Communities, together with other cities, including.the Cities of Concord and Walnut Creek, are currently in the process of jointly negotiating a cable franchise with AT&T. 3. I work closely with representatives of Concord and Walnut Creek on cable TV and related issues. As of this date, Concord and Walnut Creek representatives expect to receive franchise fees on cable internet revenue, as agreed in their franchise agreements with Seren, and do not construe recent court cases as affecting this right. 4. Attached hereto and incorporated herein by this reference are true and correct copies of: Exhibit A: August 31, 2001 letter from Seren (Pete Glass) to Patricia Burke; Exhibit B: September 7, 2000 letter from MVE to Seren; ORIGINAL Page 1 • • ��Y11�1�Q Exhibit C: October 6, 2000 letter from MVE to Seren; Exhibit D: Seren/Walnut Creek Franchise. 5. I have reviewed the Staff Report and Recommendation to the Board regarding Seren's Appeal. I am familiar with all factual representations in the report. To the best of my knowledge, all factual representations in the report are true. I declare under penalty of perjury under the laws of the State of California the foregoing is true and correct. Executed on Gb at Martinez, California. Patricia Burke Page 2 EXHIBIT A seren innov''_!ions, inc Corporate Headquarters 15 South 5th Street Suite 500 August 31, 2000 Minneapolis,MN 55402 Main 800-550-6238 VIA OVERNIGHT MAIL Fax 612-395-3501 www.seren.com Patricia Burke www.astound.net Cable TV Administrator Contra Costa County 10 Douglas Drive, Suite 210 Martinez, CA 94553-4079 Dear Ms. Burke: I understand our negotiations with the county are nearly complete. As a result, I would like to clarify the outstanding issues in the cable franchise negotiations so that we may proceed in the most expeditious manner possible towards the award of a cable television franchise. Form Agreement: At our last negotiation session.of August 3, 2000, we concluded negotiations on the boiler plate franchise agreement. Attached is a list of minor revisions to the boilerplate provisions of the agreement. Business Issues: According to our notes, the business terms specific to Contra Costa County are as follows: - the number of PEG access channels; - the lump suns PEG access capital payment; - the number of City I-Net sites, no additional payment for unused sites; an office which will be "convenient to subscribers in the County". Internet: With regard to the outstanding issue of franchise fees on Internet services, Soren remains committed to the position, as expressly stated by the Ninth Circuit Court of Appeals, that Internet services do not constitute cable services [AT&T y. City o/ Portland, el.al., 216 F.3d 871 (9`h Cir., June 22, 2000)). As a result, Internet services fall outside the jurisdiction of the City's franchising authority and are not subject to the City's regulation through the imposition of franchise. fees. To impose such fees would violate federal public policy that prohibits franchising authorities from regulating cable broadband Internet access. I mention this because, as you know, Matt Anles Esq. (of Miller & VanEaton) has proposed that Seren sign a proposed "Addendum Agreement for Provision of Non-Cable Communications Services Via Cable System." This Addendum would impose a 5% fee on all gross revenues derived from Internet and other non-cable communications services and imposes on non-cable services virtually all of the obligations contained in the Franchise Agreement. Based on the Ninth Circuit's decision in Portland, this appears to be all Impermissible attempt to regulate Internet services as if they were cable services. ° EXHIBIT A by Sercn I.M23\ 1 hrnOVafiOns �7 By extension of Seren's position, we will no longer consider any attorney fees regarding Internet services to be a part of this negotiation and will not pay any such fees. We are all aware that telecommunication technologies are evolving more rapidly than many of our institutions (including the law) can keep pace. However, Seren believes the Addendum (or any other attempt by the County to collect what is basically a cable franchise fee on Internet services) violates the holding of the Portland decision and runs contrary to the federal "hands off' policy with regard to the Internet. Seren is eager to bring to the County state-of-the-art cable and non-cable services, and, in doing so, to bring to the community the advantage of true competition in both of these markets. The motivation to do so and Seren's ability to do so are each, in large part, dependent on the tremendous local and national support of the Internet as a free, open, competitive and evolving medium. Preservation of this support will ultimately benefit both the County and Seren. We urge the County to examine this issue and to focus on the long term advantages to its citizens if the Internet is allowed to remain free and open. As we indicated at the August 3`d meeting, we would very much like to conclude our negotiations and we stand ready to sign the cable franchise agreement as soon as possible. (As you can see from the attached list, there is little, if anything remaining to be addressed, but for the Internet issue.) If we cannot quickly resolve the Internet issue, we do intend to contact the County's elected officials as early as next week to discuss this matter. We urge you to inform your Board of Supervisors as needed. Please feel free to contact me. We look forward to providing the residents and businesses of Contra Costa County with a choice for telecommunications services. Sincerely, Pete Glass V.P. and General Counsel Cc: Patty Friesen Keith Wietecki 1402)8.1 Revisions to Franchise Agreement: 1. In Section I.T. (page 6) the reference to "Operator Innovations, Inc." should be changed to "Serer Innovations, Inc." 2. Sections impacted by Internet issue: I.G.; I.H.; I.0.4.; I.0.6; 3. Section IIIA. (page 10): delete the last 2 sentences, as this merger has already occurred. 4. Section IV.A.S (page 13): Insert period at the end of the third sentence. 5. Section IV.D.1 (page 16).: Per the agreement reached at our August 3`d meeting, the inserted reference should include the word, "actual", to read: "...the City shall obtain reimbursement for restoration, reasonable inspection, and directly applicable actual administrative costs from the Operator." 6. Section IV.D.2 (page 16): The language of the last sentence was to match that of Section IV.D.1. (page 15), to read, "Construction plans must be approved by the appropriate City department, in accordance with City permitting procedures." 7. Section IV.D.3 (page 16): The last sentence must refer- to the Operator's own ticllltles, to wit.: "In the event the Operator's facilities must be relocated, Operator shall do so at its own expense." S. Section IV.E. (page 20): In the second full paragraph, second sentence, the word "operator" should be capitalized. 9. Section VI.A.4. (page 32): In the fourth sentence, insert the words, "by the City", to read: ""These sites shall be designated by the Cit prior to cor��pletion of the design of the institutional network." 10. Section VI.E.1.(page 36): As dratted by Scren, this concept of a level playing field allowed for more. "players" than just the Operator and the Incumbent Operator. We want this language. reinserted. In the event that another ovcrbuilder enters the market, it %1,ould be as unfair for the "new player" to have an advantage over Seren as it would be for the Incumbent to have an advantage. It. Section VIII.C. (page`40): "File citation reference should read: "an annual sum equal to the then applicable Household Income Limitation requirement for Universal Lifeline Telephone Service, as established by the Moore Universal Telephone Service Act (Section 571, et.scxl. of the California Public Utilities Code) and the regulations and General Orders promulgated by the Public Utilities Commission ofthe State of California in accordance therewith." EXHIBIT B M I L L E R & V A N E A T O N 1,. C. MAI'IIIEW C. AMES 1155 CONNLC.'IICU rAVENUE, N.W. WILLIAM L. LOWERY KI:NNI.I II A. F3RtINI I'Tl f SUITE 1000 WILLIAM R. MALONE FUDERIC'K F. ELLROD III WASHINGTON, D.C. 20036-4306 NICHOLAS I'. MILLER MARCI L. I'RISCHKORW TFLEPI IONE(202) 785-0600 JOSI H VAN EATON �11'I SHKO R. IILRRI:RAt FAX(202) 785-1234 'Admitted to Practice in Virginia Only MILLER& VAN EATON,L.L.P. 44 MONTGOA1ER1'S1�REF:1- OFCOUNSEL: tAdmitled to Practice in JAMES R. HOBSON California Only Surrr:3085 SAN FRANCISCO,CALIFORNIA 94104-4804 JOHN F. NOBLE Incorporating the Practice of TELEPHONE(415)477-3650 Miller& Holbrooke FAX(415)398-2208 _) %VWW.MII-I-ERV'ANEATON.COM NOV', 12bbfl "OUNTY COUNSEL CALIF. �,lJr,,h'a C(i�;A i;tt ;;;; September 7, 2000 RECEIVED 1 BY FEDERAL EXPRESS Mr. Pete Glass 2 "'flfii' Vice I'-csident and General Counsel Seven Innovations, Inc. 0. i1F 15 South 5".' Strect - I Shite 500 i Minneapolis, Minnesota 55402 Dear Mr. Glass: I write in response to your letters of August 31, 2000, to Pat Burke, Lauri f-loffineister, Elizabeth Hudson and Debra Margolis regarding the status of Scren's franchise negotiations with Contra Costa County, the Cities of'Clayton and Pleasant Hill, and the Town of Danville. Your letters address three sets of issues: proposed revisions to the draft documents; business terms for each proposed franchise; and the treatment of Internet service. I will leave the first two issues to later correspondence or discussions, because there is little point in addressing them until we resolve the Internet issue. Your letters correctly state that we have proposed that Seren enter into a separate ay-reement with each jurisdiction, which we have denominated an "Addendum Agreement for Provision of Non-Cable ConlJrlunicattons Services Via Cable System." Your letters also correctly state that the addendum would require Seren t0 pay a 5`vo franchise Tec on gross revenues derived from Internet and other non-cable COI11111u111CalIOnS Services, as well as I-CCILllrlllg SCI-Cll to nlCCt 111OSt of the requirements of thc•proposed cable franchises. YOU then Slate that "Internet scl-VICCS fall Outside the Jurisdiction of the City's franchising authority and are EXHIBIT B MILLER& VAN EATON, P.t.,.t_.C. not subject to the City's regulation through the imposition of'franchise fees," citing as your authority A7RT ty. City of Portland, 21 C F.3d 871 (9"' Or. 2000). . Your reliance on Portland is misplaced. While it is true that Pot-tland held that the term "cable service" as used in the federal Cable Act does not encompass Internet service, the case says nothing about the scope of local franchising authority. You must understand that local governments do not receive their franchising authority over cable television or any other service tinder federal law. They receive that authority under state la%v; the Cable Act merely chooses to rely on the franchising concept as a means of granting the right to build and operate a cable system. Congress recognized that the local franchise .was a convenient means of ensuring that local governments received compensation for the use of their rights-of-way by cable operators, as well as a mechanism for controlling the activities of those operators in the rights-of-way. Franchising long antedates the cable television industry. in fact, in many states, local governments have the authority to franchise not only cable operators, but telephone companies and other telecommunications providers as well. Therefore, merely because the Portland court held that Internet service is not a cable service does not mean that the City of Portland cannot grant franchises for the installation of facilities used to provide Internet service. For the same reason, the Portland case alone does not —and cannot— tell us whether local governments in California can require franchises for the installation of facilities used to provide Internet service. California happens to be one of the states that limit local franchising authority in certain respects; the trouble for Seren is that the scope of that limitation is unclear. in principle, under their home rule powers California municipalities have the power to grant franchises for the use Of public property, unless state law specifically restricts that authority. California has done so, but only with respect to "telephone lines" installed by a "telephone corporation." As you know, California Public Utilities Code Section 7901 provides that "[t]elegraph or telephone corporations may construct lines of telegraph or telephone lines along and upon any public road or highway . . ." California Public Utilities Code Section 7901.1 preserves local authority over the time, place, and manner of construction, but the courts have held that Section 7901 itself prohibits a local government from requiring compensation for the use of its rights-of-way by a telephone corporation. The ternis "telephone line" and "telephone corporation" are not defined in Section 7901. Both terms are defined elsewhere in the California Code, but those definitions do not apply to Section 7901. 1 am sure that you understand that those terms could be construed in various ways. Given the important technological differences between traditional telephone service and Internet service and further given that the Internet not only did not exist but was inconceivable at the time Section 7901 was enacted, we believe that the facilities needed to deliver Internet services are not telephone lines. Neither the California. Public Utilities Commission nor the courts have ruled on that issue. Consequently, until the California legislature amends the law or the courts or the PUC address the issue, the most that can be said is that it is an open legal issue. In fact, our view is that since the law is silent, California local governments are presumed to have the authority to franchise not only cable systems, but telecommunications facilities that are MILI,GI2 & VAN EIATON, P.t..I..C. not subject to Section 7901. Furthermore, (tic system Scren wishes to provide is not merely a cable system. It is not only capable of providing other services, but it is designed to provide other services. Therefore, it cannot be said that the proposed system is merely a cable system. Our proposed addendum is intended to apply only to non-cable services that fall outside the scope of Section 7901, whatever those may be. The addendum specifically provides that if the law is clarified to exclude Internet service or any other service, then Seren would not be required to pay a franchise fee. Soren is perfectly free to seek the necessary clarification. All my clients seek to do is to protect their rights by not making unnecessary concessions regarding their authority or the state of the law. in addition, although the draft does not currently provide for it, the communities are prepared to discuss revising the addendum to state that if they do not require the incumbent cable operator to pay on comparable revenues upon renewal of the Incumbent's franchises, they will relieve Sercn of that obligation. This would also apply to any other new operators who might be granted franchises.' ' In addition, I must take issue with your statement that "federal public policy . . . prohibits franchising authorities from regulating cable broadband Internet access." Neither Congress nor the FCC have taken any step that prohibits local governments from franchising Internet facilities ifs they have the necessary authority under state law. In the wake of the Portland decision, the FCC announced that it would conduct a proceeding to examine the issue of"open access" to cable modem platforms - but it is by no means clear that this proceeding will address, much less resolve, the question of local franchising authority over Internet facilities. That proceeding is intended primarily to address whether cable operators who provide Internet service are subject to common carrier obligations as a result of Portland. This is a very different issue. The proper treatment of Internet revenues is vitally important to my clients. Local rights- of-way are held in trust for the people, and local governments have an obligation to their residents and taxpayers to ensure that they are managed properly. "rhe current franchising system assures that local governments will receive some measure of compensation for the use of their property and retain the ability to provide for the maintenance and repair of the streets. We believe that the added valise to Seren resultin�(I from the ability to provide Internet service in addition to cable sel-vice justifies the payment of a franchise fee on.Internet service. Furthermore, as you note in your letter, telecommunications technology is evolving very rapidly,. and we do not know what the future will brine. It is very possible that in the near future Internet service will render cable service obsolete by allowing any number of video providers to make streaming video available over the Internet. In that case, demand for traditional cable service might fall to the point that Seren would no longer provide it; by the same token, my clients would then receive no compensation for the use of their property. At the very least, the growth of Internet services may lead to a sharp reduction in revenues from cable service. In either case, Please note that Danville, Pleasant Hill,and Contra Costa County are prepared to proceed on this basis. Laura Hoffnieister has asked me to advise y(Au that the City of Clayton is not currently prepared to grant Seren a franchise that allow it priavide Internet services Without an unconditional agreement regarding Internet revenues. MILLER& VAN EATON, P.L.L.C. - 4 - it would be foolhardy under these circumstances for the County, the Cities, and the '['own to grant Seren franchises for cable service without addressing the Internet issue. Indeed, for that reason, the discussion and resolution of the Internet issue is an integral part of the cable franchise negotiations. Consequently, my clients believe that in refusing to pay all costs arising out of Seren's decision to apply for a cable franchise, Seren has reneged on its original commitment. They have asked to me to inform you that the grant of any franchise will be contingent on reimbursement of all fees and costs reasonably related to that franchise, including the resolution of the.Internet issue. Finally, my clients have asked me to request that Seren and Seren's outside counsel either direct future correspondence to me, or copy me on correspondence, as appropriate. As your letters indicate, we are very close to agreement on everything except the Internet issue, and keeping me informed will expedite matters. Please let me know if you have any questions. Let me assure you that Contra Costa County, Clayton, Danville and Pleasant Hill are eager for Seren to begin providing services to their residents. We believe we can proceed very quickly to accommodate Seren's desire to commence construction work shortly, provided that the key concerns of both sides are properly addressed. Very truly yours, Miller & Van Eaton, P.L.L.C. By *Matthew .4Ames 99,16'%0--'tNIC 00627.DCX: EXHIBIT C v W N Z O U �o d LL W W Q 0- J U Y W ' s �Wc 4 � 119tHX3 M I L L E R & V A N E A T O N P. L. L. C. MATTIIEW C.AMES 1155 CONNECTICUT AVENUE,N.W. WILLIAM L.LOWERY KENNETH A. BRUNETTIt SUITE 1000 WILLIAM R.MALONE FREDL'RiCK E. ELLROD HI WASHINGTON,D.C. 20036-4306 NICHOLAS P.MILLER MARC]L. FRISCHKORN* TELEPIIONE(202)785-0600 JOSEPH VAN EATON MITSUKO R. HERRERAt FAX(202)785-1234 *Admitted to Practice in Virginia Only MILLER&VAN EATON,L.L.P. OF COUNSEL: tAdmitted to Practice in 44 MONTGOMERY STREETOF R. HOBSON California Only SUITE 3085 JOHN F.NOBLE SAN FRANCISCO,CALIFORNIA 941044804 Incorporating the Practice of TELEPHONE(415)477-3650 Miller&Holbrooke FAX(415)398-2208 WWW.MILLER VANEATON.COM October 6, 2000 BY TELECOPIER AND FIRST-CLASS MAIL .Debra E. Keller, Esq. Shapiro Buchman Provine Patton LLP 1333 N. California.Boulevard Suite 350 Walnut Creek, California 94596 Dear Debra: As you know, in recent weeks there has been a fair amount of correspondence between Seren Innovations, Inc. ("Scren") and Contra Costa County, the Cities of Clayton and Pleasant Hill and the Town of Danville (the"Communities"). The Communities have not responded to all of the correspondence received from Seren, partly because some issues have been overtaken by events, and partly because we do not think detailed responses would necessarily be productive. A recurring theme in Seren's letters, however, has been the subject of delay in the franchise negotiations. This issue was raised in Pete Glass's letter to me of September 14, 2000, as well as in Keith Wietecki's letter to various elected officials of September 19, 2000. The Communities take issue with any assertion that they are responsible for any delay in the process to date, and I have been asked to address Seren's complaint by reviewing the chronology of events so far.' As an aside, I must mention that I was somewhat surprised by Mr. Glass's letter to me of September 21, 2000, regarding the transfer of the Ponderosa franchise. Rather than take the time for a detailed rebuttal, I would just like to note that by the time that letter was sent Seren had received a draft resolution taking a significantly different approach. In any event,as you know,subsequent events have superseded both the draft resolution in question and Mr. Glass's letter. The County looks forward to Scren's response to my letter of October 3, 2000, regarding that matter. EXHIBIT C MiLLER& VAN.EATON, P.L.L.C. - 2 - As-I understand it, Seren submitted its applications at different times in the four communities, ranging between mid-June and mid-September, 1999. There are questions about whether those applications were complete under the provisions of local ordinances, but for the sake of argument we will assume they were complete as submitted. It is important to note, however, that at the time the applications were submitted, Seren was in the early stages of negotiations with Walnut Creek and Concord, and made no effort to pursue the applications at the time. Nor did Seren propose specific franchise terms to the Communities. The Concord and Walnut Creek franchises were approved in late July 1999 and late September 1999, respectively. Some time in October, the Communities were approached by Cress Gackle of Seren, and a joint meeting of the Communities with Seren was held on November 19, 1999, to begin negotiations, approximately five months after the applications were submitted. At the meeting, Seren proposed that the franchise agreements be based on the Walnut Creek agreement. The Communities agreed in principle, but noted that they would each need to review the document, and it was likely that changes would be needed to meet local right-of-way management procedures, as well as insurance and bonding requirements. The Communities also infornied.Seren that this procedure might take some time, as a number of staff members would need to see it in each case. It was also understood that adjustments to the public, educational and governmental ("PEG") access contribution and the institutional network ("I-Net") would be made on sonic sort of pro rata basis. Finally, it was understood that the Communities were going to try to negotiate together as much as possible. Seren did not indicate that there was any urgency, and did not ask about setting a date for another meeting. The Communities had the sense that Seren had its hands fiill with Concord and Walnut Creek. At the request of the Communities, my firni immediately began work on an analysis of the Walnut Creek agreement, which was provided to the Communities in early December. We discussed the issues raised by tine analysis in mid-December. That conversation raised several questions about the applications, and on December 23, 1999, 1 sent Cress Gackle two letters requesting additional information from Seren regarding its finances and the terms of tine proposed franchises. During this period, the Communities were conducting their internal review of the Walnut Creek franchise agreement. In late January, I received a letter from Cress Gackle dated January 24, 2000, responding to our information requests, which I briefly discussed with Cress on January 28. After reviewing the additional information, the Communities completed their internal reviews and gave me their comments on the Walnut Creek agreement. During this period, as far as we can determine, neither the Communities nor I were contacted by Seren. Our firnn prepared a draft incorporating their comments in early March, and 1 met with the Communities on March 22, 2000. After that meeting, I immediately contacted Cress Gackle to schedule another meeting with Seren. We spoke on March 24, and I proposed various dates in April. Tine earliest Cress was available was April 12, and a meeting was scheduled for that day; because of the difficulty of coordinating so many schedules, we ultimately rescheduled the meeting for April MILLER cit VAN EATON, P.L.L.C. - 3 - 19. On March 31, 2000, I sent Cress a draft agreement incorporating the changes requested by the Communities. Those changes largely dealt with right-of-way management issues and were relatively minor in nature. The draft also contained blank spaces for dealing with the PEG and l-Net issues. The purpose of the April 19 meeting was to review the changes proposed in the draft and, if time allowed, to discuss each community's individual proposals regarding PEG access and the I=Net. Unfortunately, we spent more time than anticipated going over the right-of-way management and administrative provisions in the draft, and time did not allow us to complete all of the individual meetings. Pleasant Hill and Clayton discussed their PEG and I-Net plans with Seren that afternoon, and Cress Gackle said he would review them and respond later. We did not set a date for another meeting, nor did Seren request such a meeting. On May 10, 2000, you sent me a letter proposing changes to the document we had reviewed at the April 19 meeting, and stating that because the communities were deviating from the Walnut Creek document in a number of respects, Seren felt that it was justified in making additional changes of its own. Your letter did not address the PEG and I-Net issues, however. On May 18, 2000, Danville and the County met with Seren representatives in your office to discuss their individual issues. Again, Cress indicated that he would consider their proposals and would get back to us. On May 24, 1 sent the Communities a revised draft, incorporating some of your requested changes, and noting open issues for discussion. On July 6, I met with the Coil]►nnunities to get their comments on the revised draft. During the period of approximately May, June and July, 2000, Seren representatives met with staff in Pleasant I-I111, Clayton and Danville to discuss local right-of-way management procedures. The only contact with the County during that period was the delivery of a revised map of Seren's proposed service area. On or about July 12 1 received an urgent message from Cress Gackle, insisting that I contact him as soon as possible. He also asked that I e-mail the current draft to you, which I did, with the proviso that the Communities had not yet approved all of my changes, so the language in that version should not be considered binding. I rearranged my schedule and on the afternoon of-July 12, I spoke with Cress and you about a number of the outstanding issues raised in the draft. On July 27, 2000, I received a revised draft of the agreement from you, proposing a number of changes, including a "level playing field" provision regarding the I-Net, and'rennoving any obligation to pay franchise fees on Internet services. Rather than wait until our next meeting to raise the issue, on July 28, 2000, 1 prepared and sent you a draft of an Addendum intended to MILLER& VAN EATON, P.L.L.C. - 4 - deal with the issue of the Communities' authority to require franchises for facilities designed to provide noir-cable services that are not subject to California Government Code Section 7901. 011 August 3, 2000, we met in Pleasant Hill and agreed on language dealing with nearly all of the outstanding right-of-way management and related issues. We did not agree, however, oil how to deal with Internet revenues or the level playing field, nor did we discuss the specific PEG and I-Net provisions for the individual communities. We did not set a date for another meeting, but it was understood that we would move as quickly as possible because Seren wanted to complete the process. On August 9, 2000, I sent you a revised draft reflecting the prior week's discussions. On August 11, I sent you a draft of a letter regarding Seren's commitment to pay certain costs, also in accordance with the sante discussions. 011 at least two occasions in the following weeks I called your office to follow up. 011 each occasion, I left a voice mail message seeking to confirm that you had received the documents and asking you to call me back. My calls were not returned. On August 31, 2000, however, each of the Communities received a letter rejecting their position regarding Internet revenues, proposing Minor revisions to the draft agreement and specific I-Net and PEG terms, and refusing to pay any of the Communities' attorneys' fees related to the Internet revenue issue. This was the first written response from Seren on the specific PEG and I-Net needs of the individual communities. Mr. Glass expressed the willingness to sigh the franchise agreement as soon as possible, but did not propose a date for another meeting or offer any suggestion as to the procedure for completing the negotiations. As you know, I responded to Mr. Glass on behalf of the Communities oil September 7, 2000. It was in his reply to me of September 14, 2000, that he first complained of delay on the part of the Communities. Five days later Mr. Wietecki's letter went out. The foregoing chronology describes a fairly typical negotiation process. Both sides made efforts to advance the negotiations at a reasonable pace, but all the people involved are busy and as you know it can be difficult to coordinate that many schedules. The chronology does not, however, support Seren's claim that there has been unreasonable delay, at least on the part of the Communities. There is a fairly consistent pattern of meetings, followed by document preparation, followed by periods of waiting. Seren has not consistently indicated any urgency on its part. Even this summer, when the Communities and I responded very quickly to a request for a meeting in early August and immediately turned the documents around, we received no response from Seren until Pete Glass's letter arrived three weeks later. The Communities understand Seren's desire to proceed quickly at this point, and they are prepared to accommodate reasonable requests front Seren. "rile COn1111llllltles are also committed to continuing to negotiate in good faith. We hope, however, that Seren understands the importance of the outstanding issues to the Communities. Local government officials are MILLER& VAN EATON, P.L.L.C. - 5 - charged with protecting the interests of their residents and taxpayers, and take their responsibilities very seriously. In particular, the Communities feel very strongly that they have the authority to franchise facilities used to provide non-cable services that are not subject to Section 7901. We understand Seren's reluctance to agree to pay franchise fees for such facilities in the face of uncertainty regarding competition and possible changes in the law. Nevertheless, we will need to reach a mutually acceptable resolution of that point as well as the other outstanding issues. In conclusion, we understand that to follow up on our discussions of last week on the treatment of Internet revenues and the I-Net level playing field, Seren is preparing a proposal for the Communities. We look forward to hearing from you, and to moving forward promptly to conclude agreements with each cormnunity. Very truly yours, Miller & Van Eaton, P.L.L.C. By . Matthew C. Ames cc: Patricia Burke Rob Ewing Lillian Fujii Laura Hoffineister Elizabeth Hudson Debra Margolis `:01)16':01`•,1iC •100649 D(.)C:? EXHIBIT D CABLE FRANCHISE AGREEMENT BETWEEN THE CITY OF WALNUT CREED CALIFORNIA AND SEREN INNOVATIONS,INC. September 21, 1999 r CITY OF WALNUT CREEK, CALIFORNIA Page I. DEF 14MONS.......................................................................................................2 A. Access Channel......................................................................................................:2 B. Affiliate.....................................................................:.....................................�......2 C. Applicable Law.......................................................................................................2 D. Basic Cable Service..........................................:.....................................................2 E. Cable Act............................:...................................................................................2 F. Cable Ordinance......................................................................................................2 G. Cable Service..........................................................................................................3 H. Cable System or System......................................................................................... 3 I. Channel...................................................................................................................3 JDwelling Unit..........................................................................................................3 K. Financial Interest .................................................................................................... 3 L. Franchise...............................................:.................................................................4 M. Franchise Agreement or Agreement.......................................................................4 N. Franchise Area........................................................................................................4 O. Gross Revenues........................................................................................................4 P. Incumbent Operator................................................................................................ 5 Q. Installation.......:....................................................................................................... 5 R. Institutional Network or I-Net................................................................................ 5 S. Interconnect.............................................................................................................6 T. Operator................................................................................................................... 6 U. Person......................................................................................................................6 V. Public Facility.........................................................................................................6 W. Public Rights-of-Way.............................................................................................6 X. Section...............................................................:.....................................................6 Y. Service Interruption................................................................................................6 Z. Service Tier.............................................................................................................6 AA. State.........................................................................................................................6 BB. Subscriber.................................................................:.............................................6 . CC. Transfer...................................................................................................................6 II. GRANT OF AUTHORITY; LUMTS AND RESERVATIONS.......................7 A. Grant of Authority...................................................................................................7 B. Area Served:............................................................................................................7 C. Term........................................................................................................................ 7 .D. Grant Not Exclusive................................................................................................7 E. Franchise Agreement Subject to Other Laws......................................................... 8 F. Franchise Agreement Subject to Exercise of Police Powers...................................8 G. Approval and Effective Date.................................................................................. 8 H. Effect of Acceptance...............................................................................................9 I. No Waiver:..............................................................................................................9 i . J. Limitation on Liability.......................................................................................... 10 K. Incorporation by Reference.........................................:......................................... 10 III. TRANSFERS....................................................................................................... 10 A. City Council Approval Required................................:......................................... 10 B. Determination'by City........................................................................................... 11 C. Transferee's Agreement........................................................................................ 12 D. Approval Does Not Constitute Waiver................................................................. 12 E. City's Processing Costs...................:.................................................................... 12 IV. CONSTRUCTION AND MAINTENANCE..................................................... 12 A. Construction Standards:........................................................................................ 12 B. Undergrounding:................................................................................................... 14 C. Compliance with Construction Codes and Permitting Requirements................... 15 D. Conditions on Use of the Public Rights-of-Way.................................................. 15 E. System Architectural Design Review Process...................................................... 18 F. Construction Segments......................................................................................... 18 G. Construction Manual............................................................................................. 19 H. Post-Construction Design Modifications.............................................................. 20 I. System Operation Test.......................................................................................... 20 J. Construction Deadlines.........................................................................................20 K. Periodic Progress Reporting ...............................................................................21 L. System Tests and Inspections:..............................................................................21 M. Publicizing Proposed Construction Work.............................................................22 NRight of Inspection................................................................................................22 O. System Maintenance:............................................................................................22 P. Standard Connections.........................................:.................................................23 V. SYSTEM FACILITIES,EQUIPMENT AND SERVICES.............................23 A. System Requirements............................................................................................23 B. System Characteristics..........................................................................................24 C. Periodic Review:...................................................................................................25 D. Equipment Compatibility:............................;........................................................26 E. Types of Service...................................................................................................27 F. Offices...................................................................................................................27 G. Leased Access Channels.......................................................................................27 H. Interconnection: .....................................................................................................28 I. Customer Service Monitoring..........................................:....................................28 J. Emergency Alert System............................................... ..............................28 K. Home Wiring........................................................................................................28 L. Uses of System:......................................................................................................28 M. Parental Control Lock..................................... .................................................29 N. Open Platform for Internet Services.....................................................................29 ii O. No Limitation of Streaming Video.......................................................................29 VI. CHANNELS AND FACILITIES FOR PUBLIC, EDUCATIONAL AND GOVERNMENTAL USE:....................................................................................29 A. Access Channels:..................................................................................................29 B. Periodic PEG Access Capital Payments...............................................................32 ........................ C. Lump Sum PEG Access Capital Payment............................................................32 D. Cable Service to Certain Facilities:.......................................................................33 E. Institutional Network(I-Net).................................................................................34 . F. Compliance with Federal Law....................................................................... ...36 G. Additional Payments, Contributions, Support Not Franchise Fees......................36 VII. FRANCHISE FEE..............................................................................................36 A. Payment to the Ci ......................................................................36 B. Computation.........................................................................................:....:..........:37 C. Supporting Information.........................................................................................37 D. No Accord or Satisfaction.....................................................................................37 E. Interest...................................................................................................................37 F No Limitation on Taxing Authority:..................................................................... 38 VIII. RATE REGULATION................................................................ .............. 38 A. All Rights Reserved:..................... B. Geographic Uniformity......................................................................................... 38 C. Senior Citizen Discount........................................................................................38 IX. INSURANCE,SURETY,AND INDEMNIFICATION...................................39 A. Insurance Required...............................................................................................39 B. Minimum Scope of Insurance...............................................................................39 C. Minimum Limits of Insurance..............................................................................39 D. Deductibles and Self-Insured Retentions..............................................................40 E. Other Insurance Provisions...................................................................................40 F. Acceptability of Insurers.......................................................................................41 G. Verification of Coverage.......................................................................................41 H. Failure Constitutes Material Violation: ................................................................41 I. Indemnification:.....................................................................................................41 J. No Limit of Liability: ...........................................................................................42 X. PERFORMANCE GUARANTEES AND REMEDIES..................................42 A. Performance Bond: ................................................................................................42 B. Security Fund:.......................................................................................................43 C. Rights Cumulative................................................................................................44 Hi D. Letter of Credit Procedures..........................:........................................................44 E. Failure Constitutes Material Violation..................................................................45 F. Remedies........................................................... G. Liquidated Damages.............................................................................................45 H. Shortening,Revocation,or Termination of Franchise:.........................................47 XI. REPORTING AND REVIEW...........................................................................48 A. Records Required and the City's Right to Inspect................................................48 B. Annual Reports.....................................................................................................49 C. Reports available for inspection........."..::............................... _ ..........................49 D. Operator's Expense...............................................................................................49 XII. RIGHT TO PURCHASE....................................................................................49 A. The City's Right to Purchase System...................................................................49 B. Purchase by the City Upon Expiration or Revocation...........................................49 C. Abandonment or Removal of Equipment............................................................... D. Extended Operation and Continuity of Service...............................1..1...1.........1... 51 XIII. MISCELLANEOUS PROVISIONS .................................................................. 51 A. Conflict with and Amendment of Ordinance........................................................ 51 B. No Discrimination................................................................................................. 51 C. Unbundling............................................................................................................ 51 D. Receivership and Foreclosure............................................................................... 51 E. Franchise Renewal................................................................................................52 F. Severability........................................................................................................... 52 G. Preemption............................................................................................................53 H. Compliance With Federal and State Laws............................................................53 I. Force Majeure....................................................................................................... 53 J. Notices..................................................................................................................53 K. Time of Essence; Maintenance of Records of Essence........................................ 54 L. Captions and References:.................................................................... 54 M. Rights Reserved to the City.......................................................................... .... 54 N. Operator Bears Its Own Costs................................................... ..................... 55 O. City Bears Its Own Costs...................................................................................... 55 P. Entire Agreement................................................................................................... 55 Q. Adequacy and Sufficiency of Consideration........................................................ 55 R. Possessory Interest Taxation................................................................................. 55 S. Representations and Warranties of the Operator's Signatories.............:.............. 55 T. Jurisdiction of California Courts and Waiver of Diversity Jurisdiction............... 56 U. Rights of Individuals..........:..........:.......................................................................56 V. Ownership of the Operator.................................................................................... 58 iv CABLE TELEVISION FRANCHISE AGREEMENT BETWEEN TBE CITY OF WALNUT CREEK,CALIFORNIA AND SEREN INNOVATIONS,INC. THIS CABLE FRANCHISE AGREEMENT (the "Franchise Agreement') is entered into by and between the City of Walnut Creek, California ("City'); and Seren Innovations, Inc., a Minnesota corporation("Operator'). WHEREAS, Operator has applied to the City for a nonexclusive franchise to construct, install,maintain and operate a cable communications system in the City; and WHEREAS, the construction, installation, maintenance and operation of such a system involves the occupation of and placement of private commercial facilities in.the Public Rights- of-Way within the City; and WHEREAS, the City has considered the financial, technical and legal qualifications of Operator, and has determined whether Operator's plans for constructing, operating and maintaining its Cable System are adequate, in a full public proceeding affording due process to all parties;and WHEREAS, the City has relied on Operator's representations regarding its financial, technical and legal qualifications and its plans for constructing, operating, and maintaining its Cable System, and has considered the information that Operator has presented to it; and WHEREAS, based on Operator's representations and information, and in response to its request for a cable television fianchise, the City Council has determined that, subject to the provisions of Chapter 7 of Title 6 of the Walnut Creek Municipal Code, as amended, known as the Walnut Creek Cable Television Ordinance (the "Cable Ordinance" or"Ordinance"), and the terms and conditions set forth herein, the grant of a nonexclusive franchise on the terms and conditions herein and subject to applicable law,is consistent with the public interest; and WHEREAS, the City and Operator have reached agreement on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the City's grant of the Operator's fi-anchise; Operator's promise to provide Cable Service to residents of the City pursuant to and consistent with the Cable Ordinance; the terms and conditions set forth herein, the promises and undertakings herein, and other good and valuable consideration, the receipt and the adequacy of which is hereby acknowledged,the signatories do hereby agree as follows: I. DEFINITIONS For the purpose of this Agreement, the following terms, phrases, words and their derivations shall have the meaning given herein. Words used in the present tense include the future, words in the plural number include the singular number, and words in the singular number include the plural number. All capitalized terms used in the definition of any other term shall have their meaning as otherwise defined in this Section. The words "shall and "will" are mandatory and "may" is permissive. Words not defined shall be given their common and ordinary meaning. A. Access Channel: Any Channel on the Cable System set aside under this Agreement for public, educational or governmental use. B. Affiliate: Any subsidiary of the Operator, any parent of the Operator, any Person in which the Operator has a Financial Interest of thirty percent(30%) or more, and any Person who is directly or indirectly under common control with the Operator, including, but not limited to, any Person which has a Financial Interest of thirty percent (30%) or more in the Operator and any Person in which a Person, also having a Financial Interest of thirty percent(30%) or more in the Operator, has a Financial Interest of thirty percent (30%) or more, provided that the foregoing shall not include any Person who is an electric company and who is not involved in the operation or management of the Cable System other than as a shareholder. C. Applicable Law: Any law, statute, charter, ordinance, rule, regulation, code, license, certificate, franchise, permit, writ, ruling, award, executive order, directive, requirement, injunction (whether temporary, preliminary or permanent), judgment, decree or other order issued, executed, entered or deemed applicable to the City by any Governmental Authority. D. Basic Cable Service: Any Service Tier which includes the retransmission of local television broadcast signals. Basic Cable Service as defined herein shall not be inconsistent with 47 U.S.C. 543(b)(7). E. Cable Act: The Cable Communications Policy Act of 1984, Pub. L. No: 98-549, 98 Stat. 2779 (1984) (codified at 47 U.S.C. 521-611(1982 & Supp. V 1987)) as amended by the Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385 and the Telecommunications Act of 1996, Pub. L No. 104-458 and as the same may, from time to time,be amended. F. Cable Ordinance: The City of Walnut Creek Cable Ordinance, as it may be amended from time to time. 2 G. Cable Service: (1) The one-way transmission to Subscribers of (i) video programming, or(ii) other programming service; and (2) Subscriber interaction, if any, which is required for the selection or use of such video programming or other programming service. The parties agree that any internet access or internet service provided over the Cable System ("Internet Services') is, as of the Effective Date, included in this definition. However, if any(i) subsequent enactment of Federal or State statutory law, (ii) final Federal Communications Commission order or regulation which is not in the process of being challenged in court, or(iii) judicial decision of a State or Federal appellate court,which is applicable to the City, determines that such Internet Services are not a Cable Service and is retroactive in application, then such Internet Services shall be excluded from this definition, provided however, if such enactment, order or decision does not state whether it is retroactive, then either party may seek a judicial determination as to the retroactive applicability of the same. H. Cable.System or System: The facility proposed to be built by the Operator, which shall consist of a set of closed transmission paths and associated signal generation, reception, and control equipment that is designed to provide Cable Service which includes video programming, and which is provided to multiple subscribers within the City,but such term does not include(A) a facility that serves only to retransmit the television signals of 1 or more television broadcast stations; (B) a facility that serves Subscribers without using-any public right-of-way; (C) a' facility of a common carrier which is subject, in whole or in part, to the provisions of 47 U.S.C. §§ 201-226, except that such facility shall be considered a Cable System(other than for purposes of 47 U.S.C. § 541(c)) to the extent such facility is used in the transmission of video programming directly to Subscribers, unless the extent of such use is solely to provide interaction or on-demand services under federal law; (D) an open video system that complies with 47 U.S.C. § 573; or (E) any facilities of any electric utility used solely for operating its electric utility system. I. Channel: A six Megahertz (MHz) frequency band, which is suitable for carrying either one standard video signal, a number of audio, digital or other non-video signals or some combination of such signals. J. Dwelling Unit: Residential livi4g units as distinguished from temporary lodging facilities such as hotel and motel rooms and dormitories, and including single family residential units and individual apartments, condominium units, mobile homes within mobile home parks, and other multiple family residential units. K. Financial Interest: Includes without limitation: 1. Any form of equity ownership interest, which is either (a) direct or (b) indirect through another form of Person; 2. Any form of contingent or optional ownership interest; 3. Any contract in which the Operator or any Affiliate thereof is to receive a percentage of the gross revenues and/or a.percentage of the net income of the other party to the transaction by reason of the activities encompassed by said contract; 3 4. Any debt relationship in which the Operator as debtor borrows funds at a rate more advantageous than that generally available to similarly situated entities of similar creditworthiness; 5. Any debt relationship in which the Operator as creditor receives a rate of interest exceeding that which would otherwise be paid by a similarly situated debtor of similar creditworthiness; 6. Any option or warrant to purchase the stock or other equity interest in any Person which is related to a Person which generates revenues arising from or attributable to the operation of the Cable System; and 7. Any debt relationship which has conversion privileges to a form of equity of the nature described in the preceding subsection. L. Franchise: The franchise granted pursuant to this Agreement. M. Franchise Agreement or Agreement: This contract and any amendments, exhibits or appendices hereto. N. Franchise Area: The territorial confines of the'City, and any areas annexed thereto during the term of the Franchise. O. Gross Revenues: All revenue derived directly or indirectly by the Operator, or any Affiliate of the Operator, arising from or attributable to, the operation of the Cable System to .provide Cable Service. Gross Revenues shall include,but shall not be limited to: 1. Revenue from (i) payments for service, equipment, late fees, franchise fees and other charges, including without limitation all payments directly or indirectly from Subscribers; (ii) advertising carried on the Cable System or in subscriber bills; and(iii)programmers or others relating to transmissions carried on the Cable System, including but not limited to payments to carry programming and home shopping revenues. 2. All revenue directly or indirectly attributable to the Operator which is received by any Affiliate,whether or not such revenue is actually received by the Operator. 3. Revenue which is not actually received by the Operator or an Affiliate thereof. reflecting the value of services bartered or exchanged for non-monetary consideration. 4. Revenues derived from the provision by the Operator or any Affiliate thereof of Internet access,cable modems and/or other Internet-related services, including without limitation bandwidth leased to unaffiliated Internet service providers. Notwithstanding the foregoing, if any(i)subsequent enactment of Federal or State statutory law,(ii) final Federal Communications Commission order or regulation which is not in the process of being challenged in court, or(iii) judicial decision of a State or Federal appellate court,which is applicable to the City, determines either that Internet Services are not a Cable Service or that the revenues specified in this 4 subsection (4) should not be included in the definition of Gross Revenues and is retroactive in application, then such revenues shall be excluded from Gross Revenues, provided however, if such enactment, order or decision does not state whether it is retroactive, then either party may seek a judicial determination as to the retroactive applicability of the same. Further, notwithstanding Applicable Law, the revenues specified in this subsection(4) shall immediately be excluded from Gross Revenues in the event and to the extent that the City permits such revenues to be excluded from the calculation of Gross Revenues for Franchise Fee purposes by. any other cable operator which is operating a cable system in the City. 5. Revenue from any activity, product or service which generates revenue of any type whatsoever and which is offered to users by means of the Cable System, to the extent such revenue arises from or is attributable to the operation of the Cable System to provide Cable Service. 6. Revenue from any activity, product or service in the production or provision of which any of the assets of the Cable System, including without limitation cable, computers, servers, production facilities and administrative facilities, are utilized, unless such revenue is expressly excluded from Gross Revenues by Applicable Law. Gross Revenues shall not include (i) the amount of any tax, fee or other assessment imposed by law upon Subscribers or others which the Operator is obligated to collect and pass on in full to the applicable taxing authority nor (ii) the amount of Periodic Access Capital Payments as defined herein. A franchise fee is not such a tax, fee or other assessment. Moreover, revenues of both the Operator and any Affiliate which represent a transfer of funds between them shall be counted only once for purposes of determining Gross Revenues. Refunds of revenues previously received and accounted which are paid to Subscribers shall reduce Gross Revenues by the amount of the refunds received during the reporting period in which such refunds are.made. P. Incumbent Operator: Either of UACC Midwest, Inc., or Televents, Inc., or such successors or affiliates thereof that are parties to any renewal of the existing franchises. Q. Installation: The connection of the System from the tap to the point of connectivity to a Subscriber's terminal for the provision of Cable Service. R. Institutional Network or I-Net: A communications system, whether physically integrated with a cable system or not,that is constructed,operated or maintained by the Operator, whose transmissions are principally available to persons other than cable television subscribers (i.e. government agencies and affiliated non-profits, and educational institutions). The Institutional Network includes all equipment required to make the capacity available including but not limited to fiber,coaxial cable, switching,patching, electronic transmitting, receiving, and signal conversion necessary for effective use of the I-Net.. S. Interconnect: The provision by the Operator of technical, engineering, physical, financial, and all other necessary components to accomplish, complete, and adequately maintain a physical linking of the Operator's Cable System and Cable Services or any designated Channel 5 or signal pathway thereof, with any other designated cable system or programmer so that Cable Services of technically adequate quality may be sent to and received from such other systems. T. Operator. Seren Innovations, Inc., a Minnesota corporation, and its lawful and permitted successors, assigns,and transferees. U. Person: Any individual or any association, firm, general partnership, limited partnership, joint stock company,joint venture, trust, corporation, limited liability company or other legally recognized entity,private or public,whether for-profit or not-for-profit. V. Public Facility: A fire station, public educational facility, police station, public library,and City department or agency within the Franchise Area which is listed on Exhibit 1. W. Public Rights-of-Way: The surface of and the space above and below and from right- of-way line to right-of-way line in each of the following which have been dedicated to the public or are hereafter dedicated to the public and maintained under public authority or by others and located within the City limits: streets, roadways, highways, avenues, paths, lanes, alleys, sidewalks, boulevards, easements, rights-0f--way, and similar public property and areas that the City shall permit to be included within the definition of Street from time to time. X. Section: Any Section, subsection or provision of this Agreement. Y. Service Interruption: The loss of picture or sound on one or more Cable Channels for more than sixty(60) seconds. Z. Service Tier: A category of Cable Service or other services provided by the Operator and for which a separate rate is charged by the Operator. AA. State: The State of California. BB. Subscriber: Any Person who or which lawfully elects to become a recipient of Cable Service provided by the Operator by means of or in connection with the Cable System whether or not a fee is paid for such service. CC. Transfer: Any transaction in which(i) an ownership or other interest in the Operator, its Cable System, or any Person that is an operator of the Cable System is transferred from one Person or group of Persons to another Person'or group of Persons so that control of the Operator is transferred; or (ii) the Franchise or the rights and obligations held by the Operator under the Franchise are transferred or assigned to another Person or getup of Persons. The term"control," as used in this definition, means working control, in whatever manner exercised. By way of illustration, and not limitation,the addition,deletion or other change of any general partner of the Operator, or a cable operator of the Cable System is such a change of control. For purposes of this Section, an initial public offering of the Operator's common stock pursuant to a Registration Statement filed with the United States Securities and Exchange Commission on Form S-1 shall not be deemed a "change of control," provided that this exception shall not apply if any one 6 Person shall directly acquire thirty percent (30%) or more of the outstanding stock of the Operator directly through such an offering. II. GRANT OF AUTHORITY; LUMTS AND RESERVATIONS A. Grant of Authority. Subject to the terms and conditions of this Agreement and the Cable Ordinance, the City hereby grants the Operator the right to own, install, construct, reconstruct, operate, maintain, dismantle, test, upgrade, repair, use and remove a Cable System along, under, over, above, through or across or in any manner connected with the Public Rights- of-Way within the Franchise Area, for the sole purpose of providing Cable Service. This Franchise shall grant no authority for the Operator to use the City's Public Rights-of-Way for any purposes other than the provision of Cable Service, except to the extent other services may be provided pursuant to section VI(E). No reference herein to a Public Right-of-Way shall be deemed to be a representation or guarantee by the City that its interest or other right to control the use.of such property is sufficient to permit the Operatoes use for specific purposes, and the Operator shall be deemed to gain only those rights to use that are within the City's power to convey. No privilege or power of eminent domain is bestowed by this grant or by this Agreement. B. Area Served: 1. The Franchise is granted for the Franchise Area defined herein. The Operator shall extend its Cable System to provide service to any residence in the City upon request, in accordance with the terms of the Cable Ordinance and this Agreement. 2. The Operator shall design, construct and maintain the Cable Television System to pass every Dwelling Unit in the Franchise Area, provided that the Operator may apply to the City for a low-density exception for any specific mile of street within the Service Area, which has less than thirty-six (36) Dwelling Units fronting thereupon, measured from the closest point of connectivity to.the Operator's System,provided that the Operator's Cable System shall be designed to reach the maximum possible number of Dwelling Units and to minimize the existence of any low-density exception with the City. The Operator shall be responsible for providing sufficient information to the City to establish the existence of the low-density exception and to establish that the System's architecture is such as to minimize the occurrence of such low density exceptions. The Operator shall bear the burden of proof as to both elements. C. Term: The Franchise and this Franchise Agreement shall extend for a term of fifteen years, commencing on the date accepted below by the Operator, unless the Franchise is earlier revoked or its term shortened as provided herein or in the Cable Ordinance, or unless the Franchise is renewed or extended by mutual agreement. D. Grant Not Exclusive: The Franchise granted under this Agreement shall be nonexclusive. The City specifically reserves the right to grant, at any time, such additional Franchises for a Cable System or any component thereof, as it deems appropriate, subject to Applicable Law. The City also specifically reserves the right to operate a municipal Cable System, or any portion thereof; pursuant to Applicable Law and shall not be required to grant a Franchise to the City for the operation of a municipal Cable System unless specifically required by Applicable Law. E. Franchise Agreement Subject to Other Laws: This Franchise Agreement is subject to and shall be governed by all applicable provisions of federal,state, and local law. F. Franchise Agreement Subject to Exercise of Police Powers: All rights and privileges granted herein are subject to the constitutional police powers of the City and its rights under Applicable Law to exercise its governmental powers to their full extent and to regulate the Operator and the construction, operation and maintenance of the Operator's Cable System, including,but not limited to, the right to adopt and enforce additional ordinances and regulations as the City shall find necessary in the exercise of its police powers,the right to adopt and enforce applicable zoning, building, permitting and safety ordinances and regulations, the right to adopt and enforce ordinances and regulations relating to equal employment opportunities, and the right to adopt and enforce ordinances and regulations containing right-of-way, telecommunications, utility and cable television consumer protection and service standards, and rate regulation provisions. The Operator expressly acknowledges that the City has begun proceedings related to the renewal of the Incumbent Operator's franchise, and that in the course of those proceedings, the City may choose to amend the Cable Ordinance. G. Approval and Effective Date: The grant of the Franchise provided for in this Agreement shall be effective on the date stated on the signature page (the 'Effective Date"), provided that, prior to or upon the date of the City's approval of and authorization of execution of this Agreement, the Operator shall theretofore have fully executed this Agreement and submitted to the City all required submissions required hereby, including without limitation, the Security Fund and insurance certificates provided for in this Agreement. H. Effect of Acceptance: By accepting the Franchise and executing this Franchise Agreement,the Operator: 1. accepts and agrees to comply with each provision of the Cable Ordinance and this Agreement; 2. acknowledges and accepts the City's legal right to grant the Franchise, to enter this Franchise Agreement, and to enact and enforce ordinances and regulations related to the Franchise; 3. agrees that the Franchise was granted pursuant to processes and procedures consistent with Applicable Law, and that it shall not raise any claim to'the contrary, or allege in any claim or proceeding by the Operator against the City that any provision, condition.or term of the Cable Ordinance or this Agreement at the time of the acceptance of the Franchise was unreasonable or arbitrary, or that at the time of the acceptance of the Franchise any such provision, condition or term was void or that the City had no power or authority to make or enforce any such provision, condition or term; 8 • • . 4. agrees that the City retains the absolute right to terminate this Agreement in accordance with Section X(H) for any material violation by the Operator of any substantive provision of the Cable Ordinance or any term or condition hereof, which violation has not (i) been substantially corrected by'Operator within sixty days of receiving written notice from the City of such violation,or(ii)in the case of a violation which reasonably requires more than sixty days to convect, Operator has undertaken substantive corrective action within sixty days of receiving written notice from the City of such violation and subsequently completes any necessary corrective action in a timely manner. 5. agrees that it will not oppose intervention by the City in any proceeding affecting the Operator's Cable System within the Franchise Area; and 6. agrees that, as fiu-ther provided in Section VI, the costs to the Operator associated with the provision of support for public, educational and governmental access and the Institutional Network as expressly described in this Franchise Agreement do not constitute franchise fee payments within the meaning of 47 U.S.C..§ 542, and fall within one or more of the exceptions to 47 U.S.C. § 542. I. No Waiver. 1. The failure of the City on one or more occasions to exercise a right or to require compliance or performance under this Franchise Agreement, the Cable Ordinance, or any other applicable law shall not be deemed to constitute a waiver of such right or a waiver of compliance or performance by the City, nor to excuse the Operator from complying or performing, unless such right or such compliance or performance has been specifically waived in writing. 2. Waiver of a breach of this Agreement shall not be a waiver of any other breach, whether similar to or different from that waived Neither the granting of the Franchise, nor any provision herein, nor any action by the City hereunder shall constitute a waiver of or a bar to the exercise of any governmental right or power of the City, including without limitation of the right of eminent domain. J. Limitation on Liability. In any court proceeding involving any claim against the City or other governmental entity, or any official, member, employee, or agent of the City, arising from the regulation of Cable Service or from a decision of approval or disapproval with respect to a grant, renewal, transfer, or amendment of the Franchise, any relief, to the extent such relief is required by any other provision of federal, state, or local law, shall be limited to injunctive relief and declaratory relief. The Operator shall not apply for any waivers, exceptions, or declaratory rulings from the FCC or any other federal or state regulatory agency affecting the System or the Franchise without written notice to the City K. Incorporation by Reference: Subject to Section XIII(A), the Cable Ordinance shall be incorporated in and made a part of this Agreement as if fully set forth herein. III. TRANSFERS 9 A. City Council Approval Required. No Transfer shall occur unless prior application is made by the Operator to the City and the City Council's prior written consent is obtained, pursuant to this Agreement and the Cable Ordinance, and only then upon such terms and conditions as the City Council deems necessary and proper. This shall not be deemed to be a waiver of any right of Operator to challenge any such condition imposed by the City. Any such Transfer without the prior written consent of the City Council shall be considered to impair the City's assurance of due performance, and shall be invalid. The granting of approval for a Transfer in one instance shall not render unnecessary approval of any subsequent Transfer. Notwithstanding anything contained in this Agreement, the City acknowledges that, as of the Effective Date, Northern States Power, (NSP), sole shareholder of Operator;is in the process of merging with New Century Energies (NCE). Said merger and any reconfiguration or renaming of NSP or NCE and/or establishment-of intermediate entities (between NSP and Operator) resulting therefrom, shall not require the City's approval or consent. 1. Application.. (a) The Operator shall promptly notify the City Manager of any proposed Transfer. If any Transfer should take place without prior notice to the City Manager, the Operator shall promptly notify the City that such a Transfer has occurred. At least one hundred- twenty (120) calendar days prior to the contemplated effective date of a Transfer, the Operator shall submit to the City Manager an application for approval of the Transfer. Such an application shall provide complete information on the proposed.transaction, including details of the legal, financial, technical, and other qualifications of the new controlling entity or transferee, and on the potential impact of the Transfer on Subscriber rates and service. At a minimum, the following information shall be included in the application, provided that, the Operator is not required to duplicate information that it submits to the City Manager to comply with its obligations under federal or State law: i. all information and forms required under federal law or the equivalent of such forms if no longer required by federal law; ii. all information required by the Ordinance; iii. any contracts or other documents that relate to the proposed transaction, and all documents, schedules, exhibits,or the like referred to therein; iv. any shareholder reports or filings with the Securities and Exchange Commission that discuss the transaction; V. other information necessary to provide a complete and. accurate understanding of the financial position of the Cable System before and after the proposed Transfer; vi. complete information regarding any potential impact of the Transfer on Subscriber rates and service; and 10 vii. a brief summary of the proposed'controlling entity's or transferee's plans for at least the next five (5) years regarding line extension, plant and equipment upgrades, channel capacity, expansion or elimination of services, and any other changes affecting or enhancing the performance of the Cable System. The City shall notify Operator of any insufficiency in the information provided within thirty (30) days.after receipt thereof. The failure of the City to so notify Operator of such insufficiency shall result in the information being deemed complete and adequate. For the purposes of determining whether it shall consent to a Transfer, the City or its agents may inquire imto all qualifications of the prospective controlling entity or 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 as provided under the Ordinance. The Operator and any prospective controlling entities or transferees shall assist the City in any such inquiry in any reasonable manner, and if they fail to do so, the request for approval of the Transfer may be denied. B. Determination by City. In making a determination as to whether to grant, deny, or grant subject to conditions, an application for a Transfer, the City may consider, without limitation, the legal, financial, and technical qualifications.of the proposed controlling entity or transferee to operate the Cable System; the proposed purchase price and consideration to be paid for the Franchise; any potential effects of the Transfer on Subscriber rates or services; whether the Operator is in compliance with this Agreement and the Ordinance, and, if not, the proposed controlling entity transferee's commitment to cure such noncompliance; whether the proposed controlling entity or transferee owns or controls any other Cable System in the City, and whether operation by such Person may eliminate or reduce competition in the delivery of Cable Service in the City; and whether operation by the proposed controlling entity or transferee or approval of. the Transfer would adversely affect Subscribers, the public, or the City's interest under this Agreement,the Ordinance, or other Applicable Law. C. Transferee's Agreement: No application for a Transfer of the Franchise shall be granted unless,the proposed controlling entity or transferee agrees in writing that it will abide by and accept all terms of this Agreement and the Cable Ordinance and that it will assume the obligations, liabilities, and responsibility for all acts and omissions, known and unknown, of the previous Operator under this Agreement and the Ordinance, for all purposes, including renewal. D. Approval Does Not Constitute Waiver. Approval by the City Council of a Transfer does not constitute a waiver or release of any of the rights of the City under this Agreement or the Cable Ordinance,whether arising before or after the date of the Transfer. E. City's Processing Costs: If the Operator initiates a request for approval regarding a Transfer, the Operator shall reimburse the City for all reasonable out-of-pocket costs, including attorneys' and consultants' fees and costs, incurred by the City in connection with,the City's review and processing of the Operator 's request. Nothing in the foregoing shall entitle the Operator to have any role in the selection of the City's consultants and, in order to protect the attorney-client and work product privileges, the City may delete from billings for attorneys and consultants retained by attorneys any detailed description of services performed. Payments.of such costs and expenses shall not be deemed to be"franchise fees" within the meaning of Section 11 622 of the Cable Act (47 U.S.C. §542), and such payments shall not be deemed to be (i) "payments in kind" or any involuntary payments chargeable against the Franchise Fee to be paid to the City by the Operator pursuant to this Agreement or (ii) part of the Franchise Fees to be paid to the City by the Operator pursuant to this Agreement to the extent required by Applicable Law. IV. CONSTRUCTION AND MAINTENANCE A. Construction Standards: 1. The construction, operation, maintenance, and repair of the System shall be in accordance in all material respects with all applicable sections of the Occupational Safety and Health Act of 1970, as amended; the National Electrical Safety Code and National Electric Code; Obstruction Marking and Lighting, AC 70/7460 i.e., Federal Aviation Administration; Construction, Marking and Lighting of Antenna Structures, Federal Communications Commission Rules Part 17; the Cable Ordinance; Applicant's Construction Procedures Manual; and other applicable federal, state, or local laws and regulations, all as hereafter may be amended or adopted. In the event of a conflict among codes and standards, accepted cable industry practices shall control (except insofar as such practices, if followed, would result in a Cable System that could not meet express requirements of federal, state or local law, or in instances in which such practices are expressly preempted by other standards). Consistent with the foregoing, the City may ensure that work continues to be performed in an orderly and workmanlike manner, reflecting any changes that may occur over the Franchise term. 2. To the extent permitted by Applicable Law, the City reserves the right to.adopt and impose such technical and other standards as it may deem necessary or appropriate, after notice to Operator and opportunity for Operator to participate. It is-acknowledged, however, that 47 C.F.R. 76.605 currently preempts City authority. 3. All installation of electronic equipment shall be of a permanent nature, using durable components. 4. Without limiting the foregoing, antennae and their supporting structures (towers) shall be designed in accordance with the Uniform Building Code as amended, and shall be painted, lighted, erected, and maintained in accordance with all applicable rules and regulations of the Federal Aviation Administration and all other applicable federal, state or local laws, codes, and regulations, all as hereafter may be amended or adopted. 5. The Operator shall maintain all wires, conduits, cables, and other real and personal property and facilities comprising Operator's Cable System in good condition, order and repair. Consistent with subsection IV(a)(1) above, all safety practices required by law shall be used during construction, maintenance, and repair of Operator's Cable System. The Operator shall at all times employ ordinary care and shall install and maintain in use commonly accepted methods and devices for preventing failures and accidents. 12 6. In the event of a failure by the Operator to complete any work required for the protection or restoration of the Public Rights-of-Way, or any other work required by City law or ordinance, within the time specified by and to the reasonable satisfaction of the City, the City, following notice and an opportunity to cure, may cause such work to be done, and the City shall submit an itemized list of such costs to Operator as well as any materials reasonably requested by Operator to verify such costs. Following the Operator's receipt of such itemized list and supporting materials,the Operator shall reimburse the City the costs thereof within thirty days, or the City may recover such costs through the letter of credit provided by Operator. • 7. In the event of an emergency, or where the Operator's Cable System creates or is contributing to an imminent danger to health, safety, or property, or an unauthorized use of property, the Operator shall remove or relocate any or all parts of Operator's Cable System at the request of the City. If the Operator fails to comply with the City's request, the City may remove or relocate any or all parts of the Operator's Cable System upon reasonable notice to Operator. If Operator's compliance with the City's request pursuant to this subsection results in the breach of any of Operator's obligations under this Agreement, and Operator has so notified the City before complying with the City's request, Operator shall not be liable for its failure to satisfy such obligations. • 8. Any and all Public Rights-of-Way, public property, or private property that is disturbed or damaged during the construction, repair, replacement, relocation, operation, maintenance, or construction of a System shall be repaired, replaced and restored, in a good workmanlike, timely manner, to substantially the same condition as immediately prior to the disturbance (including appropriate landscape restoration). All repairs, replacements and restoration shall be undertaken within no more than thirty (30) days after the damage is incurred, and shall be completed as soon as reasonably possible thereafter. The Operator shall guarantee and maintain such repairs, replacements and restoration for at least one year against defective materials or workmanship. • 9. Any contractor or subcontractor used for work or construction, installation, operation, maintenance, or repair of System equipment must be properly licensed under laws of the State of California and all applicable local ordinances, where applicable, and each contractor or subcontractor shall have the same obligations with respect to its work as the Operator would have if the work were performed by the Operator. The Operator will take reasonable measures to require that contractors, subcontractors and all employees who will perform work for it are trained and experienced. The Operator shall be responsible for ensuring that the work of contractors and subcontractors is performed consistent with this Agreement and Applicable Law, shall be fully responsible for all acts or omissions of contractors or subcontractors, shall be responsible for promptly correcting acts or omissions by any contractor or subcontractor, and shall implement a quality control program to ensure that the work is properly performed. • 10. The City does not guarantee the accuracy of any maps showing the horizontal or vertical location of existing substructures. B. Undergrounding: 13 1. In those areas of the City where transmission or distribution facilities of all the public utilities providing telephone and electric power service are underground, the Operator likewise shall construct, operate and maintain its transmission and distribution facilities therein underground. In those areas of the City where transmission or distribution facilities of all the public utilities providing telephone and electric power service are aerial, the Operator shall likewise construct, operate and maintain its transmission and distribution facilities therein on an aerial basis, unless otherwise agreed to by the City. 2. In those areas of the City where the Operator's cables are located on the above- ground transmission or distribution facilities of the public utility providing telephone or electric power service, and in the event that the facilities of both such public utilities subsequently-are placed underground, the Operator shall similarly and simultaneously construct, operate and maintain its transmission and distribution facilities underground,at the Operator's cosh 3. In those areas of the City where transmission or distribution facilities of the Cable System are other than aerial (and therefore not pole-mounted), all passive electronic facilities, 4fv including without limitation all tap pedestals, shall be undergroun provided that where the Operator demonstrates to the reasonable satisfaction of the City that, by reason of peculiar underground conditions in a given area of the City, the passive electronic facilities cannot be feasibly maintained in below-ground structures, the Operator may then place such passive electronic facilities in above-ground enclosures. However,the City specifically reserves all of its rights to approve, in accordance with this Agreement, all above-ground and/or underground locations for all such equipment subject to Applicable Law. The Operator shall, at installation and throughout the term of the Franchise, install and maintain all mitigation measures required in the Mitigated Negative Declaration dated September 1, 1999 related to the Cable System adopted by the City for all such above-ground equipment installations. C. Compliance with Construction Codes and Permitting Requirements: 1. The Operator shall obtain all necessary permits from the City before commencing any construction, repair, upgrade or extension of the System, including the opening or disturbance of any Public Rights-0f--Way, on private or public property within the City. The Operator shall adhere to all state and local laws and building and zoning codes currently or hereafter applicable to construction, operation,or maintenance of the System in the City and give due consideration at all times to the aesthetics of the property. 2. The City shall, at all times, have the right to inspect all construction or installation work performed pursuant to the provisions of the Franchise and to make such tests at its own expense as it shall find necessary to ensure compliance with the terms of the Franchise and applicable provisions of local, state and federal law in such a manner so as to minimize disruption of service to Subscribers. D. Conditions on Use of the Public Rights-of-Way: 1. Any and all Public Rights-of-Way or public property or private property, which are disturbed or damaged during the construction, repair, replacement, relocation, operation, or 14 reconstruction of the System shall be promptly and fully restored by the Operator, at its expense, to a condition as good as that prevailing prior to the Operators work, in accordance with the City's normal restoration procedures and standards regarding Public Rights-of-Way and other public property In so doing, the Operator shall comply with all directions of the City Engineer, including without limitation direction to utilize directional boring in lieu of trenching. Moreover, the Operator shall use its best efforts to reduce, through coordination with the City Engineer, its trench cuts of the Public Rights-of-Way by coordinating such intrusions with other users, franchisees, licensees and occupants of the Streets so as to minimize the trench cuts and resulting pavement degradations in the Public Rights-of-Way. It is a violation of this Franchise for the Operator to leave cable unburied on the ground for more than the shortest, temporary period required to bury it and, in no event, overnight. If the Operator shall fail to promptly perform the restoration required herein after written notice and an opportunity to cure, the City shall have the right to put the Public Rights-of-Way, public, or private property back into a condition as good as that prevailing prior to the Operator 's work and the City shall obtain reimbursement for such restoration from the Operator. The City may deduct the Operator's payment due from the Security Fund, if it shall remain unpaid fifteen(15) days after presentation for payment. Nothing contained in this Agreement shall excuse or relieve the Operator from compliance with any street cut ordinance of general application which the City should hereafter enact. 2. Nothing in this Franchise shall be construed to prevent the City from constructing, maintaining, repairing or relocating sanitary sewers and/or storm drains; grading, paving, maintaining, repairing, relocating and/or altering any Public Rights-of-Way; constructing, laying down; repairing, maintaining or relocating any water mains; or constructing, maintaining, relocating,or repairing any sidewalk or other public work. 3. All System transmission and distribution structures, lines and equipment erected by the Operator within the City shall be located so as not to unreasonably obstruct or unnecessarily interfere with the usual and customary use of the Public Rights-of--Way, and to cause minimum interference with the rights of property owners who abut any of the Public Rights-of-Way, and not to unreasonably interfere with existing public utility installations. The Operator shall furnish to and file with City Engineer the maps, plats, and permanent records of the location and character of all facilities constructed, including underground facilities, and the Operator shall file with the City updates of such maps, plats and permanent records annually if changes have been made in the System. 4. If at any time during the period of this Franchise the City shall alter, or change the grade or location of any Public Rights-of-Way, the Operator shall at*its own expense, upon notice by the City, remove and relocate its poles, wires, cables, conduits, manholes and other fixtures of the System, and in each instance comply with the standards and specifications of the City. 5. The Operator shall not place poles, conduits,or other fixtures of the System above or below ground where the same will unreasonably interfere with any gas, electric, telephone, water or other utility fixtures. All the Operator's poles, conduits, or other fixtures placed in any Public Rights-of-Way shall be so placed as to comply with all requirements of the City. 15 6. The Operator shall, on request of any Person holding a moving permit issued by the City, temporarily move its wires or fixtures to permit the moving of buildings with the expense of such temporary removal to be paid by the Person requesting the same, and the Operator shall be given not less than ten (10) business days advance notice to arrange for such temporary changes. 7. The Operator shall cooperate with and participate fully in Underground Service Alert (USA) and other reputable underground facility locating services to insure that damage and/or interference with other underground facilities occupants is minimizes_ 8. If(i) the Operator should in the course of the construction and/or reconstruction of the System elect to place underground cable plant in the public utility easement on private property where there was, at the time of the Operator 's election, space available for the installation of such plant within the public roadway, and (ii) the Operator should fail, neglect or refuse to take pre-construction photography (or videography) of the condition of any private property upon which underground construction is to occur,the Operator shall have the burden of proof as to the condition of the private property prior to the initiation of such construction in any subsequent complaint resolution, arbitration or judicial procedure between the Operator and the private property owner. If the Operator enters private property for the purposes of construction where there is no dedicated public easement, the Operator shall first secure the private property owner's written consent. 9. Notwithstanding any other term, condition or provision hereof, no trench cut or portion thereof by the Operator in any Public Rights-of-Way shall remain open and unfilled for more than three (3) business days from the date of its initial opening. The Operator shall be subject to the imposition of liquidated damages pursuant hereto for each additional day that any such trench or portion thereof shall remain open beyond the aforesaid three (3) business day limit. For purposes of this section, "open' shall mean and include any degree of refilling and/or restoration of the trench short of the final restoration of the pavement to its original grade. Moreover, the Operator shall, at the close of each day, suitably cover, by plate or other means acceptable to the City, (i) any unfilled trench or portion thereof, and (ii) any open trench which traverses a driveway or other means of ingress and egress for any property owner in such a fashion as to allow full use of the driveway or other means of ingress and egress by the property owner during periods of non-construction. Each failure by the Operator to cover any such trench shall be a separate event of default which shall be separately.subject to the liquidated damages provisions of this Agreement. 10. Notwithstanding the approval and/or acceptance by the City of the construction by the Operator in the Public Rights-of-Ways, including without limitation the repair and/or restoration of trench cuts, as of the completion of the Operator's construction or..any phase thereof, the City may re-inspect any such construction by the Operator("Re-inspection') within twenty-four(24) months after the completion of all construction by the Operator(as established by the Notice of Completion for the last Construction Segment Area) and the Operator shall, as a condition of this Franchise, repair and restore to such standards as the City may then specify, any deficiencies and/or degradations noted by the City in the Re-inspection. Any such repairs and/or 16 restorations by the Operator pursuant to such a Re-inspection shall be subject to a further Re- inspection within twenty-four(24)months from the completion thereof. 11. The Operator shall, at installation and throughout the term of the Franchise, install and maintain all mitigation measures required in the Mitigated Negative Declaration adopted by the City pursuant to the California Environmental Quality Act, which are hereby incorporated by reference as fully as if set forth herein. Each failure to install and/or maintain such a mitigation measure specified in the Mitigated Negative Declaration shall.be a separate event of default which shall, in addition to all other available remedies, be separately subject to the liquidated damages provisions of this Agreement. 12. Except in cases of emergency or responses to unplanned system failures where it is impractical to do so, prior to entering onto private property to construct, operate or repair its Cable System(unless the repair or construction can be performed from the Public Rights-of-Way without disrupting private property), the Operator shall give the Person residing on or using the property adequate notice, not less than twenty-four (24) hours nor more than seventy-two (72) hours in advance, that it intends to work on the property, a description of the work it intends to perform and a name and telephone number the Person can call to protest or seek modification of the work. Failure of the Operator to give the timely and adequate notice as described above shall cause the burden of proof in any subsequent legal action for damage by the Operator to the private property, to shift to the Operator as to all matters before the court. Work shall be done in a manner that causes the least interference with the rights and reasonable convenience of property owners, residents and users and that complies with Applicable Law. In such case, subject to the exception for timely notice, the notice shall be given to the Person residing or using the property as soon as possible. 13. When in the course of aerial construction, it is necessary to replace an existing pole and the Operator desires to utilize a temporary second pole without simultaneously removing the original pole (hereinafter "Temporary Duplicative Pole Method") in order to maintain the pace of construction, the Operator shall make application to the City to use the Temporary Duplicative Pole Method. The Temporary Duplicative Pole Method shall not be utilized without the prior written approval of the City. In determining whether or not to grant its approval for the use of the Temporary Duplicative Pole Method, the City may consider, among other things, the degree of delay which will be incurred if the Duplicative Pole Method is not utilized, the Operator's diligence and foresight theretofore in pursuing the processing of make ready work and the timely construction of the System, and the Operator's timely completion (or lack thereof) of the relocation of facilities on previously approved Temporary Duplicative Pole Method permits. If the City shall approve the use of the Temporary Duplicative Pole Method in a given instance, the Operator shall deposit with the City one and one-half(I V2) times the City's estimate of the cost to complete the relocation of facilities to the new pole and remove the old pole and shall agree in writing to complete the relocation of all facilities to the new pole and the removal of the old pole within four (4) months from the date of the City's approval of the Temporary Duplicative Pole Method permit. Each failure to complete the relocation of facilities within the time specified shall be a separate event of default which shall, in addition to all other remedies,be separately subject to the liquidated damages provisions of this Agreement. 17 14. The City shall have the option to lay its own. conduit or place other public improvements that do not incur significant cost, delay or redesign by Operator, including without limitation wiring for traffic signals, streetlights, etc. in the Operator's open trenches during the initial construction and during any future rebuilds or repairs. 15. The City shall have the right, at no charge(but at no additional cost to Operator), to install or maintain any wires and fixtures desired by the City upon the poles and within the underground pipes and conduits of the Operator that are located in the same Public Rights-of- Way. If the City desires to utilize the Operator's facilities, the City and the Operator shall enter into a mutually acceptable separate agreement for the provision thereof. Any such agreement shall, contain terms and conditions other than rate provisions that are no more favorable nor less burdensome than the terms and conditions made available by the Operator to any other Person. The.Operator may deny use of its facilities if the City's proposed installation or maintenance is not technically feasible, exceeds available space, would delay Operator's construction schedule such that liquidated damages would be payable as a result, would cause a violation of this Agreement,or otherwise interferes with the existing or future operations of the Operator. 18 E. System Architectural Design Review Process: Prior to submitting the initial Application for a Notice to Proceed, the Operator shall deliver to the City a System design plan, which shall include the following elements: 1. All hub sites and node map; 2. "Sell sheet"level description of equipment at hubs, and nodes; 3. System level trunking maps to illustrate the architecture of the system. The City's review shall not operate to excuse any non-performance under this Agreement, the Ordinance or other Applicable Law. The City may review the design plan and submit comments to the Operator within thirty (30) days of the date it was submitted by the Operator. The Operator shall take any such comments into account in implementing its construction plan. F. Construction Segments: The Operator shall construct the Cable System in a series of reasonably contiguous areas of the City,to be defined by the Operator in its application for a Notice to Proceed for each such area(such an area hereinafter a "Construction Segment Area" or"CSA'). Subject to such exceptions as may be approved by the City, in its sole discretion, each CSA shall be adjacent to and contiguous with a prior approved CSA. The Operator shall not construct any Cable System facilities within a Construction Segment Area until the Operator has secured a Notice to Proceed for that CSA from the City. The Operator's Application for a Notice to Proceed shall be accompanied by evidence that the Operator has obtained all of the permits and approvals necessary to fully complete construction of the Cable System within that Construction.Segment Area from (1) the City, (2)other applicable Governmental Authorities and (3)pole owners (as to aerial construction). The Operator shall obtain approval for the siting of all pedestals and similar structures prior to installation of any such structure or construction of any facilities serving or served by such a structure. Approval for such siting shall be obtained in accordance with the usual procedures governing such structures, and nothing in this Agreement or the Cable Ordinance shall be deemed to waive any such procedures. Upon proof to the reasonable satisfaction of the City that all such authorizations reasonably necessary to the completion of the Cable System within an otherwise approved Construction Segment Area have been issued, including any authorizations related to the siting of pedestals and similar structures, the City shall issue a Notice to Proceed to the Operator with respect to that Construction Segment Area The Operator shall not undertake any construction or encroachment within the public right of way prior to receipt of the Notice to Proceed applicable to the area of construction. Nothing contained in this section shall be deemed to prevent the Operator commencing construction of its head-end facility on its own property at any time, provided that it is otherwise in compliance with Applicable Law. The parties may agree to a different process for phasing construction. G. Construction Manual: Operator has submitted to City a System construction manual, and plan for notifying area residents of the system construction work process. City shall have a right to review and approve or disapprove the plan and manuals by October 1, 1999. 19 H. Post-Construction Design Modifications: At least ninety (90) days prior to the date of any construction on the System,which construction is initiated after completion of the System and which is intended to implement any modifications to the design of the System, the Operator shall deliver to the City a detailed description of the proposed design modifications. The description shall include any of the information required by subsection 6(e), relevant to an understanding of the proposed modification. The City may review the plan and, within thirty (30) days of the date the plan is made available for City review, submit comments to the Operator. I. System Operation Test: The Operator shall comply with the following procedures as it completes construction of plant: 1. The City shall be added to the notice list and shall be kept up-to-date regarding progressive activation of the System and testing of the same. 2. Successful completion of the first semi-annual FCC.proof-of-performance test for a portion of the System shall constitute.the final acceptance test for that portion. The Operator shall notify the City of the date at least ten(10)days in advance, in writing or by e-mail to City's franchise administrator, that it will conduct such a test. City shall have the right to have a designated observer present during each test. The Operator shall send a copy of the written results of each test to City promptly upon completion of each test. If the tested portion of the System passes the performance test, that portion shall be deemed accepted by the City. If the tested portion does not pass, the Operator shall take all steps necessary to meet the applicable standards and the affected portion shall be retested. 3. Final acceptance of the entire System shall take effect when (i) all nodes as set forth in the system architectural design plan approved by the City pursuant to Section V(C) have been constructed, activated, and accepted pursuant to paragraph (1) above; and (ii) at least 80% of the entire System, as measured by the number of nodes, has s passed the first semi-annual FCC proof-of-performance test. J. Construction Deadlines: The Operator shall commence construction in the City within six months of the Effective Date, and shall complete construction within the first CSA within 120 days thereafter. Failure to meet either of these requirements shall be deemed material defaults under this Agreement and shall be grounds forrevocation of the Franchise, or the exercise of any other remedy available under this Agreement or the Ordinance. The Cable System shall be completed within each Construction Segment Area within'one hundred twenty (120) calendar days from the issuance of the Notice to Proceed for that Construction Segment Area pursuant to this Agreement. Moreover, in any event, the Cable System shall be completed and operational throughout the City within twenty-four (24) months from the Effective Date of this Agreement. 20 K. Periodic Progress Reporting- 1. eporting1. Following the commencement of construction of the System or any similar major construction, the Operator shall meet with the City at least every three (3) months until the construction is completed, and provide an update on the progress of the construction according to the Operator's general plan, unless the City waives such meeting. Upon request, the Operator shall provide detailed written reports to the City on the Operator's progress in construction, within ten(10)business days of the request. 2. Public Notification. Prior to the beginning of any System construction, and periodically during each phase, the Operator shall inform the public and its Subscribers about the progress of the construction areas where construction crews will be working and any expected temporary interruptions to existing services which may occur. 3. Delays in the System Construction. The Operator shall not be excused from the timely performance of its obligation to begin and complete any system construction within the times specified herein, except for any"Force Majeure"situation, as described herein. 4. Consequences of Delays. Absent a showing of excusable delay pursuant to this Agreement, should the Operator be unable to demonstrate the commencement or timely completion of the System Construction by the times specified herein, or be unable to reasonably justify any delays,then the Operator shall be in violation of a material provision of this Franchise Agreement and the City may, in its sole discretion, either grant the Operator an extension of time to complete such construction or implement any enforcement measures specified in this Agreement or the Ordinance, including but not limited to revocation of the Franchise. In the event of excusable delay pursuant to this Agreement, the time for completion shall be extended by the period of such delay. L. System Tests and Inspections:. 1. The Operator shall perform all tests necessary to demonstrate compliance with the requirements of the Franchise and the technical standards of the FCC set forth in Part 76, Subpart K (Technical Standards) of the FCC's rules, 47 C.F.R. § 76.601 et seq., including without limitation performance tests, technical standards, signal leakage performance criteria and cable television system monitoring. In the event that the FCC's technical performance standards are repealed or are no longer applicable to the Operator's Cable System, such standards shall remain in force and effect until the City and the Operator agree to new standards. 2. The Operator shall conduct tests as follows: a. pmof of performance tests on the System at least once every six months or as required by FCC rules, whichever is more often, except as federal law otherwise' limits the Operator's obligation; and b. special proof of performance tests when Subscriber complaints indicate tests are warranted. 21 3. A written report of test results shall be filed with the City within seven(7) days of the test. In addition, the Operator shall retain written reports of.the results of any tests required by the FCC,and such reports shall be submitted to the City within seven(7)days of a request. 4. If any test indicates that any part or component of the System fails to meet applicable requirements, the Operator, without requirement of additional notice or request from City, shall take corrective action, retest the locations and advise the City of the action taken and results achieved. M. Publicizing Proposed Construction Work: The Operator shall notify the general public prior to commencing any proposed construction-that will significantly disturb or disrupt public property or Public Rights-of-Way, or have the potential to present a danger or affect the safety of the public generally. Where possible, the Operator shall publicize proposed construction work at least one week prior to commencement of that work by notifying those residents and others in the immediate vicinity of where work is to be done and most likely to be affected by the work in at least one of the following ways: by telephone, in person, by mail, by distribution of door hangers or flyers to residences, by publication in local newspapers, or in any other manner reasonably calculated to provide adequate notice. Notice to affected Persons must include the name and local telephone number of an Operator representative who is qualified to answer questions concerning proposed construction. In addition, before entering onto any Person's property for proposed non-emergency construction work in connection with Operator's Cable System, the Operator shall contact the property owner or(in the case of residential property, the resident) at least two days in advance,when possible. N. Right of Inspection: The City shall have the right to inspect all construction, reconstruction or installation work performed by the Operator under the provisions of this Agreement and Applicable Law, to ensure the Operator's compliance and to protect the health, safety and welfare of the City's citizens. All work performed by the Operator shall be fully subject to the general ordinances of the City and, in case of conflict between such general ordinances and this Agreement,the general ordinances shall prevail. O. System Maintenance: 1. The Operator shall, when practicable, schedule and conduct maintenance on Operator's Cable System so that interruption of service is minimized and occurs during periods of minimum Subscriber use of Operator's Cable System. The Operator shall provide reasonable prior notice to Subscribers and the City before interrupting service for planned maintenance or construction,except where such interruption is expected to be one hour or less in duration. Such notice shall be provided by methods reasonably calculated to give Subscribers actual notice of the planned interruption. 2. Maintenance of the System shall be performed in accordance with the technical performance and operating standards established by FCC rules and regulations. 22 P. Standard Connections: If the aerial or underground connection for service to a Subscriber's location(sometimes known as a"drop') requires no more than a one hundred fifty (150') foot extension drop measured from the nearest Street (whether or not the Operator has elected to place its Cable System in that Street), the Operator shall provide the connection to its service at no charge for the initial one hundred fifty (150) feet other than the Operator's standard installation fee. V. SYSTEM FACILITIES, EQUIPMENT AND SERVICES A. System Requirements. The Operator's Cable System generally shall meet or exceed the following requirements: 1. Compliance With FCC Rules. a. The System shall conform to or exceed all applicable FCC technical performance standards, as amended from time to time, including, without.limitation, those set forth in 47 C.F.R. § 76.601 and other applicable standards established by the City pursuant to Section 4(a)(2) above. b. The System shall have personnel, facilities and equipment sufficient to cure violations of FCC technical standards and.to ensure that Operator's Cable System remains in compliance with the standards specified in Section 0. c. The System shall have such facilities and equipment as necessary to maintain, operate, and evaluate Operator's Cable System to comply with FCC technical standards, as such standards may be amended from time to time. 2. Continuous 24-Hour Operation. The System shall be designed to be capable of continuous twenty-four-hour daily operation in accordance with FCC standards except as caused by a force majeure condition. 3. No Interference. The System shall be operated in such a manner as to comply with all applicable FCC requirements regarding (i) consumer electronic equipment and (ii) interference with the reception of off-the-air signals by a Subscriber. 4. No Deterioration to Access Signals. The System shall be so constructed and operated that each PEG Channel shall be delivered over the System with transmission quality the same as or better than the transmission quality of any other Channel on Basic Cable Service. 5. Industry-Accepted Equipment. The System shall use equipment generally used in high-quality, reliable, modem systems of similar design. Facilities and equipment shall be used at the headend to allow the Operator to transmit or cablecast signals in substantially the form received, without substantial alteration or deterioration. For example, the System shall include components so that a signal received at the headend in color may be received by a Subscriber in color, a stereo signal in stereo. 23 6. Program Security. The System shall include equipment so that any pay-per-view programming can only be activated by the positive action of a subscriber using, for example, a private identification number or other individual selection procedure. 7. Handicapped Service. The Operator shall comply with all requirements of applicable law, including but not limited to the Americans with Disabilities Act. Operator shall comply with FCC rules on transmission of closed captioning for the hearing-impaired. 8. Safety. The System's facilities and equipment shall be designed, built and operated in such a manner as to protect the safety of Operator's Cable System workers and the public. 9. Sufficient Staff and Equipment. The System shall have sufficient trucks, tools, testing equipment, monitoring devices and other equipment and facilities and trained and skilled personnel required to enable the Operator to substantially comply with Applicable Law, including applicable customer service requirements and including requirements for responding to system outages. B. System Characteristics. The Operator shall complete construction of a System in the Franchise Area in accordance with the following minimum standards: 1. The System shall have a minimum activated bandwidth of at least 860 MHz, shall be capable of delivering at least 134 analog Channels, and shall provide the equivalent of at least 87 analog Channels of programming upon activation. The System shall strictly conform, at a minimum, to the system described in Operator's franchise application dated February 10, 1999. 2. The bandwidth specifications in Section V(B)(1) refer to the engineering bandwidth of the system and do not limit what sorts of signals (e.g., analog or digital) the Operator carries on any part of that bandwidth. 3. The System shall utilize a fiber-optic wire trunk and distribution design("fiber-to- the-neighborhood"). Node size shall not exceed 500 homes per node. The System shall be designed and constructed to enable later segmentation to fewer homes per node as demand warrants. 4. The distribution plant shall have no more than six active components in a cascade. 5. The Operator shall provide standby power generating capacity at the headend and at all hubs. The Operator shall maintain standby power capable of at least 24 hours duration at the headend, at least four(4) hours duration for all system hubs, and at least 2 hours to each node .and the distribution plant, with automatic response systems to alert the system headend when conventional power is interrupted. .The Operator shall maintain sufficient portable generators to be deployed to a hub site in the event that the power disruption is expected to last more than four hours. 24 r 6. The Operator shall activate two-way capability throughout the system. The Operator shall activate all electronics for two-way operation, sweep and balance the reverse path of the system, and verify operation of the plant using procedures in NCTA Recommended Practices for Measurement on Cable Television Systems, as supplemented in October 1997, to the 1993 revised 2d edition. 7. As part of the System, the Operator shall offer every Subscriber, the opportunity to lease equipment that utilizes wireless remote controls, and that allow Subscribers to view a program on one channel while taping a program on another channel. 8. The entire System shall be technically capable of transmitting NTSC analog, compressed digital, and HDTV transmissions. The Operator shall comply with all FCC regulations regarding carriage of HDTV. 9. The Operator shall make Internet access available to all Subscribers at the same time as other services are provided over the Cable System to any Subscriber. Both upstream and downstream Internet access shall be provided over the Cable System(not via telephone lines). 10. The Operator's construction plan shall insure that the System is extended to all parts of the City without regard to income level. C. Periodic Review. Crry and OPERATOR acknowledge and agree that the field of cable television is rapidly changing which may see other regulatory, technical, and legal changes during the term of this Agreement. Therefore, in order to provide for the maximum degree of flexibility in this Agreement, and to help achieve a continued, advanced and modem Cable System, the following evaluation provisions will apply: 1. The CrrY reserves the right to adopt reasonable rules and regulations controlling the procedures as set forth below and the subjects for evaluation sessions to the extent consistent with Applicable Law. In the absence of any C=action taken to exercise these rights, OPERATOR shall be subject to the procedures and the subjects described in this Agreement. 2. The CrrY may require, in its sole discretion, that OPERATOR participate in evaluation sessions with CrrY at any time and from time to time during the term of this Agreement; provided, however, there shall not be more than four (4) evaluation sessions, with one(1) each occurring during-years 3, 6, 9 and 12 of the Agreement. 3. Topics which may be discussed at any evaluation session include, but are not limited to, rates, channel capacity, the System performance, programming, PEG access, municipal uses of the System, Subscriber complaints,judicial rulings, FCC rulings and any other topics CITY or OPERATOR may deem relevant. 4. During an evaluation session, OPERATOR shall fully cooperate with CrrY and shall provide without cost such nonproprietary information and documents as CrrY may reasonably request to perform the evaluation. 25 5. If at any time during its evaluation, CrrY determines that reasonable evidence exists of inadequate System performance, CrrY may require OPERATOR to perform tests and analyses directed toward such suspected inadequacies at OPERATOWS expense. OPERATOR shall fully cooperate with CrrY in per-forming such testing and any report prepared by OPERATOR shall include at least: a. a description of the alleged problem in the System performance which precipitated the special tests; b. the System component tested; c. the equipment used and procedures employed in testing; d. the method, if any, by which the System performance problem was resolved; and e. any other information pertinent to said tests and analyses which may be reasonably required by CrrY,or determined when the test is performed. 6. If after receiving OPERATOR's report, CrrY determines that reasonable evidence still exists of inadequate System performance, CrrY may enlist an independent engineer to perform tests and analyses directed toward such suspected inadequacies. The costs of such engineer shall be chargeable against the Security Fund. 7. As a result of an evaluation session, CrrY or OPERATOR may determine that an amendment in the terms of this Agreement may be required, that the requirements of the.System or this Agreement should be updated, changed or revised, and/or that additional services should be provided by OPERATOR (collectively a "Proposed Modification'. If the Proposed Modification is consistent with the terms of this Agreement, the needs of OPERATOR and CrrY and existing state-of--the-art technology, including what is provided by OPERATOR in other Systems owned, operated or managed by it; or its parent company, OPERATOR and CrrY will, in good faith, review the terms of the Proposed Modification and consider amending this Agreement accordingly. Nothing herein shall be construed as requiring either OPERATOR or CrrY to agree to any Proposed Modification. D. Equipment Compatibility: 1. The Operator shall comply with all FCC regulations regarding scrambling or tither encryption of signals, Subscriber premises equipment, equipment compatibility, and facilities and equipment that permit Subscribers to fully utilize the capabilities of consumer electronic equipment while receiving cable service. FCC regulations governing compatibility with consumer electronics equipment, as they may be amended from time to time, including but not limited to 47 C.F.R. §§ 76.629 and 76.630, are incorporated herein by reference. The City shall have authority, consistent with applicable law, to adopt enforcement regulations to ensure that the Operator complies with these FCC regulations. 26 2. Upon request by a Subscriber or the City, .the Operator will provide accurate. information regarding equipment compatibility and the availability of universal remote controls and other compatible equipment(a list of which, specifying brands and models, shall be provided to any Subscriber upon request). 3. As part of normal installations, without additional cost, the Operator will include full connection of all consumer equipment in use at the time of the installation, including connections permitting multiple signal reception (e.g., allowing two different Channels to be received, consistent with FCC regulations, so as to display picture-in-picture or allow a Subscriber to view one Channel while recording another). The Operator shall make such connections after installation upon a subscribers request, at a price consistent with any Appli- cable Law. E. Types of Service: Should the Operator desire to change the selection of programs or services offered on any of its tiers, it shall maintain the mix, quality and level of services provided over the System. Any change in programs or services offered shall comply with all lawful conditions and procedures contained in this Agreement and in Applicable Law. The Operator shall provide thirty(30)days' advance written notice to Subscribers and the City of any change in channel assignment or in the video programming service provided over any channel; unless this requirement is waived by the City or by operation of federal or state law, or due to events beyond the reasonable control of the Operator. F. Offices. The Operator shall maintain an office at a convenient location within the City. The office shall be open at least from 9:00a m. - 6:00 p.m. five days a week, and from 9:00 a.m. - 5:00 p.m. on Saturdays to allow Subscribers to request service, pay bills, and conduct other business. Notwithstanding the foregoing, no sooner than five (5) years after opening its office within the City, the Operator may request that City approve the relocation of its office to a convenient location outside the City. City shall approve the relocation promptly unless it finds that the relocation would be unreasonably inconvenient to subscribers within the City. G. Leased Access Channels: The Operator shall provide leased access channels as required by federal law. 27 • H. Interconnection: 1. Operator shall design its System so that it may be two-way interconnected with any or all other cable television systems in the area Interconnection of systems may be made by direct cable connection,microwave link, satellite or other appropriate methods. 2. Operator may interconnect its system with other Cable Systems upon its- own initiative,or upon request of the City Council to interconnect. If so ordered, Operator shall begin good faith negotiations concerning interconnection with the other affected system or systems. If so ordered, Operator shall interconnect with any adjacent Cable System which is controlled by the Operator or its Affiliate. 3. All signals to be interconnected will comply with FCC technical standards for all. classes of signals and will result in no more than a de minimus level of distortion. 4. The Operator shall cooperate with any interconnection corporation, regional interconnection authority, state or federal regulatory agency which may be hereafter established for the purpose of regulating, facilitating, financing or otherwise providing for the interconnection of-communication systems within and beyond the boundaries of the City. To facilitate interconnection with other adjacent systems which are owned or controlled by the Operator or any Affiliate thereof ("Adjacent Related Systems'), the Operator shall place all comparable Access channels on the System and on Adjacent Related Systems on channels having the same numerical designations. I. Customer Service Monitoring. The Operator shall install and maintain status monitoring equipment and keep such records as required to enable the City to determine whether the Operator is complying with all telephone answering standards required by applicable customer service regulations, as amended from time to time. J. Emergency Alert System: The Operator shall comply with the requirements of 47 C.F.R. Part 11, as amended. The Cable System shall be designed and constructed to permit the City to simultaneously override audio and video signals and broadcast emergency messages on all Channels on the System. The City shall have the capability to initiate emergency messages from City Hall, or such other place as the Administrator of Emergency Services may designate. The Operator shall assist and cooperate with the City in periodic testing of the emergency alert system. K. Home Wiring: Operator shall comply with all applicable FCC requirements, including any notice requirements,with respect to home wiring and home run wiring. L. Uses of System: Operator shall notify the City of all active uses of the Operator's Cable System as promptly as possible after the institution of such uses. M. Parental Control Lock: The Operator shall provide, at no charge, to Subscribers, upon request, a parental control locking device or digital code that permits inhibiting the video and audio portions of any Channels offered by the Operator. 28 N. Open Platform for Internet Services: The Operator agrees to comply with all requirements of Applicable Law with respect to nondiscriminatory access to the Operator's cable modem platform for providers of internet service. O. No Limitation of Streaming Video: Unless expressly mandated by Applicable Law, the Operator shall place no restriction upon the downstream streaming of video programming over its internet access service. VI. CHANNELS AND FACILITIES FOR PUBLIC,EDUCATIONAL AND GOVERN- MENTAL USE A. Access Channels: 1. The parties acknowledge that the franchise granted by the City to the Incumbent Operator expires on February 18, 2001, and that the City is in the process of ascertaining cable- related community needs and interests pursuant to 47 U.S.C. § 546. Those needs and interests, including requirements for channel capacity for public, educational and governmental use, will be reflected in the terms of any Renewal Franchise. The parties agree that if such a Renewal Franchise is granted, the Operator shall provide, beginning on the effective date of the Renewal Franchise, the same number of analog Access Channels as is required of the Incumbent Operator under the Renewal Franchise. Beginning-immediately upon commencement of Cable Service to the first Subscriber in the City, the Operator shall provide two analog Access Channels for public, educational and governmental use. One channel shall be used, to the extent Operator has access to the same, for the live broadcast of City Council meetings and, by obtaining and replaying videotapes, providing similar bulletin boards or through the Incumbent Operator's system, the other programming currently carried on Channel 6 of the Incumbent Operator's System. The other channel shall be used to carry CCTV, the government access channel for Contra Costa County as soon as Operator's Cable System has direct access to the same. In addition, the Operator shall make available up to two additional analog Access Channels within- thirty(30)days of a written request from the City. The additional Access Channels shall be used for public, educational or governmental access programming, the allocation thereof to be at the sole discretion of the City. Any entity that manages an Access Channel may use that capacity to provide one or more channels of service. 2. Additionally the parties agree that if such a Renewal Franchise is granted, the Operator shall provide, beginning on the effective date of the Renewal Franchise, the same amount of digital PEG Access capacity as is required of the Incumbent Operator under the Renewal Franchise. Beginning immediately upon commencement of Cable Service to the first Subscriber in the City, and subject to subsection (3) below, the Operator shall provide digital capacity in an amount equal to the amount needed to transmit four (4) video channels, with accompanying audio, that are in digital format and capable of producing sound and picture of NTSC quality, based on the compression technology then in-use in the Cable System. Any use of such digital capacity shall be compatible with the technology, including without limitation the compression technology, used by Operator in the Cable System. The City and the Operator shall 29 ' • • work together to implement technical solutions that make the most efficient use of this capacity . Further, if the Operator offers subscribers a radio or music service delivered over the Cable System, the Operator shall include in such service, if reasonably feasible, a non-profit public radio station designated by City which is either operated by City or by a non-profit organization within Contra Costa County. 3. Any of the foregoing analog or digital PEG capacity, the control of which has not been transferred to City or a Designated Access Provider, may be utilized by the Operator for any purpose unless and until it is so transferred. Four analog PEG channels shall be provided in the manner specified in Section 6(a)(1). Additional PEG capacity up to the maximum specified in Section 6(a)(1) (as to analog) and (2) (as to digital) shall be provided as follows: Prior to requesting additional PEG capacity, City shall, in its sole discretion, determine that such additional PEG capacity can reasonably be used for PEG purposes. In making this determination, City shall consider the extent to which existing PEG capacity is being utilized, the community need for additional PEG programming, the resources and capabilities of the City or the applicable Designated Access Provider needed to produce additional PEG programming and . the impact on the Operator and its Subscribers. Upon malting this determination, City shall- deliver written notice to the Operator indicating the amount and type of capacity needed and the date upon which the capacity should be provided. If the Operator has capacity of the specified amount and type which it is not actively using, it shall provide the capacity by the specified date. If the Operator does not have such unused capacity, it may defer providing such capacity until the earlier of(i) the date such capacity becomes available or(ii) twelve (12) months after receipt of the notice from City. The Operator may defer providing the capacity in the foregoing manner �c only if it delivers a written notice to the City within fourteen(14) days after receipt of the City's notice. No third party shall have any independent right under this section to obtain additional PEG capacity, and City shall have the exclusive right to obtain additional PEG capacity for itself or a Designated Access Provider pursuant to this section. 4. The Operator shall provide dedicated, bidirectional fiber optic links between the headend and(i) City Hall; and two (2) other sites designated by the City in order to deliver PEG access programming to the headend. These links shall be completed as soon as practical after construction of the System commences. The Operator shall be responsible for providing all equipment at the origination sites necessary to transport the video programming from those origination sites to Operator's headend. The Operator shall place the PEG-access signals on their designated channels at the headend. Each of the Access Channels provided under this Section, both initially and after the effective date of any franchise issued as a result of renewal proceedings for the renewal of the Incumbent Operator's fianchise ("the Renewal Franchise"), shall, to the extent possible, cavy PEG video programming which corresponds to one of the Access Channels provided over the Incumbent Operator's system. Operator shall make all reasonable good faith efforts to connect with the Incumbent Operator's system as necessary to deliver all PEG programming made available by the Incumbent Operator as of the Effective- Date. " 5. The Operator shall provide any analog Access Channels on the Basic Service Tier throughout the life of this Franchise and the balance of any PEG access capacity, on the lowest tier or level of such capacity offered to Subscribers. If channels or capacity on the Cable System 30 are displayed through a menu system, Access Channels or capacity, shall be displayed in the same manner as other channels or capacity. Access Channels and programming shall be in channel positions that are contiguous with, and not separated by scrambled channels from, the other channels located on the Basic Cable Service tier. 6. Each analog Access Channel shall be transmitted on the System in standard 6 MHz, unscrambled NTSC format so that every Subscriber can receive and display the PEG signals using the same converters and signal equipment that is used for other Basic Service Channels. 7. The Operator shall not change the channel assignments for the Access Channels, without the prior written approval of the City Manager. The foregoing is not intended to waive or contravene any Applicable Law, now or hereafter in effect. 8. Any educational Access Channel shall be for the noncommercial use of the educational community of the City. The City or its designee may adopt reasonable rules regarding the use of any such Channel. 9. Any governmental Access Channel shall be for the noncommercial 'use of the City. The City or its designee may adopt reasonable rules regarding the use of any such Channel. 10. Any public Access Channel shall be for the noncommercial use of the public. The City or its designee may adopt reasonable rules regarding the use of any such channels. 11. The City may, but need not, designate one or more PEG access providers ("Designated Access Providers"), including itself, to control and manage the use of any or all Access facilities and/or resources under this Franchise for a period of time or at the pleasure of the City. To the .extent of such designation by the City, as between the Designated Access Provider and the Operator, the Designated Access Provider shall have sole and exclusive responsibility for operating and managing such access facilities and/or resources. The Operator shall cooperate with Designated Access Providers in the use of the Cable System and access facilities and/or resources for the provision of PEG Access. The Operator shall enter into such operating agreements with Designated Access Providers as may be necessary to facilitate and coordinate the provision of PEG access,provided that such operating agreements may not be inconsistent with this Franchise nor with such designation by the City. • 12. If the City has not designated a Designated Access Provider, and the City elects not to manage an Access facility itself, the City may request that the Operator assume that role, subject to negotiation of the terms under which the Operator shall do so. If the City so requests, the Operator shall, at a minimum, provide the Community Programming and Access Facilities and Support specified on pages 27-28 of the Operator's Franchise Application dated February 9, 1999. • 13. Nothing contained in this Agreement shall be construed to prevent the CrrY and/or any Designated Access Provider from entering into underwriting or advertising 31 agreements with for-profit ventures to provide support for PEG access programming to the extent allowed by Applicable Law. No sums derived by the CrrY and/or any Designated Access Provider from such underwriting activities or advertising shall be construed to diminish or otherwise offset PEG access payments due from under this Franchise. The City and/or any Designated Access Provider may carry non-commercial programming that is generated by entities other than the City and/or any Designated Access Provider. The City agrees to use or permit the use of the Access facilities for PEG use only. B. Periodic PEG Access Capital Payments, In addition to and apart from the Franchise Fee paid by the Operator for the use and occupancy of the Public Rights-of-Way and in addition to and apart from the Lump Sum PEG Access Capital Payment as defined below to be paid by the Operator, the Operator shall pay to the City a sum equal to three percent (3%) of its Gross Revenues as PEG Access Capital Payments ("Periodic PEG Access Capital Payments'), provided, however, that (i) for the fust twelve months after the date of first activation of Cable Service to a residential Subscriber ("Activation Date'), the periodic PEG Access Capital Payments shall not be required;{ii) for the second twelve (12) months after the Activation Date, the Periodic PEG Access Capital Payments shall equal one percent(1%) of Gross Revenues; and (iii) for the third twelve (12) months after the Activation Date, the Periodic PEG Access Capital Payments shall equal two percent (2%) of Gross Revenues. If the Incumbent Operator's franchise is renewed at any time prior to the end of the third year of the Franchise term, the Operator shall immediately begin. paying the full three percent payment, effective on the effective date of the Renewal Franchise. The Periodic PEG Access Capital Payments shall be paid quarterly at the same time and pursuant to the same calculations and rules as the calculation. and payment of Franchise Fees. The.Periodic PEG.Access Capital Payments designated hereby shall be under the direction and control of the City, and may be used for PEG access and institutional network purposes, including PEG access equipment (including, but not limited to, studio and portable production equipment, editing equipment and program playback equipment), institutional network equipment (including, but not limited to, network equipment, electronic transmission equipment and end user interface equipment) or for renovation or construction of PEG access or I-Net facilities. The City shall exercise its sole discretion as to the allocation of such resources among and within the public, educational and governmental functions, including without limitation the I-Net. The-City may, at any time, upon ninety (90) days' notice to Operator,reduce the percentage of Gross Revenues constituting the Periodic PEG Access Capital Payments. C. Lump Sum PEG Access Capital Payment: In addition to and apart from the Franchise Fee paid by the Operator for the use and occupancy of the Public Rights-of-Way and in addition to and apart from the Periodic PEG Access Capital Payment as defined above to be paid by the Operator, the Operator shall pay to the City eighteen(18) months after the Effective Date hereof the sum of(i) One Hundred Sixty Thousand Dollars ($160,000). In addition, for each of the twenty-seven I-Net sites that City chooses not to designate to be connected to the I-Net pursuant to Section VI(E) below up to a total of four (4) such sites, the Operator shall pay the additional sum of FORTY THOUSAND DOLLARS ($40,000.00) eighteen(18)months after the Effective Date. The sum of all of the foregoing payments (the "Lump Sum PEG Access Capital Payment') shall be for the purpose of capital costs incurred in or associated with the PEG Facilities,including without limitation a regional studio, a Walnut Creek studio, and/or the I-Net, 32 as distinct from payments for, or in support of the operational use of such Facilities, such as salaries and training. The parties have arrived at the amount of this Lump Sum PEG Access Capital Payment after consideration of a variety of factors, including without limitation, the population of the City, the term of this Agreement and a rough approximation of the present value of a studio. Nothing in the foregoing is intended to imply that the City has any particular expectation that the Incumbent Operator or any other cable operators that may enter into fianchise agreements with the City will provide or agree to provide any contributions and/or resources for PEG Access Capital Payments D. Cable Service to Certain Facilities: 1. The Operator shall, without charge, install one activated connection to each facility listed on Exhibit 1 under the following subheadings: City Facilities, Walnut Creek Libraries,Fire Stations and Public Schools. The Operator shall provide Basic Cable Service and the cable programming services tier, and any equipment necessary to receive and decode such service, free of charge to each of the foregoing facilities. Subject to Applicable Law, Operator also.shall, without charge, provide Internet access service to the locations listed on Exhibit 1 under the subheading City Facilities,with a connection at each such City-designated location to enable City employees Internet access. The Operator shall provide one dynamically assigned IP address to each such location and shall allow the City to transfer any existing City-controlled 1P addresses to the Operator's System At its option, City may choose to have such Internet access provided to some or all of such locations by Operator over the I-Net(to the extent such facilities are connected to the I-Net pursuant to subsection (e) below) or over the City's Local Area Network or Wide Area Network. If City chooses the foregoing option, the Operator shall provide one (1) ten (10) MBPS connection to either City Hall or the Dean Lesher Regional Center for the Arts, as specified by City. 2. Upon the request of the City, the Operator shall provide the Ygnacio Valley Library and the Downtown Library with a total of forty (40) cable modems (or their equivalent), equal in speed and capacity to the fastest and largest capacity offered by the Operator to any basic residential Subscriber, and Internet connection subscriptions, both at no charge to the libraries. The Operator shall also supply necessary interior cabling and equipment to connect said service to the libraries' local area network(not to individual computers). The Operator shall provide said cable modems (or their equivalent) and the Internet access service on or before the latest of (i) March 31, 2000; (ii) the date of completion of the CSA in which the library is located, or (iii) such later date as the City may designate. The Operator shall be permitted to advertise and promote its Cable System, including the distribution of promotional coupons, to the extent that such activities are consistent with the then-applicable rules of the libraries relating to such promotional activities by other underwriters of the libraries. 33 i • E. Institutional Network(I-Net): 1. The Operator shall, concurrent with the building of the main subscriber network, construct an Institutional Network(I-Net) dedicated for the City, public agency, educational and non-profit use consisting of twelve (12) optical fibers. The I-Net shall be a bidirectional, fully fiber-optic network designed and constructed with single mode fiber, in a design so that each Public Facility can originate and receive fully interactive video, data and voice signals. The I- Net shall be completed within twenty-four(24)months of the Effective Date. The Operator shall assure in the design and construction of its system that the aforementioned optical fiber capability will be provided on all of the Operator's fiber backbone routes. The dedicated fibers shall connect all the Public Facilities (nodes) listed on Exhibit 1, up to a maximum of twenty- seven (27) locations, and allow a protected connection to assure that I-Net communications can move upstream and downstream in, .out, and through each node. The City shall designate by October 1, 1999, which of the foregoing locations, up to the maximum of twenty-seven (27), shall be connected. The parties shall meet as soon as possible for the purpose of discussing the specific design of the I-Net. The I-Net shall be designed and constructed in compliance with the IEEE 802.3u standard for 100 megabit systems. The I-Net shall also be reasonably designed in such a manner as to permit a future migration to a 1,000 megabit system at no cost to the Operator and at City's sole expense. The parties shall reasonably agree upon the design as soon as possible and no later than ninety (90) days after the Effective Date of this Agreement. The optical fiber capability will be available to the City and 'its designated agencies for I-Net purposes pursuant to terms and conditions described in this Section. The I-Net shall be reserved for the sole use of the City and its designated agencies. Upon request the Operator shall extend similar capacity on the I-Net to any City building, or the City designated agency building, located within the Franchise area, which is constructed, acquired or leased by the City or its designated agency during the term of the Franchise, up to a maximum of one (1) such site per year. If such one additional site or any other future sites that the City may desire to be connected to the I-Net has not already been passed by the existing I-Net fiber, then the cost of providing such service to such additional location shall be borne by the City, such cost not to exceed Operator's out-of-pocket expenses plus ten percent (10%). Notwithstanding the foregoing, for each additional$40,000 Lump Sum PEG Access Capital Payment that City receives as a result of not designating an I-Net site pursuant to subsection (c) above, City shall not be entitled to designate an.additional I-Net site during one (1) subsequent year. For example, if City initially only designates 24 I-Net sites and the Operator makes a corresponding Lump Sum PEG Access Capital Payment of$40,000 for each of the 3 undesignated sites, City shall not be entitled to designate additional i-Net sites during the first three years after the Effective Date. 2. During initial construction the Operator shall construct optical fiber nodes within each building listed in Exhibit 1 as specified by the City, or its designated agency(not to exceed 27 sites). The cost of extending fiber from the Operator's backbone into each building shall be borne by the Operator. The Operator shall install at the Operator's expense in each of the 27 designated facilities listed in Exhibit 1 the necessary equipment to activate a 100 megabit Ethernet system with routers and equipment racks necessary to make the system operable at each location. The parties shall meet in good faith to determine the specific equipment to be provided,with the understanding that the equipment shall be of reasonable quality typical in the industry for similar applications and reasonably available to the Operator through its vendors. 34 The Operator shall Interconnect the facilities and hardware specified within this Section into an operational network to assure that I-Net communications can move upstream and downstream in, out, and through each node. Upon acceptance of the I-Net by the City, all nodal equipment shall be owned by the City, or its designated agency, and the City or designated agency shall be responsible for its maintenance and,if necessary, its replacement. 3. Upon completion of I-Net construction, the Operator shall provide; for the purposes described below, all equipment necessary to satisfactorily conduct and provide the City with proof of performance measurements pursuant to this Section. After acceptance of the.proof of performance by the City,.the Operator shall be responsible for maintaining the I-Net facilities (including the optical fiber lines and any equipment necessary to operate those lines outside of City facilities, and not including the nodal equipment or any other facilities which are not provided by the Operator pursuant to this Agreement)to the same extent and in the same manner as it maintains its comparable facilities in the Subscriber network. The Operator shall provide reasonable technical support and consultation to the City or its designated agency regarding the development and use of the I-Net. 4. The Operator shall begin restoration of service for all Service Outages, whether reported to Operator by the City or independently identified by Operator, within two hours of notice or discovery of the Service Outage during normal business hours, four hours otherwise. The term "Service Outage" shall mean any condition or damage of or to the physical fiber optic network affecting the I-Net plant that precludes or substantially impairs the transmission of information on the I-Net or a portion thereof. Permanent repairs shall be completed within three business days. Upon identification of a Service Outage, Operator shall, within such response time, have qualified personnel on site to investigate the outage, assess the cause and commence necessary repairs. To the extent that necessary repairs resulting in restoration of connectivity on the I-Net can be immediately accomplished, Operator shall.effect such repairs in connection with its investigation of the cause of the Service Outage. To the extent that repairs cannot be immediately effected, Operator.shall, within the response time, inform the City of the apparent cause of the Service Outage, the anticipated time for restoration of connectivity and, in cases where the City bears the cost of maintenance, the estimated cost of restoration connectivity. 5. The use of the I-Net shall be free of charge to the City and its designated agencies.The CrrY will determine which agencies may utilize the I-Net. 6. The parties acknowledge that the agreement regarding usage of the I-Net is subject to all local, state, and federal law. The City agrees to indemnify and hold harmless the Operator from and against any and all claims, damages, liabilities, costs and expenses, including reasonable attorney's fees and costs directly and solely related to the material under the City's control carried on the I-Net, including but not limited to, copyright infringement, libel, slander, defamation, patent, trademark, or invasion of privacy claims. Based on the City's control of the I-Net, City waives all claims, damages, liabilities, costs and expenses related to the material carried on the I-Net, as against Operator, and as to all functionality of the nodal equipment, from and after the expiration of the manufacturer's warranty applicable to the same. 35 F. Compliance with Federal Law: The Operator and the.City agree that the Periodic PEG Access Capital Payments and the Lump Sum PEG Access Capital Payment referenced in this Agreement will not be deemed to be "franchise, fees" within the meaning of Section 622 of the Cable Act (47 U.S.C. §542), and such obligations shall not be deemed to be (i) "payments in kind" or any involuntary payments chargeable against the Franchise Fees to be paid to the City by the Operator pursuant to this Agreement or (ii) part of the Franchise Fees to be paid to the City by the Operator pursuant to this Agreement. G. Additional Payments, Contributions, Support Not Franchise Fees: 1. The Operator acknowledges and agrees that the payments or contributions to be made by, or the Services, equipment, facilities, support, resources or other activities to be provided or performed by the Operator pursuant to Section 6 of this Agreement, or otherwise in connection with the construction, operation, maintenance or upgrade of the System shall not be franchise fees chargeable against the Franchise Fees payable by the Operator to the City pursuant to this Agreement. 2. The Operator acknowledges and agrees that each of the payments and contributions to be made by, or the Services, equipment, facilities, support, resources or other activities to be provided or performed by the Operator pursuant to Section 6 of this Agreement are within the exclusions from the term "franchise fee" set forth in Section 622 of the Cable Act (47 U.S.C. §542). 3. The Operator acknowledges and agrees that the Franchise Fees payable by the Operator to the City pursuant to this Agreement shall take precedence over all other payments, contributions, Services, equipment, facilities, support, resources or other activities to be provided or performed by the Operator pursuant to this Agreement. 4. The Operator shall not apply or seek to apply all or any part of the Franchise Fees to be made by the Operator to the City pursuant to this Agreement as a deduction from or credit or offset against any taxes, fees or assessments of general applicability levied or imposed by the City or any other Governmental Authority(including any such tax, fee or assessment imposed on both utilities and cable operators or their services, but not including a tax, fee or assessment which is unduly discriminating against cable operators or cable Subscribers). VII. FRANCHISE FEE A. Payment to the City: In consideration of the grant of the Franchise provided for herein and the Operator's use and occupation of the Public Rights-of-Way, the Operator shall, at all times during the term of this Agreement,pay to the City a Franchise Fee of five percent(5%) of the Operator's annual Gross Revenues. The Franchise Fee shall be payable quarterly within thirty(30)days of the expiration of each of the Operator's fiscal quarters. Each payment shall be accompanied by a report in such form as the City may reasonably request showing the computation of the Franchise Fee for the preceding quarter and such other relevant facts as may be reasonably required by the City, including the completion of a Franchise Fee Payment 36 Worksheet in a form specified by the City. Nothing herein shall be construed to prohibit the Operator from itemization of the Franchise Fee on Subscriber bills to the extent required by 47 U.S.C. 542(c) and 47 C.F.R. 76.985. B. Computation: In the event that the Operator shall, during the term of the Franchise, bundle, tie or combine Cable Services (which are subject to the Franchise Fee) with non-Cable Services (which are not subject to the Franchise Fee), the combined revenue therefrom shall first be allocated to Cable Services to the full extent which would have been charged by the Operator if the Subscriber had received only the Cable Services. In no event shall the amount allocated to Cable Services under the foregoing calculation exceed (i) the total amount of combined revenue actually received by the Operator or (ii) the net revenues derived when mandatory tariff rates imposed by a Governmental Authority for components of the combined service are deducted from the combined revenue. C. Supporting Information: The City, on an annual basis, shall be furnished a statement within ninety (90) days of the close of the calendar year, certified by anofficer of the Operator reflecting the total amounts of Gross Revenues and all payments, and computations of the Franchise Fee for the previous calendar year. Upon ten (10) business days prior written notice, the City shall have the right to conduct an independent audit of the Operator's records. If such audit indicates a Franchise Fee underpayment of two percent (21/o) or more, the Operator shall assume all reasonable costs of such an audit and shall remit to the City all applicable Franchise Fees due and payable together with a late payment fee equal to interest thereon at the lesser of the maximum rate permitted by Applicable Law or 18%per annum. D. No Accord or Satisfaction: Except as otherwise provided by law, no acceptance of any payment by the City shall be construed as a release or as an accord and satisfaction of any claim the City may have for fiuther or additional sums payable as a Franchise Fee under this Agreement or any Franchise Agreement or for the performance of any other obligation of the Operator. E. Interest: In the event that any Franchise Fee payment or recomputed amount is not made on or before the dates specified in this Agreement, the Operator shall pay as additional compensation only a late payment fee computed from such due date, at an annual rate equal to the lesser of the maximum rate permitted by Applicable Law or 18% per annum during the period for which payment was due. 37 F. No Limitation on Taxing Authority: 1. Nothing in this Agreement shall be construed to limit any authority of the City to impose any tax, fee,or assessment of general applicability. 2. The Franchise fee payments required by this section shall be in addition to any and all taxes of a general nature or other fees or charges which the Operator shall be required to pay to the City or to any state or federal agency or authority, as required herein or by law, all of which shall be separate and distinct obligations of the Operator. The Operator shall not have or make any claim for any deduction or other credit of all or any part of the amount of said Franchise Fee payments from or against any of said City taxes or other fees or charges which the Operator is required to pay to the City, except as required by law or expressly provided in this Agreement. The Operator shall not apply nor seek to apply all or any part of the amount of said Franchise Fee payments as a deduction or other credit from or against any of said City taxes or other fees or. charges, each of which shall be deemed to be separate and distinct obligations of Operator. Nor shall the Operator apply or seek to apply all or any part of the amount of any of said taxes or other fees or charges as a deduction or other credit from or against any of its Franchise Fee obligations, each of which shall be deemed to be separate and distinct obligations of the Operator. The Operator may designate a Franchise Fee and/or amounts representing the Periodic PEG Access Payments required hereunder as a separate item in any bill to a Subscriber of the Operator's Cable System,but shall not designate or characterize it as a tax. VIII. RATE REGULATION A. All Rights Reserved: The City reserves all of its rights to regulate the Operator's rates to the maximum extent permitted by Applicable Law. B. Geographic Uniformity: The Operator's residential rates throughout the Franchise Area shall be uniform, except as provided in Section 8(c). C. Senior Citizen Discount. Throughout the term of this Franchise and any extension or renewal thereof,the Operator shall offer to qualified Subscribers a thirty (30%) percent discount ("Senior Rate Discount') on all fees and rates necessary to receive Basic Cable Service. The discount shall be offered to all Subscribers meeting all of the following criteria: (1) sixty-five (65) years of age or older, (2) personally responsible for the payment of the cable charge to the Subscriber's residential living quarters and is directly billed by the Operator for Cable Services, and(3) the Subscriber certifies to the Operator that the aggregate gross income of all the persons who share the Subscribers residential living quarters on a permanent basis does not exceed an annual sum equal to the then-established"very low income" figures adjusted for household size, as established by the United States Department of Housing and Urban Development for the Oakland PMSA. The discount shall be prospective from the date of the application of the Subscriber for such discount. The Operator shall notify all Subscribers concurrently with an rate promotion or package of the existence and level of the Senior Rate Discount. In no event shall such notification occur less than once every twelve (12) months and the notification of the existence and level of the Senior Rate Discount shall be at least as prominent (in terms of font 38 size, placement, etc) as the most prominent advisement by the Operator to Subscribers of any other rates or charges (promotional or regular) during the preceding twelve (12) months. No single household shall receive more than one such Senior Rate Discount at any one time. IX. INSURANCE, SURETY,AND INDEMNIFICATION A. Insurance Required: The Operator shall obtain, and by its acceptance of the Franchise specifically agrees that it will maintain, throughout the entire length of the Franchise period, at its own cost and expense and keep in force and effect the following insurance covering the Operator, and by additional insured provision, the City. Coverage must be placed with an insurance company/companies authorized to do business in the State of California and evidenced by a certificate of insurance and/or copies of the insurance policies. Operator's insurance shall be primary. B. Minimum Scope of Insurance: Coverage shall be at least as broad as: 1. Insurance Services Office number GL0002 (Ed. 1/73) covering Comprehensive General Liability and Insurance Services Office form number GL 0404 covering Broad Form Comprehensive General Liability; or Insurance Services Office Commercial General Liability coverage ("occurrence" form CG 0001). The policy must include coverage for Contractual Liability, Premises and Operations, Independent Contractors, Broad Form Property Damage, Personal Injury, and Products and Completed Operations. The policy must also include coverage for the explosion, collapse and underground hazard. 2. Insurance Services Office form number CA 0001 (Ed. 1/78) covering Automobile Liability, code 1 "any auto" and endorsement CA 0025. 3. Workers' Compensation insurance as required by the Labor Code of the State of California and Employers Liability insurance. 4. If Operator should engage in programming origination of any kind, including production of advertising, Operator shall obtain Broadcasters' Liability Coverage, covering errors and omissions and negligent acts and other operations of the Operator, committed during the term of the Franchise period with the City. Operator shall provide a one-year discovery period under this policy. C. Minimum Limits of Insurance: Operator shall maintain policy limits of no less than: 1. General Liability: $1,000,000 combined single limit per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this projecttlocation or the general aggregate limit shall be twice the required occurrence limit. 39 2. Automobile Liability: $1,000,000 combined single limit per accident for bodily injury-and property damage. 3. Worker's Compensation and Employers Liability: Worker's compensation limits as required by the Labor Code and Employers Liability limits of$1,000,000 per accident. 4. Broadcasters' One million dollars ($1,000,000) per claim if required pursuant to subsection 9(b)(D)above. The City may review these amounts no more than once a year and may require reasonable adjustments to them consistent with the public interest, any increases not to exceed. the Consumer Price Index for the San Francisco-Oakland-San Jose Metropolitan Area for the period since the prior review, or the Effective Date, as applicable. D. Deductibles and Self-Insured Retentions: Any deductibles or self-insured retentions must be declared to and approved by the City. At the option of the City, either. the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects the City, its officers, officials, employees and volunteers; or the Operator shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. E. Other Insurance Provisions: The policies shall contain,or be endorsed to contain,the following provisions: 1. General Liability and Automobile Liability Coverages. a. The City, its ofr'icers, officials, employees, agents and volunteers are to be covered as insured as respects: liability arising out of activities performed by or on.behalf of the Operator; products and completed.operations of the Operator, ; premises owned, occupied or used by the Operator, or automobiles owned, leased, hired or borrowed by the Operator. The coverage shall contain no special limitations on the scope of protection afforded to the City, its officers, officials, employees, agents or volunteers acting within the performance of the official duties of the position and not resulting from malfeasance in office, willful neglect of duty or bad faith. b.. The Operator's insurance coverage shall be primary insurance as respects the City, its officers, officials, employees and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, agents or volunteers shall be excess of the Operator's insurance and shall not contribute with it. c. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to the City, its officers,officials, employees, agents or volunteers. d. The Operator's insurance shall apply separately to each insured against whom claim is made or suit is brought,except with respect to the limits of the insurer's liability. 40 1. Worker's Compensation and Employers Liability Coverage. The insurer shall agree to waive all rights of subrogation against the City, its officers, officials, employees and volunteers for losses arising from work performed by the Operator for the City. 2. All Coverages. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended,voided,cancelled by either party,reduced in coverage or in limits except after thirty (30) days' prior written notice by certified mail, return receipt requested,has been given to the City. F. Acceptability of Insurers: Insurance is to be placed with insurers with a Best's rating of no less than AXH. G. Verification of Coverage: The Operator shall furnish the City with certificates of insurance and with original endorsements effecting coverage required by this clause. The certificates and endorsements for each insurance policy are to be signed by a person authorized by that insurer to bind coverage on its behalf. All certificates and endorsements are to be received and approved by the City before work commences. The City reserves the right to require complete certified copies of all required insurance policies, at any time. H. Failure Constitutes Material Violation: Failure to comply with the insurance requirements set forth in this Section shall constitute a material violation of the Franchise. I. Indemnification: 1. The Operator shall indemnify, defend and hold the City, its officers, boards, commissions, agents and employees (collectively the "Indemnified Parties") harmless from and against any and all lawsuits, claims, causesof action, actions, liability, demands, damages, judgments, settlements, losses, expenses (including reasonable attorneys' fees) and costs that any of the Indemnified Parties acting within the performance of the official duties of the position and not resulting from malfeasance in office, willful neglect of duty or bad faith, may at any time suffer, sustain or incur arising out of, based upon or in any way connected with the grant of a Franchise to the Operator, the operation of the Operator's System and/or the acts and/or omissions of the Operator or its agents or employees, whether or not pursuant to the Franchise. This indemnity shall apply, without limitation, to any action or cause of action for invasion of privacy, defamation, antitrust, errors and omissions, fire, violation or infringement of any copyright, trademark, trade names, service mark, patent, or any other right of any Person by the Operator, but shall exclude any claim or action arising out -of the sole negligence or willful misconduct of the Indemnified Parties or related to any City programming or other Access programming for which the Operator is not legally responsible. An Indemnified Party shall promptly submit a written request to the Operator of any claim or legal proceeding which gives rise to the Operator's indemnification obligations under this Section. An Indemnified Party shall be offered the opportunity to participate in the defense, compromise, settlement or other resolution or disposition of any claim or proceeding.The Indemnified Party shall fully cooperate with the Operator regarding any such matter. 41 i • 2. Specifically, the Operator shall fully indemnify, defend, and hold harmless the City, and, in their capacity as such, the officers, agents, and employees thereof, from and against any and all claims, suits, actions, liability, and judgments for damages or otherwise subject to 47 U.S.C. § 558, arising out of or alleged to arise out of the installation, construction, operation, or maintenance of the System, including but not limited to any claim against the Operator for invasion of the right of privacy, defamation of any Person, firm or corporation, or the violation or infringement of any copyright,trade mark, trade name, service mark, or patent, or of any other right of any Person, firm, or corporation, except to the extent such loss, damage, cost or expense is due to the sole negligence or willful misconduct of the City or its employees or agents, or arising from City programming or other Access programming for which Operator is not legally responsible. 3. The indemnification obligations of the Operator set forth in this Agreement are not limited in any way by the amount or type of damages or compensation payable by or for the Operator under Workers' Compensation, disability or other employee benefit acts, acceptance of insurance certificates required under this Agreement or the terms, applicability or limitations of any insurance held by the Operator. 4. The City does not and shall not, waive any rights against the Operator which it may have by reason of the indemnification provided for in this Agreement, because of the acceptance by the City, or the deposit with the City by the Operator, of any of the insurance policies described in this Agreement and regardless of whether or not such insurance policies shall have been determined to be applicable to any such damages or claims for damages. 5. The Operator's and the City's indemnification obligations under this Agreement shall survive the expiration, cancellation or termination of this Agreement. I No Limit of Liability: Neither the provisions of this Section nor any damages recovered by the City shall be construed to limit the liability of the Operator for damages under the Franchise. X. PERFORMANCE GUARANTEES AND REMEDIES A. Per Bond: 1. The Operator shall obtain and at all times maintain during the entire term of this Franchise, and any extension(s)thereof, a performance bond in favor of the City in the amount of $400,000 to ensure the Operator's satisfactory performance of construction and other work in the Public Rights-of-Way,including,but not limited to,the construction required by this Agreement. The City may agree to accept a letter of credit in a form acceptable to the City in lieu of a Performance Bond. 2. In the event the Operator fails, after ten (10) business days' written notice and opportunity to cure from the City, to complete any System construction, upgrade or other work in the Public Rights-of-Way in a safe, timely, and competent manner, in accordance with.the provisions of this Agreement and the Cable Ordinance, there shall be recoverable, jointly and 42 severally from the principal and the surety of the bond, any damages or loss suffered by the City as a result, including the full amount of any compensation, indemnification,or cost of removal or abandonment of any property of the Operator, or the cost of completing or repairing the System rebuild, construction, upgrade, or other work in the Public Rights-of-Way, plus a reasonable allowance for attorneys' fees, up to the full amount of the bond. The bond shall expressly include all of the foregoing provisions. The City may also recover against the bond any amount recoverable against the security fund required under this Agreement,where such amount exceeds that available under the security fund. Within thirty (30) days of being notified that any amount has been withdrawn from the performance bond,the Operator shall restore the performance bond to the amount specified in paragraph(a). 3. Issuance of Bond. All performance bonds required by this Certificate or the City Code shall be in a form acceptable to the City and shall be issued by a surety with an A-1 or better rating of insurance in Best's Key Rating Guide, Property/Casualty Edition; shall be subject to the approval of the City; and shall contain the following endorsement: "This bond may not be canceled, or allowed to lapse, until sixty (60) days after receipt by the City, by certified mail, return receipt requested, of a written notice from the issuer of the bond of intent to cancel or not to renew." 4. Release of Bond. Ninety(90) days after acceptance by the City of construction of the System, the Operator may submit to the City a written request to release the performance bond. The City shall then authorize the Operator and the surety, in writing, to release and cancel the performance bond, provided that all outstanding claims of the City have been resolved to the City's satisfaction. 5. Forfeiture. The total amount of any bond shall be forfeited in favor of the City in the event that this Agreement is revoked pursuant to Section 10(h) of this Agreement, and the performance bond shall so state. B. Security Fund: 1. The Operator shall file and maintain with the City an irrevocable letter of credit from a financial institution licensed to do business in California in the amount of $50,000 to ensure the Operator's faithful performance of its obligations. The form and content of the letter of credit shall be approved by the City. 2. The Operator and its surety shall be jointly and severally liable under the terms of the letter of credit. • 3. There shall be recoverable by the City from the letter of credit any and all fines, penalties,and liquidated damages due to the City and any and all damages, losses,costs, and expenses suffered or incurred by the City resulting from the failure of the Operator to faithfully comply with the material provisions of this Agreement, the Cable Ordinance, and 43 Applicable Law; comply with all orders, permits and directives of any City agency or body having jurisdiction over its acts or defaults; pay fees due to the City; or pay any claims or liens due the City. Such losses, costs and expenses shall include but not be limited to reasonable attorney's fees. • 4. The letter of credit shall provide for thirty (30) days' prior written notice to the City of any intention on the part of the Operator to cancel, fail to renew, or otherwise materially alter its terms. • 5. The letter of credit shall be released only upon expiration or nonrenewal of the Franchise or upon the replacement of the letter of credit within the time specified herein. C. Rights Cumulative. The rights reserved to the City herein are in addition to all other rights of the City, whether reserved herein or authorized by Applicable Law, and no action, proceeding,or exercise of a right with respect to the letter of credit or performance bond required by this Agreement will affect any other right the City may have. Neither the filing of a letter of credit or performance bond with the City, nor the receipt of any damages recovered by the City thereunder,shall be construed to excuse faithful performance by the Operator or limit the liability of the Operator under the terms of its Franchise for damages, either to the full amount of the letter of credit,the performance bond,or otherwise. D. Letter of Credit Procedures: The following procedures shall apply to drawing on the. letter of credit: 1. If the Operator fails to make timely payment to the City of any amount due under this Agreement or Applicable Law, or fails to compensate the City within ten(10) business days of written notification that such compensation is due; for any damages, costs, or expenses the City suffers or incurs by reason of any act or omission of the Operator in connection with this Agreement or its enforcement, or fails, after ten (10) business days' written notice, to comply with any provision of this Agreement or the Cable Ordinance that the City determines can be remedied by an expenditure against the letter of credit, including,without limitation, payment of liquidated damages, the City Manager, upon five (5) business days notice to Operator, may withdraw the amount thereo&with interest and any penalties, from the letter of credit. 2. Within three(3)days of a withdrawal from the letter of credit, the City shall mail, by certified mail, return receipt requested, written notification of the amount, date, and purpose of such withdrawal to the Operator. 3. If at the time of a withdrawal from the letter of credit by the City, the amounts available are insufficient to provide the total payment towards which the withdrawal is directed, . the balance of such payment shall continue as the obligation of the Operator to the City until it is paid. 4. No later than thirty (30) days after mailing of notification to the Operator by certified mail, return receipt requested, of a withdrawal under the letter of credit, the Operator shall restore the letter of credit to the total amount specified herein. 44 5. Upon termination of the Franchise under conditions other than those stipulating forfeiture of the letter of credit, the balance then remaining in the letter of credit shall be returned to the Operator within forty-five (45) days of such termination, provided that there is then no outstanding default on the part of the Operator. E. Failure Constitutes Material Violation: Failure to maintain or restore the letter of credit or the performance bond shall constitute a material violation of this Agreement. F. Remedies: In addition to any other remedies available at law or equity, the City may apply any one or a combination of the following remedies in the event the Operator violates, and fails to cure after notice and expiration of the applicable cure period, the Cable Ordinance, this Franchise Agreement,or applicable state or federal law: . 1. Apply any remedy provided for in this Agreement. 2. Revoke the Franchise or shorten the term pursuant to the procedures specified in this Agreement. 3. Impose penalties available under the Cable Ordinance or other applicable state and local laws for violation of City ordinances. 4. In addition to or instead of any other remedy, seek legal or equitable relief from any-court of competent jurisdiction. G. Liquidated Damages: Because the Operator's failure to comply with provisions of the Ordinance and this Franchise Agreement will result in injury to the City, and because it will be difficult to estimate the extent of such injury, the City and the Operator agree to the following liquidated damages to be effective during the term of the Ordinance for the following violations of the Franchise and of this Agreement, which represent both parties' best estimate of the damages resulting from the specified violation. Such damages shall not be a substitute for actual performance by the Operator of a financial payment, but shall be in addition to any such actual performance. Any liquidated damages remedy shall be cumulative and in addition to any other remedies the City may have under this Agreement or Applicable-Law, other than monetary damages. The City Manager, or designee, shall have the authority to waive or reduce the liquidated damage amounts herein for good cause. 1. For failure to submit any required plans indicating expected dates of installation of various parts of the System: $200/day for each day after Operator's receipt of notice that the violation continues; 2. For failure to commence operations or to substantially complete construction in accordance with the requirements-of this Franchise Agreement: $1,500/day for each day after Operator's receipt of notice that the violation continues; 3. For transferring the Franchise without approval: $2,000/day for each violation for each day after Operator's receipt of notice that the violation continues; 45 r 4. For failure to comply with requirements for educational and governmental use of the System: $200/day for each violation for each day after Operator's receipt of notice that the violation continues; 5. For failure to supply information, reports, or filings lawfully required under this Franchise Agreement or Applicable Law or by the City: $300/day for each day after Operator's receipt of notice that the violation continues; 6. For violation of customer service standards: $200 per violation after Operator's receipt of notice that the violation continues; 7. For rate regulation violations specified under the Cable Ordinance, City orders or resolutions, or other Applicable Law, for each day that the same violation occurs and continues: $200 per day; 8. For failure, except in the case of force majeure, of the System to perform in the event of a public emergency or vital information situation: $2,500 per day; 9. For failure to render payment for reimbursement of any Franchise expenses, but excluding any failure to pay Franchise fees(for which the imposition of interest shall be the sole remedy) or liquidated damages: $100 per day after.Operator's receipt of notice that the failure has occurred and is continuing; 10. For failure to file, obtain or*maintain the required Security Fund in a timely fashion: $100 per day after Operator's receipt of notice that the failure has occurred and is continuing; 11. For failure to restore damaged property: $100 per day after Operator's receipt of notice that the failure has occurred and is continuing, in addition to the cost of the restoration and any other penalties or fees as required elsewhere herein or in the Ordinance; 12. For violation of technical standards established by the FCC: $100 per day after Operator's receipt of notice that the failure has occurred and is continuing; 13. For any other violations of this Agreement, the Ordinance, or other Applicable Law: $100/day for each day after Operator's receipt of notice that the violation continues. In all events, the City shall deliver to Operator notice of the asserted violation or failure and Operator shall have the right to dispute the asserted occurrence of such failure or violation. H. Shortening, Revocation,.or Termination of Franchise: R 1. Upon completion of the term of the Franchise granted under this Agreement, if a new,.extended, or renewed Franchise is not granted to the Operator by the City, the Operator's right to occupy the Public Rights-of-Way shall terminate, subject to Applicable Law. 46 • 2. The City shall have the right to revoke the Franchise, or to shorten the term of the Franchise to a term not less than,thirty-six (36) months from the date Operator receives written notice from the City of the City's decision to act pursuant to this Agreement concerning the City's shortening action, for the Operator's material violation of this Agreement. 3. To invoke the provisions of this Section, the City shall give the Operator written notice of the default in its performance. If within sixty(60)calendar days following such written notice from the City to the'Operator, or such other period as the Operator and the City shall agree, the Operator has not taken corrective action to the satisfaction of the City, the City may give written notice to the Operator of its intent to revoke or shorten the Franchise, stating its reasons; provided that no opportunity to cure shall be provided where the Operator is shown to have defrauded or attempted to defraud the City or its Subscribers in connection with this Agreement or Cable Service in any way that has a material adverse effect on Operator's provision of Cable Services pursuant to this Agreement. 4. Prior to shortening the term of or revoking the Franchise, the City.shall hold a public hearing, on thirty (30) calendar days' notice,.at which time the Operator and the public shall be given an opportunity to be heard. Following the public hearing, the City may determine whether to revoke or shorten the term of the Franchise based on the information presented at the hearing, and other information of record, or, where applicable, grant additional time to the Operator to effect any cure. If the City determines to shorten the Franchise term or revoke the Franchise, it shall issue a written decision setting forth the reasons for its decision. A copy of such decision shall be transmitted to the Operator. 5. If the City revokes the Franchise, or if for any other reason the Operator abandons, terminates, or fails to operate or maintain service to its Subscribers, the following procedures and rights are effective: 47 XI. REPORTING AND REVIEW A. Records Required and the City's Right to Inspect.. 1. The Operator shall at all times maintain and upon request provide to the City: a. A full and complete set of plans, records and "as-built" maps showing the location of the Cable System installed or in use in the City, exclusive of Subscriber service drops and equipment provided in Subscribers' homes. To the extent technically and economically feasible, the Operator shall also make records and maps available to the City in electronic format compatible with the City's computer system. b. If requested by the City, a summary of service calls, identifying the number, general nature and disposition of such calls, on a monthly basis. A summary of such service calls shall be submitted to the City within thirty (30) days following its request in a form reasonably acceptable to the City. 2. Upon reasonable notice, and during the hours of 9:00 a.m. to 5:00 p.m., Monday through Friday, the Operator shall permit examination by any duly authorized representative of the City, of all Cable System property and facilities, together with any appurtenant property and facilities of the Operator situated within or without the City, and all records relating to the Franchise, provided they are necessary to enable the City to carry out its regulatory responsibilities under Applicable Law and this Agreement. The Operator shall have the right to be present at any such examination. 3. The City or its designee shall also have the right to inspect and copy (at City's expense), upon twenty-four(24) hours written notice, at any time during the.hours of 9:00 a.m. to 5:00 p.m., Monday through Friday, at the Operator's local office, all books, records, maps, plans, financial statements, service complaint logs, performance test results, and records of request for service of the Operator. To the extent not inconsistent with Applicable Law, the Operator shall have the right to designate confidential, proprietary, trade secret and privileged information and.the City shall thereupon treat such information as privileged from disclosure under the California Public Records Act. The City shall provide the Operator with reasonable advance notice of any request by a third party for disclosure of information designated by the Operator as confidential, proprietary, trade secret or privileged. To the extent that any information regarding the local Cable System is maintained, either separately or cumulatively with information concerning other Cable Systems or operations, by the Operator or an Affiliate, the Operator shall make copies of such records available for inspection and auditing at the local office within seven days after receipt of a written request by the City. 4. Copies of all petitions, applications, communications and reports submitted by the Operator or on behalf of the Operator to the Federal Communications Commission,.Securities and Exchange Commission, or any other Governmental Authority having jurisdiction with respect to any matters affecting the Cable System authorized pursuant to this Agreement and any Franchise shall be submitted upon request to the City. Copies of responses from the Governmental Authority to the Operator shall likewise be furnished upon request to the City. f 48 B. Annual Reports: 1. The Operator shall within ninety (90) days of each calendar year end, submit a written end of the year report to the City with respect to the preceding calendar year containing the following information: a. A summary of the previous year's (or in the case of the initial reporting year, the initial year's) activities in development of the Cable System, including but not limited to Cable Services commenced or discontinued during the reporting year; b. A list of the Operator's officers, members of its board of directors, and other principals of the Operator,and c. A list of stockholders or other equity investors holding thirty (30) percent (30%) or more of the voting interest in the Operator. C. Reports available for inspection: All reports required under this Agreement, except those required by law to be kept confidential and any confidential, proprietary, trade secret and/or privileged information, shall be available for public inspection in the Operator's offices during the hours of 9:00 a.m. to 5:00 p.m.,Monday through Friday. D. Operator's Expense: All reports and records required under this.Agreement shall be furnished at the sole expense of the Operator, except as otherwise provided in this Agreement. XII. RIGHT TO PURCHASE A. The City's Right to Purchase System: Except for a sale, transfer, or other conveyance by the Operator to an Affiliate, the City shall have a right of first refusal to purchase the Cable System in the event the Operator receives a bona fide offer which has been accepted by the Operator, subject to the City's rights under this Agreement. The price to be paid by the City shall be the amount provided for in the bona fide offer, including the same terms and conditions as the bona fide offer. The City shall notify the Operator of its decision to purchase within the forty-five (45) days of the City's receipt from the Operator of a copy of the written bona fide offer and such other relevant and pertinent information as the City shall deem reasonably appropriate. The City's failure to respond within said 45-day period shall be deemed to constitute the City's election not to purchase the Cable System. B. Purchase by the City Upon Expiration or Revocation: Upon the expiration, cancel- lation, revocation or termination of the Franchise granted by this Agreement for which the City has lawfully denied renewal under Applicable Law, the City shall have the right to purchase the entire Cable System, in accordance with Applicable Law, upon the payment to the Operator of the then-existing fair market value of the Cable System determined on the basis of generally accepted appraisal principles(exclusive of any value attributable to the Franchise itself). C. Abandonment or Removal of Equipment: 49 1. The Operator shall not abandon any portion of its Cable System without giving at least three (3) months prior written notice to the City. The Operator shall not abandon any portion of the Cable System without compensating the City for any damages resulting to the City from the abandonment. 2. The City, upon such terms as the City may reasonably impose, may give the Operator permission to abandon, without removing, any System facility or equipment laid, directly constructed, operated or maintained in, on, under or over the Franchise Area Unless such permission is granted or unless otherwise provided in this Agreement, the Operator shall remove all abandoned facilities and equipment upon receipt of written notice from, the City and shall restore any affected street to its former state at the time such facilities and equipment were installed, so as not to impair its usefulness. In removing its plant, structures and equipment, the Operator shall refill, at its own expense, any excavation made by or on behalf of the Operator and shall leave all Streets and other public ways and places in as good condition (per the City's standard procedures for the same) as that prevailing prior to such removal without materially interfering with any electrical or telephone cable or other utility wires,poles or attachments. The City shall have the right to inspect and approve the condition of the Streets, public ways, public places, cables, wires, attachments and poles prior to and after removal according to the City's usual standards and procedures. The liability, indemnity and insurance provisions of this Agreement and any Security Fund provided for in this Agreement shall continue in full force and effect during the period of removal and until full compliance by the Operator with the terms and conditions of this Section. 3. Upon abandonment of any Franchise property in place, the Operator, if required by the City, shall submit to the City a bill of sale and/or other an instrument, reasonably satisfactory in form and content to the City, transferring to the City the ownership of the Cable System property abandoned. 4. At the expiration of the term for which the Franchise is granted, or upon its earlier revocation or termination, as provided for in this Agreement in any such case without renewal, extension or transfer, the City shall have the right to require the Operator to remove, at its own expense, all above-ground portions of the Cable System from all Streets and public ways within the City within a reasonable period of time, which shall.not be less than one hundred eighty (180) days, except to the extent the Operator is authorized or utilizing the System pursuant to Applicable Law. S. Notwithstanding anything to the contrary set forth in this Agreement, the Operator may,with the consent of the City, abandon any underground Franchise property in place so long as it does not materially interfere with the use of the Street or public rights-of-way in which such property is located or with the use thereof by any public utility or other cable operator. D. Extended Operation and Continuity of Service: Upon the expiration, revocation or termination of the Franchise,the Operator shall, upon request of the City, continue to operate the Cable System for a period of time not to exceed six (6) months from the date of such expiration, revocation or termination under the terms and conditions of this Agreement and the Franchise 50 and to provide the regular Subscriber service and any and all of the services that may be provided at that time. XIII. MISCELLANEOUS PROVISIONS A. Conflict with and Amendment of Ordinance: All of the terms, conditions, and provisions of the Franchise shall be deemed to be embodied in the Ordinance and this Agreement, and, in the event of any conflict, the express terms of the Ordinance, as amended, shall prevail over conflicting or inconsistent provisions in the Agreement, provided that the Ordinance shall not, without Operator's consent, alter the terms of Sections I; II(B); H(C); IV(n; V(B);V(C); V(F); VI(A) -VI(G); VII(A); X(A); X(B)or X(G). -B. No Discrimination: In the offering of its services, the Operator shall not discriminate between offerees, including without limitation in the use of discounts (except as otherwise expressly provided herein) and/or free or promotional packages based upon income levels and/or area of residence within the City. C. Unbundling. In the event that the Operator shall, during the term of the Franchise, bundle or combine Cable Services with non-Cable Services, it shall also offer all such Cable Services separately without the necessity of purchasing non-Cable Services. D. Receivership and Foreclosure: 1. The Franchise granted hereunder shall at the option of the City, cease and terminate one hundred twenty (120) days after appointment of a receiver or receivers, or trustee or trustees, to take over and conduct the business of the Operator, whether in a receivership, reorganization, bankruptcy or other action or proceeding, unless such receivership or trusteeship shall have been vacated prior to the expiration of said one hundred twenty(120) days, or unless: (1) such receivers or trustees shall have, within one hundred twenty (120) days after their election or appointment, fully complied with all the terms and provisions of this Agreement and the Franchise granted pursuant hereto, and the receivers or trustees within said one hundred twenty(120) days shall have remedied all the defaults and violations under the Franchise and/or this Agreement or provided a plan for the remedy of such defaults and violations which is satisfactory to CrrY, and (2) such receivers or trustees shall, within said one hundred twenty (120)days, execute an agreement duly approved by the court having jurisdiction in the premises, whereby such receivers or trustees assume and agree to be bound by each and every term, provision and limitation of the Franchise and this Agreement. 2. In the case of a foreclosure or other judicial sale of the.Franchise property or any material part thereof, the City may give notice of termination of any Franchise granted pursuant to this Agreement upon the Operator and the successful bidder at such sale, in which the event the Franchise granted and all rights and privileges of the Operator hereunder shall cease and terminate thirty (30) days.after such notice has been given, unless (1) the City shall have approved the transfer of the Franchise in accordance with the provisions of the Franchise and this 51 r • • Agreement; and (2) such successful bidder shall have covenanted and agreed with the City to assume and be bound by all terms and conditions of the Franchise. E. Franchise Renewal. Franchise renewal, if any there should be, shall be in accordance with Applicable Law and the Cable Ordinance. The City and the Operator, by mutual consent, may enter into renewal negotiations at any time during the term of the Franchise. To the extent consistent with Applicable Law and the Ordinance, a reasonable non-refundable renewal application fee in an amount established by the City may be required to accompany any renewal application to the extent consistent with Applicable Law,provided that(1) the amount of such a fee shall be reasonably related to the City's cost incurred in handling the renewal request and negotiations and(2)the same fee shall be applicable to all similarly-situated franchises,provided that the Operator shall not be required to elect whether or not to renew the Franchise prior to a date which is more than thirty-six (36) months prior to the expiration date of the Franchise granted hereunder. F. Severability: If any provision of this Agreement is held by any Governmental Authority of competent jurisdiction, to be invalid or unenforceable as conflicting with any Applicable Law now or hereafter in effect, or is held by such Governmental Authority to be modified in any way in order to conform to the requirements of any such Applicable Law, such provision shall be considered a separate, distinct, and independent part of this Agreement, and such holding shall not affect the validity and enforceability of all other provisions hereof. In the event that such Applicable Law is subsequently repealed, rescinded, amended or otherwise changed, so that the provision hereof which had been held invalid or modified is no longer in conflict with such law, said provision shall thereupon return to full force and effect and shall thereafter be binding on the City and the Operator,provided that the City shall give the Operator thirty(30) days written notice of such change before requiring compliance with said provision or such longer period of time as may be reasonably required for the Operator to comply with such provision. If the terms of this Agreement are materially altered due to changes in Applicable Law, then the parties shall negotiate in good faith to reconstitute this Agreement in a form that, to the maximum extent possible, is consistent with the original intent of Operator and the City and preserves the benefits bargained for by each party. Operator shall have no liability for any violation or non-compliance of any such invalid, unenforceable, repealed, amended or rescinded law or provision during any period of invalidity, unenforceability, repeal, amendment or rescission of the subject.law. 52 G. Preemption: In the event that federal or state laws, rules or regulations preempt a provision or limit the enforceability of a provision of this Agreement, then, subject to the City's right under subsection (M), the provision shall be read to be preempted to the extent and for the time,but only to the extent and for the time,required by law. In the event such federal or state law, rule or regulation is subsequently repealed, rescinded, amended or otherwise changed so that the provision hereof that had been preempted is no longer preempted, such provision shall thereupon return to full force and effect, and shall thereafter be binding on the parties hereto, without the requirement of finther action on the part of the City,provided that if reasonably necessary,Operator shall have a minimum of sixty (60) days in which to comply with the previously preempted provision. H. Compliance With Federal and State Laws: Both parties shall, at all times during the term of this Franchise Agreement, including any extensions thereof, comply with all applicable federal,state,and local laws and regulations. I. Force Majeure: In the event the Operator's performance of any of the terms, conditions or obligations required by this Agreement or a Franchise granted hereunder is prevented by an unforeseeable cause or event not within the Operator's reasonable control, such inability to perform shall be deemed excused for the period of such inability and no penalties or sanctions shall be imposed as a result thereof provided the Operator has notified the City in writing within ten(10)business days of its discovery of the occurrence of such an event. The Operator shall not be excused from any violation of the terms, provisions and conditions of this Franchise, except for causes which are beyond the reasonable control of the Operator. In the event of any such force majeure occurrence, Operator shall perform to the maximum extent possible. Except as otherwise provided above, violations caused exclusively by acts or omissions by the City or its officers, agents or employees shall constitute an excuse and justification for failure of the Operator to comply with the terms, provisions and conditions of this Franchise,precluding a determination that the Operator is in breach. However, violations as a result of such exclusive causes shall not be deemed to excuse the Operator from other unrelated violations, shield the Operator from a determination that it is in breach for such other unrelated violations,or bar any relief for damages or otherwise as a result of such other unrelated breach. Examples of circumstances beyond the control of the Operator which will excuse the Operator from violation and being in breach of the terms, provisions and conditions of this Franchise, when such violations are caused thereby, include the following: strikes, acts of public enemies; orders by military authority; insurrections; riots; epidemics; landslides; lightning; earthquakes; fires; floods; civil disturbances; explosions; partial or entire failure of utilities; delays in obtaining inspection by the City inspectors of more than one (1) business day(provided that the request for such inspection shall have been given by the Operator in a commercially reasonable manner within regular business hours of the City) and Acts of God. J. Notices: All notices, reports or demands required or permitted to be given under this Agreement shall be in writing and shall be deemed to be given when delivered personally to the party designated below, or when delivered by the United States mail in a sealed envelope, with registered or certified mail, postage prepaid thereon, or delivered by express mail or nationally 53 i recognized overnight air courier addressed to the party to which notice, report or demand is being given, as follows: If to the City: CrrY Manager CITY OF WALNUT CREEK 1660 N. Main Street Walnut Creek, CA 94596 If to the Operator: SEREN INNOVATIONS, INC. Attention: President/CEO 15 South Fifth Street Suite 500 Minneapolis, MN 55402 Such addresses may be changed by either party upon notice to the other party given as provided in this Section. K. Time of Essence: In determining whether a party has substantially complied with this Franchise Agreement,the parties agree that time is of the essence. L Captions and References: 1. The captions and headings of sections throughout this Agreement are intended solely to facilitate reading and reference to the sections and provisions of this Agreement. Such captions shall not affect the meaning or interpretation of this Agreement. 2. When any provision of the Cable Ordinance is expressly mentioned herein, such reference shall not be construed to limit the applicability of any other provision of the Cable Ordinance or City law that may also govern the particular matter in question. M. Rights Reserved to the City: 1. In addition to any rights specifically reserved to the City by this Agreement, the City reserves to itself every right and power which is required to be reserved by a provision of any ordinance or under the Franchise. 2. The City shall have the right to waive any provision of the Franchise to be performed by Operator, except those required by Applicable Law, if the City, in its reasonable opinion, determines (1) that it is in the public interest to do so, and (2) that the enforcement of such provision will impose an undue hardship on the Operator or the Subscribers. Waiver of any provision in one instance shall not be deemed a waiver of such provision subsequent to such instance nor be deemed a waiver of any other provision of the Franchise unless the statement so recites. 54 3. Notwithstanding any other provision in this Agreement, nothing in this Agreement shall preclude the City from exercising its police powers to enact, amend or supplement any law or regulation governing cable communications within the City. N. Operator Bears Its Own Costs: Unless otherwise expressly provided in this Agreement, all acts that the Operator is required to perform must be performed at the Operator's own expense. O. City Bears Its Own Costs: Unless otherwise expressly provided in this Agreement, all acts that the City is required to perform must be performed at the City's own expense. P. Entire Agreement: This Agreement embodies the entire understanding and agreement of the City and the Operator with respect to the subject matter hereof and merges and supersedes all prior representations, agreements, and understandings, whether oral or written, between the City and the Operator with respect to the subject matter hereof, including, without limitation, any and all written or oral statement or representations by any official, employee, agent, attorney, consultant,or independent contractor of the City or the Operator. Q. Adequacy and Sufficiency of Consideration: The parties hereto expressly declare and agree that adequate and sufficient consideration has been provided for each and every promise, covenant,commitment and undertaking contained in this Agreement. R. Possessory Interest Taxation: The City hereby declares, pursuant to California Revenue&Taxation Code section 107.6, that as a result of this Agreement, a possessory interest subject to property taxation may be created and any such property interest may be subject to property taxation if it is created. The Operator, as the party in whom the possessory interest will be vested,may be subject to the payment of property taxes levied upon such an interest. S. Representations and Warranties of the Operator's Signatories: Each of the Persons executing this Agreement on behalf of the Operator do affirmatively represent and warrant as follows: 1. That this Agreement and the resulting contract constitute a valid and binding obligation, as to each and every term thereof, enforceable against the Operator in accordance with the terms thereof; 2. That the execution and delivery of this Agreement has been duly authorized and approved by the Board of Directors of the Operator; 3. That the persons who have executed this Agreement on behalf of the Operator are duly authorized to do so by all necessary action; and 4. That the execution and deliveryof this Agreement does not violate any provision of the by-laws and/or Articles of Incorporation of the Operator's corporation. 55 T. Jurisdiction of California Courts and Waiver of Diversity Jurisdiction: This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to its conflicts of laws rules or principles. In the event that suit is brought by any party, the parties agree that trial of such action shall be vested exclusively in the state courts of California, County of Contra Costa, or, in the event of a"federal question" in the United States 'District Court for the Northern District of California. Moreover, the Operator expressly consents to service of process pursuant to California Code of Civil Procedure Section 416.10 at the office of Operator's registered agent for service of process as to any action arising under or purporting to rise under this Agreement and the Operator expressly declares and agrees that, for the purpose of any action arising under this Agreement and for no other purpose, its principal place of business shall be deemed to be within the State of California, and that it shall not assert otherwise in connection with any claim of"diversity of citizenship" under 28 U.S.C. Section 1441(b). U. Rights of Individuals:- 1. The Operator shall not deny Cable Service, deny access, or otherwise discriminate against Subscribers, Channel users, or general citizens on the basis of race, color, religion, disability, national origin, age, gender or sexual preference. The Operator shall comply at all times with all other Applicable Law,relating to nondiscrimination. 2. The Operator shall adhere to the applicable equal employment opportunity requirements of Applicable Law, as now written or as amended from time to time. 3. Neither the Operator, not any Person, agency, or entity shall, without the Subscriber's consent, tap or arrange for the tapping of any cable; line, signal input device, or Subscriber outlet or receiver for any 'purpose except routine maintenance of the System, detection of unauthorized service, polling with audience participating, or audience viewing surveys to support advertising research regarding viewers where individual viewing behavior cannot be identified. 4. In the conduct of providing its Cable Services, the Operator shall take reasonable steps to prevent the invasion of a Subscriber's or general citizen's right of privacy or other. personal rights through the use of the System as such rights are delineated or defined by Applicable Law. The Operator shall not, without lawful court order or other applicable valid legal authority, utilize the System's interactive two-way equipment or capability for unauthorized personal surveillance of any Subscriber or general citizen. 5. No signals of a Class IV Channel may be transmitted from a Subscriber terminal for purposes of monitoring individual viewing patterns or practices without the express written permission of a Subscriber. The request for permission must be contained in a separate document with a prominent statement that the Subscriber is authorizing the permission in full knowledge of its provisions. The written permission must be for a limited period of time not to exceed one year,which is renewable at the option of the Subscriber.No penalty may be invoked for a Subscriber's failure to provide or renew the authorization. The authorization is revocable at 56 r. any time by the Subscriber without penalty of any kind. The permission must be required for each type or classification or Class IV Channel cable communications activity planned. a. No information or data obtained by monitoring transmission of a signal from a Subscriber,terminal including but not limited to the lists of the names and addresses of the Subscribers or lists that identify the viewing habits of Subscribers may be sold or otherwise made available to any Person other than to the Operator and its employees for internal business use, or to the Subscriber who is the subject of that information, unless the Operator has received specific written authorization from the Subscriber to make the data available. b. Written permission from the Subscriber must not be required for conducting System wide or individually addressed electronic sweeps for the purpose of verifying System integrity or monitoring for the purpose of billing. Confidentiality of this information is subject to the provisions of this Agreement. 6. In the offering of its services, the Operator shall not discriminate between offerees, including without limitation in the use of discounts (except as otherwise expressly provided herein) and/or free or promotional packages based upon income levels and/or area of residence within the City. V. Ownership of the Operator: The Operator represents to the City that the names_of the shareholders,partners,members or 57 other equity owners of the Operator and of any of the shareholders, partners, members and/or other equity owners of the Operator as of the date of this Agreement are as set forth in Exhibit 2 hereto. AGREED TO THIS DAY OF , 1999. CITY OF WALNUT CREEK SEREN INNOVATIONS,INC., a Minnesota corporation By: / By: �.f ity Manager Title: -4 C60 APPROVED AS TO FORM: GUJ Assistant City Attorney • Is CAROLE A WA"CE NOTARY PUBUC—MINNESOTA ' MyCw Y *rcmJan.31 2000 NA106 58 UUUUU VUUUUUUUVU VU x4x -9xxxxxxx ,axxxv v x xx a v a v v v a v v UUtUU Vay UMull, aa aaaa UVVUv v UU o ,v vim°' 3 ' GAS AAA uUQ � C Q) a .� v ,� .� .� aG► a14 v O W cd r tI) v °? z u .� .uuuUzzxc � H { z0 % m o o O a ON -( .-� a � � rn � �+ cnmr� � ot� 000c� o o •o •� .-{ Lc) 4m r-4 � r ,-4 � c� � cv CO CC) O � cq v U G tz H .a ° to U o � w Un 'b ° U -.0 o w .1 *' z o U tv 16 U H u 16 w cz v o 5� xQY4 V OE= i, t�. F. a a v 'dw � a i� a u u u u u u u u u u u u u u u u u u xxxx xxxxxxxxx xx x ,.� v v (U aj u u C� C� (� C� C� ( 000 UC� bC� U C� u H � a � 44 ° x cin •� .o ,o cz (13 N O M LO LO t 1 LO N I N NO n O tc) LO � c" RICO � N LO N � � N N cN � N � n � 0000 LO b v O bO d N e•�1 x c an a •� a 0 OC4 ci v O w Ci 07 En O I w a, . in c i n G a •a� b •" O G -J a� O ami � w• a 0 -4 � > o �sxu a Q ° � V14 (� o 4(9s ° o ° Q. -a ti rwcnc*ncn ca ,� a. aa > 3 wz ?-� . p • . u u 3 3 ti Q) o v H O CC) LO � N Cy\ w b a� d Ob cv Cd ed �-+ C/) o a, . 4.. > vw o w 41 Cd tj � .0 i I •~4. b LL' U P. o u I .: � .� •� us.i� yU V . b O cti p cv wv you � u3x � p � pcl w (U4) w > > > > u a ,� ,0 0 0 0 0 0 0 0 0 0 ,0 .0 0 .0 0 .0 a o 0 0 u u u u u u u u u u c� c� cd ca cu c� c� cd cd «f at cd R w u r � >q4r � r � � � �q- >4 0 ^0� 00 :2 a � - '� V V C13 P-4 V •� � cC -- V V N� V] N � v+'i 0 0 � O (13 a 0- IM U U o o aao U o 0 0 0 O4-1 p° GQ c�a44 3 ZuicriZ zzUV r•] zz � criviz0 �.� ` i.r .}..' 6•` .�• is , :; ", ,+'.A •:C w 0 N O c� Q O G cn C) 0 00 o p° ° o �" o ZZZZZZ vi aauuu ESE-� E-� a OM Mama OF r� p d � �` cd tn � � ° � �, , OOC .� CIA ,O c� N �` fj d ? �y v �• D-S BEFORE THE BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA In the Matter of the Appeal of DECLARATION OF LILLIAN T. FUJII IN SUPPORT OF COUNTY STAFF SEREN INNOVATIONS, INC. REPORT AND RECOMMENDATION November 6, 2001 I, Lillian T. Fujii, declare as follows: 1. 1 am employed by the County of Contra Costa as a Deputy County Counsel in the County Counsel's Office. 2. 1 have been working with Cable TV Administrator Patricia Burke on the County's negotiations with Seren Innovations, Inc. ("Seren"). 3. Following Seren's application for encroachment permits, I requested and received copies of documents from Seren's attorney. True and correct copies of selected documents provided by Seren are attached hereto, including the following: A. Seren's:Certificate of Public Convenience and Necessity (part), including Negative Declaration (14), copy attached hereto as Exhibit A, and numbered pages 1 - 56. B. Seren's Petition for Certificate of Public Convenience and Necessity and Attachment 7 thereto (Proponent's Environmental Assessment), attached hereto as Exhibit B. and numbered pages 57 - 73. 1 declare under penalty of perjury under the laws of the State of California the foregoing is true and correct. Executed ori 1 ( at Martinez, California. Lillian T. FuJiU1111, Page 1 EXHIBIT A ALJ/TRP/ays Mailed 6/24/99 Decision 99-06-083 June 24, 1999 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Order Instituting Rulemaking on the Commission's Own Motion into Competition for Rulemaking 95-04-043 Local Exchange Service. (Filed April 26, 1995) Investigation 95-04-044 Order Instituting Investigation on the (Filed April 26, 1995) Commission's Own Motion into Competition for (Petition Nos. 132, 133, 134, Local Exchange Service. 135, 136, 137,138, 139 140, and 142) O P I N I O N By this decision,we grant the petitions for certificates of public convenience and necessity (CPCN) to operate as facilities-based competitive local carriers (CLCs) and to offer resold local exchange services within the territories of Pacific Bell (Pacific),GTE California Incorporated (GTEC), Roseville Telephone Company (RTC), and Citizens Telephone Company (CTC), for those petitioners as set forth in Appendix B of this decision, subject to the terms and conditions included herein. We also grant petitioners' requests for intrastate interLocal Access and Transport Areas (interLATA) and intraLATA authority on a statewide basis as designated in Appendix B. 1. Background We initially established rules for entry of facilities based CLCs in Decision (D.) 95-07-054. Under those procedures,we processed a group of candidates that filed petitions for CPCNs by September 1, 1995, and granted authority effective January 1, 1996, for qualifying CLCs to provide facilities-based competitive local 45871 - 1 - 0 00001 , R.95-04-043, I.95-04-044 ALJ/TRP/ays exchange service in the territories of Pacific and GTEC. We authorized CLCs seeking to provide resale-based services to begin operations on March 1, 1996. We further advised prospective entrants that any filings from nonqualifying CLCs, and any filing for CLC operating authority made after September 1, 1995, would be treated as standard applications and processed in the normal course of the Commission's business. By D.96-12-020,effective January 1, 1997,we instituted quarterly processing cycles for granting CPCN authority for facilities-based CLCs in order to streamline the approval process for these particular carriers. Since we had been processing the environmental impact review required under the California Environmental.Quality Act (CEQA) on a consolidated basis for groups of qualifying facilities-based CLCs, we concluded in D.96-12-020 that it would be more efficient and consistent to process other aspects of the CLC filings on a consolidated basis, as well. Accordingly, we directed that any CLC filing on or after January 1, 1997, for facilities-based CPCN authority was to make its fiLng in the form of a petition to be docketed in Investigation (I.) 95-04-044 that would be processed quarterly on a consolidated basis. CLCs seeking only resale authority continued to file individual applications. On September 24, 1997,we adopted D.97-09-115 in which we extended the coverage of our adopted rules for local exchange competition to include the service territories of California's two midsized local exchange carriers (MSLECs), RTC and CTC. In that decision,we also authorized candidates seeking CLC CPCN authority within the MSLECs' territories to immediately begin making filings following the applicable entry rules previously adopted in D.95-07-054 and subsequent decisions. Specifically, requests for CLC CPCN authority for facilities-based service were to be filed in the form of a petition docketed in I.95-04-044, while resellers have sought authority through applications. In - 2 - 000002 R.95-04-043, 1.95-04-U4-4 AL TRP ays • D.98-01-055,we approved the first group of petitions for facilities-based CPCNs to offer local exchange service within the MSLEC territories. In this decision, we approve CPCNs for those facilities-based CLCs which filed petitions during the first quarter of 1999 and satisfied all applicable rules for certification as established in Rulemaking (R.) 95-04-043. The Petitioners identified in Appendix B will be authorized to begin offering service upon the filing of tariffs and compliance with the terms and conditions set forth in this order. H. CEQA Review We have reviewed the petitions for compliance with CEQA. CEQA requires the Commission to assess the potential environmental impact of a project in order that adverse effects are avoided, alternatives are investigated, and environmental quality is restored or enhanced to the fullest extent possible. To achieve this objective, Rule 17.1 of the Commission's Rules requires the proponent of any project subject to Commission approval to submit with the petition for approval of such project a Proponent's Environmental Assessment (PEA). The PEA is used by the Commission to focus on any impacts of the project which may be of concern, and prepare the Commission's Initial Study to determine whether the project needs a Negative Declaration or an Environmental Impact Report (EIR). Based on its assessment of the facilities-based petitions and PEAs, the Commission staff prepared a Negative Declaration and Initial Study generally describing the facilities-based Petitioners' projects and their potential environmental effects. The Negative Declaration prepared by the Commission staff is considered a Mitigated Negative Declaration (MND). This means that, although the initial study identified potentially significant impacts,revisions -3 - 0000013 R.95-04-043, 1.95-04-09 ALJ/TRP/ays • which mitigate the impacts to a less than significant level have been agreed to by the Petitioners. (Pub. Res. Code § 21080(c)(2).) A. Results of the Negative Declaration On April 29, 1999, the Negative Declaration and Initial Study were sent to various city and county planning agencies, as well as public libraries throughout the state for review and comment by May 28, 1999. The Commission staff prepared a public notice which announced the preparation of the draft negative declaration, the locations where it was available for review, and the deadline for written comments. The public notice was advertised in newspapers throughout the state. The draft Negative Declaration was also submitted to the Governor's Office of Planning and Research where it was circulated to affected state agencies for review and comment. Public comments on the draft Negative Declaration were reviewed and answered, as necessary. The Commission staff then finalized the MND covering all facilities-based CLC petitions listed in Appendix B. The finalized MND includes a list of mitigation measures with which the CLCs must comply as a condition of their CPCN authority. The MND includes a Mitigation Monitoring Plan to ensure that the mitigation measures are followed and implemented as intended. A copy of the MND is attached to this decision as Appendix D. We hereby approve the MND as finalized by staff. Concurrently with our approval of the MND, we grant the request of the Petitioners in Appendix B for CPCN authority subject to the terms and conditions set forth in our order beiow. B. Required Payment of CEGA Deposit Commission Decision 97-04-046 stipulates that all petitioners for CLC authority must submit with their filing an initial payment of$2000 to cover CEQA costs. The $2000 payment is used to cover the Commission's costs for j -4 - 0000011 R.95-04-043, 1.95-0#44 AL TRP ays • preparing and publishing the Mitigated Negative Declaration for each qualifying petitioner,as required by CEQA law. As of the date of this order,the Commission has received payment of the required$2000 deposit from each of the CLCs, as identified in Appendix B. III. Review of CPCN Petitions A. Overview The CLC petitions have been reviewed for compliance with the certification-and-entry rules (Rules) adopted in Appendices A and B of D.95-07-054 and subsequent decisions in R.95-04-043/1.95-04-044. Consistent with our goal of promoting a competitive market as rapidly as possible,we are granting authority to all of the facilities-based CLCs that filed during the first quarter of 1999 and met the Rules. The Rules are intended to protect the public against unqualified or unscrupulous carriers, while also encouraging and easing the entry of CLC providers to promote the rapid growth of competition. Petitioners had to demonstrate that they possessed the requisite managerial qualifications, technical competence, and financial resources to provide facilities-based local exchange service. Petitioners were also required to submit proposed tariffs which conform to the consumer protection rules set forth in Appendix B of D.95-07-054. In response to a notice of tariff deficiencies, the various petitioners submitted tariff corrections. Except for the outstanding deficiencies noted in Appendix C, the petitioners' proposed tariffs are found to be satisfactory with no deficiencies noted. As prescribed in Rule 43.(1), prospective facilities-based CLCs must also show that they possess a minimum of$100,000 in cash or cash-equivalent resources, as defined in the Rules. In order to demonstrate that they possess the requisite financial resources,petitioners submitted copies of recent financial -5 - 000005 R.95-04-043, I.95-04-IALJ/TRP/ays • statements. Because the financial statements contain commercially sensitive information, the petitioners filed motions for limited protective orders to restrict the financial statements and related documents containing commercially sensitive information from public disclosure pursuant to General Order (GO) 66-C. We grant those motions as prescribed in our order below. Based upon our review, we conclude that each of the facilities-based Petitioners identified in Appendix B, has satisfactorily complied with our certification requirements for entry, including the consumer protection rules set forth in D.95-07-054, subject to correcting any tariff deficiencies in Appendix C, payment of the required CEQA deposit, and satisfying the additional conditions set forth in the ordering paragraphs below. Accordingly, we grant these Petitioners authority to offer facilities-based and resold local exchange service within the territories of Pacific and GTEC and, where requested, within the CTC and RTC territories. We also grant the statewide inter- and intraLATA.authority as requested. Pursuant to D.97-09-115, CLC resale authority within the RTC and CTC territories was authorized to become effective on or after April 1, 1998. As we stated in D.97-09-115, until the time that tariffed wholesale discount rates are adopted for RTC and CTC, individual CLCs certificated to resell local. service within the CTC/RTC territories may enter into negotiations with each of the MSLECs to seek agreement on an interim wholesale discount rate. Disputes over the terms of resale arrangements may be submitted to the Commission for, arbitration pursuant to the provisions of Section 252(b)(1) of the Telecommunication Act of 1996 and Commission Resolution ALJ-174. - 6- ,I 000006 R.95-04-043, I.95-0A, ALJ/TRP/ays B. Motion of DSLnet DSLnet Communications, LLC ("DSLnet"), attempted to file a petition (# 142) for CLC local exchange authority on March 31, 1999,with the intention of being included in the Commission's quarterly "batch" review of such petitions filed during the first quarter of 1999. However,DSLnet subsequently learned that, due to certain confusion surrounding whether DSLnet's Petition was complete for purposes of the Commission's review, the Commission did not technically accept DSLnet's petition until April 13, 1999. As a result,it is now too late for DSLnet's Petition to be included in the Commission's quarterly review process for such petitions filed during the first quarter of 1999, at least to the extent DSLnet seeks facilities-based authority. Nonetheless, in order to allow DSLnet to initiate competitive telecommunications service in California as soon as possible, DSLnet filed a motion on May 4, 1999, asking the Commission to: (1) immediately consider the portion of DSLnet's Petition seeking authority to resell local exchange telecommunications services, and (2) consider the portion of DSLnet's Petition seeking facilities-based authority in the Commission's quarterly review process for Petitions filed during the second quarter of 1999. No party has objected to the motion of DSLnet. We consider the request of DSLnet for consideration of the resale portion of its petition in the current quarterly review to be reasonable, under the circumstances and shall grant it. Due to the timing requirements relating to the Mitigated Negative Declaration, DSLnet's request for facilities-based authority cannot be considered during the.current quarter,but shall be deferred to the subsequent quarterly review period. - 7- 000007 R.95-04-043, I.95-04-0 ALJ/TRP/ays IV. Compliance With Section 311 In compliance with Pub. Util. Code Section 311 (g)(2), this is an uncontested matter in which the decision grants the relief requested. Accordingly,pursuant to Pub. Util. Code Section 311(8)(2), the otherwise applicable 30-day period for public review and comment is being waived. Findings of Fact 1. Nine petitioners filed requests during the first quarter of 1999 seeking a CPCN to provide competitive local exchange services in the territories of various California incumbent local exchange carriers as set forth in Appendix B. 2. An additional petitioner, DSLnet attempted to file during the first quarter, but the filing was not actually docketed until April 13, 1999. DSLnet subsequently filed an uncontested motion seeking to have its request for CLC resale authority to be considered as part of the first quarterly group of CLCs. 3. No protests to the CLC petitioners have been filed. 4. A hearing is not required. 5. By prior Commission decisions,we authorized competition in providing local exchange telecommunications service within the service territories of Pacific, GTEC, RTC, and CTC for carriers meeting specified criteria. . 6. The Petitioners listed in Appendix B have demonstrated that each of them has a minimum of$100,000 in cash or cash equivalent reasonably liquid and readily available to meet its start-up expenses. .7. Petitioners' technical experience is demonstrated by supporting documentation which provides summary biographies of their key management personnel. 8. Except as noted in Appendix C, Petitioners have each submitted a complete draft of their initial tariff which complies with the requirements -8 - 000008 R.95-04-043, I.95-04-Gt: ALJ/TRP/ays established by the Commission, including prohibitions on unreasonable deposit requirements. 9. Commission D.97-04-046 stipulates that all petitioners for CLC authority must submit with their filing an initial payment of$2,000 to cover the Commission's costs for preparing and publishing the Mitigated Negative Declaration pursuant to CEQA. 10. Each of the CLCs, as identified in Appendix B,has submitted the required $2,000 CEQA deposit as of the date of this order. 11. By D.97-06-107, petitioners or applicants for CLC authority are exempt from Rule 18(b). 12. Exemption from the provisions of Pub. Util. Code §§ 816-830 has been granted to other nondominant carriers. (See, e.g., D.86-10-007 and D.88-12-076.) 13. The transfer or encumbrance of property of nondominant carriers has been exempted from the requirements of Pub. Util. Code §851 whenever such transfer or encumbrance serves to secure debt. (See D.85-11-044.) Conclusions of Law 1. Each of the Petitioners listed in Appendix B has the financial ability to provide the proposed services; and has made a reasonable showing of technical expertise in telecommunications. 2. Public convenience and necessity require the competitive local exchange services to be offered by Petitioners subject to the terms, conditions, and restrictions set forth below. 3. Each Petitioner is subject to: a. The current 0.0% surcharge applicable to allintrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the Universal Lifeline Telephone Service (Pub. Util. Code § 879; Resolution T-16245, December 3, 1998); -9 - 000009 R.95-04-043, I.95-04-O,O-0,O b. The current 0.192% surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California Relay Service and Communications Devices Fund (Pub. Util. Code § 2881; Resolution T-16234; D.98-12-0731 December 17, 1998); c. The user fee provided in Pub. Util. Code §§ 431-435, which is 0.11% of gross intrastate revenue for the 1998-1999 fiscal year (Resolution M-4789); d. The current surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California High Cost Fund-A (Pub. Util. Code § 739.30; D.96-10-066, pp. 3-4, App. B, Rule 1.C; Resolution T-16242 at 0.0% for 1999, December 3, 1998); e. The current 3.8% surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California High Cost Fund-B (D.96-10-066, p. 191, App. B, Rule 6.F., Resolution T-16244, December 3, 1998); and, f. The current 0.05% surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California Teleconnect Fund (D.96-10-066, p. 88, App. B, Rule 8.G, Resolution T-16165; August 1, 1998). 4. Petitioners should be exempted from Rule 18(b). 5. Petitioners should be exempted from Pub. Util. Code §§ 816-830. 6. Petitioners should be exempted from Pub. Util. Code § 851 when the transfer or encumbrance serves to secure debt. 7. Each of the Petitioners must agree to, and is required to, carry out any specific mitigation measures adopted in the Mitigated Negative Declaration (MND), attached as Appendix D, in compliance with CEQA. - 10 - HOW R.95-04-043, I.95-0 ALJ/TRP/ays • 8. With the incorporation of the specific mitigation measures in the final MND, the Petitioners' proposed projects will not have potentially significant adverse environmental impacts. 9. The Petitioners should be granted CPCNs subject to the terms, conditions, and restrictions set forth in the order below. 10. Any CLC which does not comply with our rules for local exchange competition adopted in R.95-04-043 shall be subject to sanctions including,but not limited to, revocation of its CLC certificate. ORDER IT IS ORDERED that: 1. A certificate of public convenience and necessity (CPCN), shall be granted to each of the Petitioners listed in Appendix B (Petitioners) to permit each of them to operate as a facilities-based provider of competitive local exchange telecommunications services, as a reseller of competitive local exchange telecommunications services within the service territories as noted in Appendix B and, as a statewide nondominant interexchange carrier (NDIEC), as noted in Appendix B, contingent on compliance with the terms identified in Appendix B and in the remainder of this order. 2. Each Petitioner shall file a written acceptance of the certificate granted in this proceeding prior to commencing service. 3. a. The Petitioners are authorized to file with this Commission tariff schedules for the provision of competitive local exchange, intraLATA (Local Access Transport Area) toll and intrastate interLATA services, as applicable. The Petitioners may not offer these services until tariffs are on file, and until any applicable deficiencies as noted in Appendix C have been corrected. Petitioners' - il - 000011 R.95-04-043, I.95-04-044*AL1/TRP/ays • initial filing shall be made in accordance with General Order (GO) 96-A, excluding Sections IV,V, and VI, and shall be effective not less than one day after approval by the Telecommunications Division. b. The Petitioners are competitive local carriers (CLCs). The effectiveness of each of their future tariffs is subject to the schedules set forth in Decision (D.) 95-07-054, Appendix A, §4E. A. "E. CLCs shall be subject to the following tariff and contract-filing, revision and service-pricing standards: "(1) Uniform rate reductions for existing tariff services shall become effective on five (5) working days' notice to the Commission. Customer notification is not required for rate decreases. "(2) Uniform major rate increases for existing tariff services shall become effective on thirty (30) days' notice to the Commission, and shall require bill inserts, or a message on the bill itself, or first class mail notice to customers at least 30 days in advance of the pending rate increase. "(3) Uniform minor rate increases, as defined in D.95-07-054, shall become effective on not less than five (5) working days' notice to the Commission. Customer notification is not required for such minor rate increases. "(4) Advice letter filing for new services and for all other types of tariff revisions, except changes in text not affecting rates or relocations of text in the tariff schedules, shall become effective on forty (40) days' notice to the Commission. "(5) Advice letter filings revising the text or location of text material which do not result in an increase in any rate or charge shall become effective on not less than five (5) days' notice to the Commission. "(6) Contracts shall be subject to GO 96-A rules for NDIECs, except interconnection contracts. - 12 - 000012 R.95-04-043, I.95-04-00 ALJ/TRP/ays • "(7) CLCs shall file tariffs in accordance with Public Utilities (Pub. Util.) Code Section 876." 4. The Petitioners may deviate from the following provisions of GO 96-A: (a) paragraph II.C.(1)(b), which requires consecutive sheet numbering and prohibits the reuse of sheet numbers, and (b) paragraph II.C.(4), which requires that "a separate sheet or series of sheets should be used for each rule." Tariff filings.incorporating these deviations shall be subject to the approval of the . Commission's Telecommunications Division. Tariff filings shall reflect all fees and surcharges to which Petitioners are subject, as described in Conclusion of Law 3. Petitioners are also exempt from GO 96-A Section II.G.(1) and (2) which require service of advice letters on competing and adjacent utilities, unless such utilities have specifically requested such service. 5. Each Petitioner shall file as part of its initial tariffs, after the effective date of this order and consistent with Ordering Paragraph 3, a service area map. 6. Prior to initiating service, each Petitioner shall provide the Commission's Consumer Services Division with the Petitioner's designated contact persons for purposes of resolving consumer complaints and the corresponding telephone numbers. This information shall be updated if the names or telephone numbers change or at least annually. 7. Where applicable, each Petitioner shall notify this Commission in writing of the date local exchange service is first rendered to the public within.five days after service begins. The same procedure shall be followed.for the authorized intraLATA and interLATA services, where applicable. 8. Each Petitioner shall keep its books and records in accordance with generally accepted accounting principles. - 13 - 0000 � R.95-04-043, I.95-04=0V ALJ/TRP/ays 9. Petitioners shall each file an annual report, in compliance with GO 104-A, on a calendar-year basis using the information-request form developed by the Commission Staff and contained in Appendix A. 10. Petitioners shall ensure that its employees comply with the provisions of Pub. Util. Code § 2889.5 regarding solicitation of customers. 11. The certificate granted and the authority to render service under the rates, charges, and rules authorized will expire if not exercised within 12 months after the effective date of this order. 12. The corporate identification number assigned to each Petitioner, as set forth in Appendix B, shall be included in the caption of all original filings with this Commission, and in the titles of other pleadings filed in existing cases. 13. Within 60 days of the effective date of this order, each Petitioner shall comply with Pub. Util. Code § 708, Employee Identification Cards, reflecting its i authority, and notify the Director of the Telecommunications Division in writing of its compliance. 14. Each Petitioner is exempted from the provisions of Pub. Util. Code §§ 816-830. 15. Each Petitioner is exempted from Pub. Util. Code § 851 for the transfer or encumbrance of property, whenever such transfer or encumbrance serves to secure debt. 16. If any Petitioner is 90 days or more late in filing an annual report or in remitting the fees listed in Conclusion of Law 4, Telecommunications Division shall prepare for Commission consideration a resolution that revokes that Petitioners CPCN, unless that Petitioner has received written permission from Telecommunications Division to file or remit late. - 14 - 0.00014 R.95-04-043, I.95-04-OPALJ/TRP/ays • 17. The Final Mitigated Negative Declaration, including the Mitigation Monitoring Plan, attached as Appendix D of this decision is hereby approved and adopted. 18. Each of the Petitioners listed in Appendix B shall comply with the conditions and carry out the mitigation measures outlined in the adopted Mitigated Negative Declaration. 19. Each of the Petitioners shall provide the Director of the Commission's Energy Division with reports on compliance with the conditions and implementation of mitigation measures under the schedule outlined in the Mitigated Negative Declaration. 20. Petitioners shall comply with the consumer protection rules set forth in Appendix B of D.95-07-054. 21. Petitioners shall comply with the Commission's rules for local exchange competition in California that are set forth in Appendix C of D.95-12-056, including the requirement that CLCs shall place customer deposits in a protected, segregated, interest-bearing escrow account subject to Commission oversight. 22. Petitioners shall comply with the customer notification and education rules adopted in D.96-04-049 regarding the passage of calling party number. 23. Petitioners' respective motions for a limited protective order keeping designated documents containing financial and other operating information confidential are granted. Such documents will remain under seal for one year from today unless a petitioner makes a timely request for a:tension of confidential treatment of its documents by filing a separate motion with good cause shown. 24. The motion of DSLnet to have the resale portion of its CLC petition considered in the current quarterly cycle is granted. - 15 - 000015 R.95-04-043, I.95-04-040ALJ/TRP/ays • 25. The petitions listed in Appendix B are granted only as set forth above. This order is effective today. Dated June 24, 1999, at San Francisco, California. RICHARD A. BILAS President HENRY A DUQUE JOSIAH L. NEEPER JOEL Z. HYATT CARL W. WOOD Commissioners - 16 - 000010 R.95-04-043, I.95-04-4 ALJ/TRP/ays • APPENDIX A Page 1 of 2 TO: ALL COMPETITIVE LOCAL CARRIERS AND INTEREXCHANGE TELEPHONE UTILITIES Article 5 of the Public Utilities Code grants authority to the California Public Utilities Commission to require all public utilities doing business in California to file reports as specified by the Commission on the utilities' California operations. A specific annual report form has not yet been prescribed for the California interexchange telephone utilities. However, you are hereby directed to submit an original and two copies of the information requested in Attachment A no later than March 31St of the year following the calendar year for which the annual report is submitted. Address your report to: California Public Utilities Commission Auditing and Compliance Branch, Room 3251 505 Van Ness Avenue San Francisco, CA 94102-3298 Failure to file this information on time may result in a penalty as provided for in §§ 2107 and 2108 of the Public Utilities Code. If you have any question concerning this matter,please call (415) 703-1961. 000017 R-95-04-043, I.95404-04,4&LJ/TRP/ays APPENDIX A Page 2 of 2 Information Requested of California Competitive Local Carriers and Interexchange Telephone Utilities. To be filed with the California Public Utilities Commission,505 Van Ness Avenue, Room 3251,San Francisco,CA 94102-3298,no later than March 31st of the year following the calendar year for which the annual report is submitted. 1. Exact legal name and U#of reporting utility. 2. Address. 3. Name, title, address, and telephone number of the person to be contacted concerning the reported information. 4. Name and title of the officer having custody of the general books of account and the address of the office where such books are kept. 5. Type of organization (e.g., corporation,partnership,sole proprietorship,etc.). If incorporated,specify: a. Date of filing articles of incorporation with the Secretary of State. b. State in which incorporated. 6. Commission decision number granting operating authority and the date of that decision. .7. Date operations were begun. 8. Description of other business activities in which the utility is engaged. 9. A list of all affiliated companies and their relationship to the utility. State if affiliate is a: i . a. Regulated public utility. b. Publicly held corporation. 10. Balance sheet as of December 31st of the year for which information is submitted. 11. Income statement for California operations for the calendar year for which information is submitted. (END OF APPENDIX A) 00001. 8 R.95-04-043, I.95ALJ/TRP/ays APPENDIX B Page 1 of 1 j LISTING OF PETITIONERS GRANTED CPCN AUTHORITY,/ Requested Authority/ Granted / . Statewide Name of Petitioner Petition Utility Local Exchange' Inter/Intra No. U-No. Facilities-based Resale LATA 1. Eagle Communications of 132 U-6182C X X California, LLC 2. US Data Highway Corp.7, 133 .. U-6183C X 3. Seren Innovations, Inc. 2 1 U-6184C X X X 4. HTC Communications, LLC 2 135 U-6185 X X X S. Network Plus, Inc. 136 U-61 6C X X X 6. Campuslink Communications 137 U-6 87C X X X Systems, Inc.2 7. XL Networks, Inc. 138 /L 6188C X X X 8. Triad Communications 139 /U-6189C X X X Corporation- 9. NTC Network, LLC2 1 U-6190C X X X 10. DSLnet Communications, 42 U-6191C X LLC 3 1 Unless otherwis indicated, the authorized local exchange service territory of each CLC petitoner i invited to the ILEC service territories of Pacific,GTEC. 2 The author' ed local exchange territory for this carrier encompasses the ILEC service territories Pacific, GTEC,RTC, and CTC. 3 The fa . ities-based portion of the DSLnet petition shall be considered during the next quart y review period. 000019 ' OCT-i2-99 08:51 FROM:P.A.C. 415-291-8165 T0*23305827 PAGE:004/032 '. R.95-04043, I.95-04044 AL,j/TRP/ays zoo APR 10 2001 APPENDIX B (Corrected) COUNTY Page 1 MARTINEZ, CALIF.LFI C LISTING OF PETITIONERS GRANTED CPCN AUTHORITY Requested Authority Granted StatPwidp. Name of Petitioner Petition Utility Local Exchan_ge` Inter/Intra- No. U-No. Facilities-based Resale LATA 1. Eagle Communications of 132 U-61820 X X California, LLC 2 US Data Highway Corp.', 133 U-6183C X X 3. Seren Innovations,Inc. 2 134 U-6184C X X X 4. HTC Communications, LLC ' 135 U 6185C X X X 5. Network Plus,Inc. 136 U-6186C X X X 6. Campuslink Communications 137 U-6187C X X X Systems,Inc.' 7. XL Networks, Inc. 138 U-6188C X X X 8. Triad Communications 139 U-6189C X X X Corporation' 9. NTC Network, LLC' 140 U-6190C X X X 10. DSLnet Communications, LLC142 U-61910 X 'Unless otherwise indicated,the authorized local exchange service territory of each CLC petitoner is limited to the ILEC service territories of Pacific,MC. 'The authorized local exchange territory for this carrier encompasses the ILEC service territories of Pacific,GTEC,RTC,and CTC. 'The facilities-based portion of the DSLnet petition shall be considered during the next quarterly review period. (END OF APPENDIX B) 000020 R.95-04-043, I.95-04-04®ALJ/TRP/ays* • APPENDIX C LIST OF CLC Tariff Deficiencies Page 1 of 4 Eagle Communications, Pet. 132 Eagle Communicatf bins was to file a supplement to its petition as previously requested by the Telecommunications Staff to correct the many deficiencies to its tariffs. To date, it has not filed a supplement to correct the identified deficiencies. Eagle must file a revised set of tariffs that fully comply with D.95-07-054, D.95-12-056, D.95-12-057, D.96-04-049. Network Plus — Pet. 136 Deficiencies in Network Plus's Proposed Tariffs 1. On each tariff sheet, (1) replace the phrase above the top horizontal line "Local Exchange Services" to "Competitive Local Carrier Tariff" and (2) add a vertical line on both the left and right margins. 2. Sheet No. 3, Preliminary Statement, 1.1, last paragraph. Replace the phrase "to resell local exchange telecommunications services within the State of California" to "to provide facilities-based and resale local exchange services as a competitive local carrier in the service areas of Pacific Bell, GTEC, Citizens and Roseville Telephone Companies." 3. Sheet No. 13, Rule 1, Definitions. Include the definitions adopted in Decision 95-07-054 for: (1) Major Rate Increase, and (2) Minor Rate Increase. 4. Sheet No. 17, Rule 3, Customer Application for Service. Revise tariffs to fully comply with the provisions of Rule 2, Appendix B of Decision 95-07-054, (e.g., service initiation based on a written or oral agreement; confirmation letter 0000�n R.95-04-043, I.95-04-04,, ALJ/TRP/ays* • APPENDIX C LIST OF CLC Tariff Deficiencies Page 2 of 4 5. briefly describing services, in case of an oral agreement; statement of terms/conditions for all new customers, etc.). 6. Sheet No. 18, Rule 5, Contracts and Agreements. Delete language re effectivity on five days' notice for "subsequent completed contracts." All contracts shall be subject to the 40-day notice until revised by the Commission. 7. Sheet No. 19. (1) Rule 6, Special Information Required on Forms. Revise tariff language to fully comply with the provisions of Rule 3 (A) and (B), Appendix B of Decision 95-07-054. (2) Rule 7, Establishment and Re-establishment of Credit. Include language on situations when deposits are not required. (See Rule 4, Appendix B of Decision 95-07-054.) 8. Sheet No. 20. (1) Rule 8, Advance Payments. Revise tariff language to indicate that advance payments shall be credited on the customer's first bill. . (2) Deposits. Include language on the interest rate to be added to deposits. (See Rule 5, Appendix B of Decision 95-07-054.) 9. -Sheet No. 21, Rule 9, Notices. (1) Revise tariff to indicate that cancellation of service by customers may be either verbal or written. (2) Include tariff language on rates and rate revisions and information on notices of discontinuance by a competitive local carrier. (See Rule 6, Appendix B of Decision 95-07-054.) 10. Sheet No. 22, Rule 10, Cancellation of Service by Company. Revise tariff to indicate that notice of discontinuance of service by a company for nonpayment of bills shall be provided in writing by first class mail to the customer not less than 7 calendar days prior to termination. . 00002 R.95-04-043,1.95-04A AL TRP ays* 1/ / APPENDIX C LIST OF CLC Tariff Deficiencies Page 3 of 4 11. Sheet No. 25, Rule 16, Rendering and Payment of Bills. Note that a five-month back billing period for error files and one and one-half years back billing period for fraud are applicable only to interexchange service providers. Revise tariff accordingly. (See Decision 88-09-061.) 12. Sheet Nos. 27 through 31, Liability of the Company. Adopt either Pacific Bell's or GTEC's limitation of liability. The limitation of liability of these companies are appended to Decision 95-12-057. 13. Sheet 36, Rule 25, Additional Provisions, etc., Section D. Include language, to indicate that deposits will be refunded with interest within 30 days after discontinuance of service or 12 months of service, whichever comes first. 14. Sheet 37, Rule 26, Additional Provisions, etc. Comply with the back billing provisions of Decision 88-09-061 for local exchange service providers. 15. Sheet 68, Custom Calling Services. Briefly describe each feature. Delete any reference to Caller ID service. This service can only be provided upon compliance with the customer notification and education rules adopted in Decision 96-04-049. 16. Sheet 72,Taxes and Surcharges. Update the applicable California surcharges. The current surcharges are: (1) Reimbursement Fee -0.11%; (2) ULTS -0.00%; (3) CHCF-A-0.00%; (4) CHCF-B - 3.8%; (5) California Relay Service & Communications Devices Fund - 0.192%; (6) California Teleconnect Fund-0.05%. 17. Include tariffs on: (1) Directories, (2) Non-published service, (3) Demarcation points, (4) Pro-rating of bills, (5) Change of service provider, 000023 R.95-04-043, 1.95-04-OAALJ/TRP/ays* • APPENDIX C LIST OF CLC Tariff Deficiencies Page 4 of 4 18. (6) Blocking of 976/900 calls, (7) Access to 911 by residential customers disconnected for nonpayment, (8) Switched access, (9) Number portability, (10) Privacy, (11) Universal Lifeline Telephone Service (ULTS) rates and income limitations, and (12) Sample forms. The forms may be filed with the company's initial tariff filing. (See Decision 95-07-054.) NTC Network, LLC — Pet. 140 NTC has to file a full set of tariffs in compliance with D.95-07-054, etc. (END OF APPENDIX Q 000024 R.95-04-043,I.95-04.04!.LJ/TRP/ays APPENDDC D 00002= NEGA'T'IVE DECLARATION (14) Competitive Local Carriers' (CLCs) Projects for Local Exchange Telecommunications Service throughout California. The subject of this Negative Declaration are nine current petitions/applications for authorization to provide facilities based local telephone services. (See Appendix B). The California Public Utilities Commission is the lead agency in approving these petitioners' intent to compete in the local exchange market. Additional approvals by other agencies may be required depending upon the scope and type of construction proposed by the petitioner(e.g. federal, other state agencies, and ministerial permits by local agencies). Because the subject projects of the nine current petitioners are similar, with some modifications, to the projects proposed by the past petitioners, the Commission incorporates, in whole,Negative Declaration 13 for these nine petitionslapplications, and will refer to the incorporated documents as"Negative Declaration 14"(Section 15150 of CEQA Guidelines). The public comment period for the Draft Negative Declaration 14 begins on Apra 29, 1999 and expires on May 28, 1999. Comments should be addressed to: John Boccio, Project Manager, California Public Utilities Commission, Energy Division, 505 Van Ness Avenue, San Francisco, CA 94102, Fax: (415) 703-2200, E-Mail:jbx@cpuc.ea.gov. For further information call Mr. Boccio at (415) 703-2641. BACKGROUND The California Public Utilities Commission's Decision 95-07-054 enables telecommunications companies to compete with local telephone companies in providing local exchange service. Previous to this decision, local telephone service was monopolized by a single utility per service territory. The Commission initially received 66 petitions from companies to provide competitive local telephone service throughout areas presently served by Pacific Bell and GTE California. The 66 petitioners included cable television companies, cellular(wireless) companies,' long- distance service providers, local telephone service providers, and various other telecommunication companies that specialize in transporting data. Forty of the sixty-six petitions were for approval of facilities-based services,which means that the petitioners.proposed to use their own facilities in providing local telephone service. The remaining 26 petitions were strictly for approval of resale-based services, meaning that telephone I Wireless companies covered in the Negative Declarations adopted by the Commission for entry in the local telephone market are also subject to Commission General Order(G.O. 159A). G.O. 159A.delegates to local governments the authority to issue discretionary permits for the approval of proposed sites for wireless facilities. Commission adoption of the Negative Declarations is not intended to supersede or invalidate the requirements contained in General Order 159A. l 00002 service will be resold using another competitor's facilities. (Most of the facilities-based petitioners offer resale-based services as well.) The 40 facilities-based petitions indicated that physical modifications to existing facilities may be required, and construction of new facilities was a possibility in the long-term. The 26 resale-based petitions were strictly financial and billing arrangements that involved no construction and were therefore considered to be exempt from the California Environmental Quality Act (CEQA) (Public Resources Code Sections 21000 et seq.). The Commission issued a draft Negative Declaration for the initial 40 facilities-based petitioners in October 1995. Comments on the draft Negative Declaration covered issues such as traffic congestion,public safety, cumulative impacts, aesthetic impacts, and physical wear on streets. These comments were addressed and the Negative Declaration was modified to some extent in response to the comments. In December 1995, Commission Decision D.95-12-057 adopted a final mitigated Negative Declaration finding that the proposed projects of the initial 40 facilities- based petitioners would not have potentially significant environmental effects with specified mitigation measures incorporated by the projects. Following the adoption.of D.95-12-057, the Commission received eight additional petitions for facilities-based services. The eight petitioners included cable television companies,resale-based providers approved by D.95-12-057, and other telecommunication companies. Following the public comment period,the Commission made minor modifications to the first Negative Declaration, and in September 1996,the Commission adopted the second Negative Declaration for these eight companies (D.96-09-072). (This Negative Declaration is sometimes referred to as "Negative Declaration II"). In January 1997, the Commission adopted a third Negative Declaration for eight more facilities-based petitioners. "Negative Declaration III"is virtually the same document as Negative Declaration Il because the proposed projects of the eight petitioners were no different from the projects proposed by the two groups of petitioners that preceded them. Following the issuance of Negative Declaration III, ten subsequent Negative Declarations, Negative Declaration IV(D.97-04-011),Negative Declaration V(D.97-06-100),Negative Declaration VI (D.97-09-110),Negative Declaration VII (D97-12-084),Negative Declaration IX (D.98-03-066),Negative Declaration X(D. 98-06-067),Negative Declaration 11 (D.98-09-66), and Negative Declaration 12 (D.98-12-083)and Negative Declaration 13 (D.99-03-050)have been adopted by the Commission in granting authority to provide facilities based local telecommunication services under essentially the same circumstances. (Negative Declaration VIII addressed telecommunication companies petitioning to provide services in the Roseville Telephone Company and Citizens Telephone Company of California service areas only). Negative Declaration IV addressed nine petitioners,Negative Declaration V addressed six petitioners,Negative Declaration VI addressed eight petitioners Negative Declaration VII addressed five petitioners,Negative Declaration VIII addressed eleven petitioners,Negative Declaration IX addressed eleven petitioners,Negative Declaration X addressed, two petitioners and Negative Declaration 11 addressed eight petitioners and Negative Declaration 12 addressed twelve petitioners. 2 000027 ..t �. � ZS i PRO=TECT DESCRIPTION Following the adoption of Negative Declaration 13, the Commission received nine more petitions/applications for facilities-based services. These petitioners are the subject of this Negative Declaration. (See Appendix B for a list of the current facilities-based petitioners.) Similar to the earlier petitioners,most of the current petitioners are initially targeting local telephone service for areas where their telecommunications infrastructure is already established, and therefore only minor construction is envisioned. Services provided will include but not be limited to voice, data, video,.internet and other telecommunications services. The petitioners will need to make some modifications to their existing facilities; these modifications are minor in nature, the most common being the installation of a switch that connects potential customers to outside systems. Switch installation is necessary because customers.receiving a particular type of service may not have access to local telephone networks. For example, customers receiving cable television service are presently unable to connect to local telephone networks because of the differences in modes of service. A switch ins=tallation by a cable television provider is one step that makes the connection possible. Switch installation is considered a minor modification because it typically involves a single installation within an existing central communication facility or building. Besides the minor modifications, some of the companies are planning to install their own fiber optic cables to provide adequate service. Cables will be installed within existing utility underground conduits or ducts, or attached to utility poles with existing overhead lines whenever possiM. Fibe wpfftc—cables are extremely thin, and existing conduits will likely be able to hold multiple cables. However, if existing conduits or poles are unable to accommodate additional cables,then new conduits or poles will need to be constructed by the petitioner. In this case, the petitioners will construct within existing utility rights-of-way. There is also the possibility that the petitioners may attempt to access other rights-of-way (such as roads)to construct additional conduits. Extension of existing rights-of-way into undisturbed areas is not likely, but a possibility. ` The installation of fiber optic cables into underground conduits will vary in complexity depending upon the conditions of the surrounding area For example, in urban, commercial areas, utility conduits can be accessible with minimal groundbreaking and installation simply requires stringing the cable through one endue conduit and connecting it to the desired end. In this case,major excavation of the right-of-way is unnecessary. However, there may also be conditions where access to the conduit will require trenching and excavation. N Some of the petitioners have plans to construct service boxes or cabinets which contain batteries for the provision of power or emergency power. The dimensions of the boxes vary, but basically range from three to five feet in height. Depending upon the type of technology and facilities operated by the petitioner, smaller service boxes (approximately 3 inches in height)would be used for power supply and backup power. Those petitioners who have no plans to use such 3 000028 . � � `a ;�' �. i boxes already have capable power and backup power within their existing facilities. The petitioners who will need such boxes, have committed to placing the boxes in existing buildings, or in underground vaults. If conditions do not permit building or underground installation, the petitioners would use small low-profile boxes that are landscaped and fenced. While most of the petitioners will initially compete for customers in urban, commercial and residential zones where telecommunication infrastructure is already in place, some petitioners state their intention or right to compete on a state wide basis wherever competition is permitted. However it is unclear at this time if all areas will be affected by the projects because many petitioners are not specific where they intend to compete in the long-run. ENVIRONMENTAL DETERMINATION An Initial Study was prepared to assess the projects'potential effects on the environment, and the respective significance of those effects. Based on the Initial Study, the CLCs'projects for competitive local exchange service have the potential to cause significant adverse effects,on the environment in the area of Land Use and Planning, Geological Resources, Water, Air Quality, Transportation and Circulation,Hazards,Noise,Public Services,Aesthetic and Cultural Resources. The projects will have less than a significant effect in other resource areas of the checklist. It should be noted that Findings 2 through 10 are for those projects which require work within existing utility rights-of-way for the purpose of modifying existing facilities or installing new facilities. Finding 1 is applicable for work outside of the existing utility rights-of- way. In response to the Initial Study, the following specific measures should be incorporated into the projects to assure that they will not have any significant adverse effects on the environment. (See Public Resources Code Section 11064.5.) As a general matter,many of the mitigation measures rely on compliance with local standards and the local ministerial permit process. Although local safety and aesthetic input is essential in minimizing the impact of the petitioner's construction, local jurisdictions cannot impose standards or permit requirements which would prevent petitioners from developing their service territories, or otherwise interfere with the statewide interest in competitive telecommunication service. Therefore, the petitioners'required.compliance with local permit requirements is subject to this limitation. The findings of the draft Negative Declaration were modified in response to comments Bled during the public comment period from Negative Declarations 11 and IV Changes are marked by italics. 1. The proposed projects could have potentially significant environmental effects for all environmental factors if a proposed project extends beyond the utility right-of-way into undisturbed areas or into other rights-of--way. ("Utility right-of-way" means any utility 4 000024L right-of-way, not limited to only telecommunication utility right-of-way.) For the most part, the petitioners do not plan to conduct projects that are beyond the utility right-of- way. However, should this occur, the petitioner shall file a Petition to Modify it's Certificate for Public Convenience and Necessity (CPCN). An appropriate environmental analysis of the impacts of these site specific activities shall be done. 2. The proposed projects will not have any significant effects on Population and Housing, Biological Resources, Energy and Mineral Resources, and Recreation if the proposed projects remain within existing utility right-of-way. There are no potential environmental effects in these areas, or adequate measures are incorporated into'the projects to assure that significant effects will not occur. 3. The proposed projects could have potentially significant environmental effects on Geological Resources because possible upgrades or installations to underground conduits may induce erosion due to excavation, grading and fill. It is unclear as to how many times underground conduits may be accessed by the petitioners, but it is reasonable to assume that constant excavation by various providers could result in erosion in areas where soil containment is particularly unstable. In order to mitigate any potential effects on geological resources, the petitioners shall comply with all local design,construction and safety standards by obtaining all applicable ministerial permits from the appropriate local agencies. In particular, erosion control plans shall be developed and implemented for areas identified as particularly unstable or susceptible to erosion. If more than one petitioner plans to excavate geologically sensitive areas, coordination of their plans shall be necessary to minimize the number and duration of disturbances. 4. The proposed projects could have potentially significant environmental effects on Water Resources because possible upgrades or installation to underground conduits may be in close proximity to underground or surface water sources. While the anticipated construction will generally occur within existing utility rights-of-way, the projects have the potential to impact nearby water sources if heavy excavation is required as the method of access to the conduits. In order to mitigate any potential effects on water resources, the petitioners shall comply with all local design,construction and safety standards. This will include consultation with all appropriate local, state and federal water resource agencies for projects that are in close proximity to water resources, underground or surface. The petitioners shall comply with all applicable local, state and federal water resource regulations. Appropriate site specific mitigation plans shall be developed by the petitioners if the projects impact water quality,drainage, direction, flow or quantity. If there is more than one petitioner for a particular area that requires excavation,coordination plans shall be required to minimize the number and duration of disturbances. 5 000030 5. The proposed projects could have potentially significant environmental effects on Air Quality because possible excavation efforts for underground conduits may result in vehicle emissions and airborne dust for the immediate areas of impact. This is especially foreseeable if more than one petitioner should attempt such work in the same locale. While the impact will be temporary,the emissions and dust could exceed air quality standards for the area. The petitioners shall develop and implement appropriate dust control measures during excavation as recommended by the applicable air quality management district. The petitioners shall comply with all applicable air quality standards as established by the affected air quality management districts. If there is more than one petitioner for a particular area that requires excavation,coordination plans shall be required to minimize the number and duration of disturbances. 6. The proposed projects could have potentially significant environmental impacts on Transportation and Circulation and Public Services because uncoordinated efforts by the petitioners to install fiber optic cable could result in a cumulative impact of traffic congestion, insufficient parking and hazards or barriers for pedestrians. This is foreseeable if the competitors choose to compete in the same locality and desire to install their own cables. If the selected area is particularly dense with heavy vehicular or pedestrian traffic, the impacts could be enormous without sufficient control and coordination. Uncoordinated efforts may also adversely impact the quality and longevity of public street maintenance because numerous excavation activity depreciates the life of the surface pavement. Impacts from trenching activity may occur in utility rights-of-way that contain other Public Services such as irrigation water lines. The petitioners' shall coordinate their efforts to install fiber optic cables or additional conduits so that the number of encroachments to the utility rights-of-way are minimized. These coordination efforts shall also include affected transportation and planning agencies to.coordinate other projects unrelated to the petitioners' projects. For example, review of a planning agency's Capital Improvement Plan (CIP) to identify impacted street projects would be an expected part of the coordination effort by the petitioner. Besides coordinating their efforts,the petitioners shall abide by all local construction, maintenance and safety standards (and state standards, if applicable) by acquiring the necessary ministerial permits from the appropriate local agency or CalTrans (if within a State right-of-way). Examples of these permits are excavation,encroachment and building permits. Appropriate construction start and end times, and dates if appropriate, 2 The petitioners discussed in this Negative Declaration shall coordinate with all CLCs including those listed in the first Negative Declaration adopted by the Commission(D.95-12-057)and all CLCs in future Negative Declarations. CLCs covered in the first Negative Declaration shall likewise be expected coordinate with those CLCs listed in this Negative Declaration or any subsequent one adopted by the Commission. 6 00003.1 shall be employed to avoid peak traffic periods and to minimize disruption, especially if the petitioners' work encroaches upon transportation rights-of-way. Petitioners shall consult with local agencies on appropriate restoration ofpublic service facilities that are damaged by the construction and shall be responsible for such restoration. 7. The proposed projects could have potentially significant hazard-related effects because uncoordinated construction efforts described above could potentially interfere with emergency response or evacuation plans. There is also potential for an increase in overhead lines and poles which carry hazard-related impacts. The same mitigation plan as described in the previous section is applicable here as well, and shall be augmented by notice to and consultation with emergency response or evacuation agencies if the proposed project interferes with routes used for emergencies or evacuations. The coordination efforts shall include provisions so that emergency or evacuation plans are not hindered. If the projects result in an increase in overhead communication lines,the petitioner shall obtain the necessary ministerial permits to erect the necessary poles to support the lines. The Commission shall include these facilities as part of its overhead line regular inspections so that the requirements of G.O. 95 are met. 8. The proposed projects could have potentially significant environmental effects on Noise because it is possible some projects may require excavation or trenching. Although. the effect is likely to be short-term,existing levels of noise could be exceeded. If the petitioner requires excavation,trenching or other heavy construction activities which would produce significant noise impacts, the petitioner shall abide by all applicable local noise standards and shall inform surrounding property owners and occupants (particularly school districts,hospitals and the residential neighborhoods) of the day(s)when most construction noise would occur. Notice shall be given at least two weeks in advance of the construction. 9. The proposed projects could have potentially significant environmental effects on aesthetics because it is possible that additional lines on poles in utility rights-of-way could become excessive for a particular area Aesthetic impacts may also occur in utility rights-of-way that are landscaped Moreover, there is potential for an increase in above grade utility service boxes or cabinets which also carry aesthetic impacts. Local aesthetic concerns shall be addressed by the petitioners for all facilities that are above-ground, in particular all types of service boxes or cabinets. The local land use or planning agency shall be consulted by the petitioner so that any site-specific aesthetic impacts are assessed and properly mitigated. For example, this may include restoration of the landscaped utility rights-of-wary 10. The proposed projects could have potentially significant environmental effects on 7 000032 cultural resources because situations involving additional trenching may result in disturbing known or unanticipated archaeological or historical resources. The petitioners shall conduct appropriate data research for known cultural resources in the proposed project area, and avoid such resources in designing and constructing the project. Should cultural resources be encountered during construction, all earthmoving activity which would adversely impact such resources shall be halted or altered so as to avoid such impacts, until the petitioner retains the service of a qualified archaeologist who will do the appropriate examination and analysis. The archeologist shall consult with appropriate federal, state and local agencies concerned with cultural resources,so that any potential impacts upon cultural resources are assessed and properly avoided or mitigated. The archeologist shall, in coordination with agencies, develop a plan for avoiding or mitigating any potential impacts upon those resources encountered. In summary, the Mitigation Measures recommended in this environmental determination are: A) All Environmental Factors: if a proposed project extends beyond the utility right-of- way into undisturbed areas or other right-of-way, the petitioner shall file a Petition to Modify its Certificate for Public Convenience and Necessity (CPCN). ("Utility right-of- way" means any utility right-of-way,not limited to only telecommunications utility right- of-way.) An appropriate environmental analysis of the impacts of these site specific activities shall be done. If the projects remain within the utility right-of-way,the following Mitigation Measures are ,recommended: B) General Cumulative Impacts: in the event that more than one petitioner seeks modifications or additions to a particular locality, the petitioners shall coordinate their plans with each other, and consult with affected local agencies so that any cumulative effects on the environment are minimized. These coordination efforts shall reduce the number and duration of disturbance to existing utility right-of-way. Regardless of the number of petitioners for a particular locality, the petitioner shall consult with,and abide by the standards established,by all applicable local agencies. Each petitioner shall file a quarterly report,one month prior to the beginning of each quarter,that summarizes the construction projects that are anticipated for the coming quarter. The summary will contain a description of the type of construction and the location for each project so that the local planning agencies can adequately coordinate multiple projects if necessary. The reports will also contain a summary of the petitioner's compliance with all Mitigation Measures for the projects listed. The quarterly reports will be filed with the local planning agencies where the projects are expected to take place and the Commission's Telecommunications Division. The Commission filing will be in the form of an informational advice letter. Subsequent quarterly reports shall also summarize the status 8 000033 ., : i , �-, t, - '. i � of the projects listed in previous quarterly report, until they are completed. C) Geological Resources: the petitioners shall comply with all local design construction and safety standards by obtaining all applicable ministerial permits from the appropriate local agencies including the development and approval of erosion control plans. These shall be developed and implemented for areas identified as particularly unstable or susceptible to erosion. If more than one petitioner plans to excavate sensitive areas, coordination of their plans shall be necessary to minimize the number of disturbances. The petitioner's compliance with this Mitigation Measure shall be included in its quarterly report. D) Water Resources: the petitioners shall consult with all appropriate local, state and federal water resource agencies.for projects that are in close proximity to water resources, underground or surface. The petitioners shall comply with all applicable local, state and federal water resource regulations including the development of site-specific mitigation plans should the projects impact water quality,drainage, direction, flow or quantity. If there is more than one petitioner for a particular area that requires excavation, coordination plans shall be required to minimize the number of disturbances. The petitioner's compliance with this Mitigation Measure shall be included in its quarterly report. E)Air Quality: the petitioners shall develop and implement appropriate dust control measures during excavation as recommended by the applicable air quality management district. The petitioners shall comply with all applicable air quality standards as established by the affected air quality management districts. If there is more than one petitioner for a particular area that requires excavation, coordination plans shall be required to minimize the number of disturbances. The petitioner's compliance with this Mitigation Measure shall be included in its quarterly report. F)Transportation and Circulation and Public Services: the petitioners shall coordinate their efforts to install fiber optic cables or additional conduits so that the number of disturbances to the utility rights-of-way are minimized. These coordination efforts shall include affected transportation and planning agencies to coordinate other projects unrelated to the petitioners'projects. For example, review of a planning agency's Capital Improvement Plan (CIP) to identify impacted street projects would be an expected part of the coordination effort by the petitioner. Besides coordinating their efforts, the petitioners shall abide by all local construction, maintenance and safety standards (and state standards, if applicable) by acquiring the necessary ministerial permits from the appropriate local agency and/or CalTrans (if within State right-of--way). Examples of these permits are excavation,encroachment and building permits. Appropriate construction start and end times, and dates if appropriate, shall be employed 3 See Footnote#2. J 9 0d00311 . � � 1�}. ,t to avoid peak traffic periods, especially if the petitioners' work encroaches upon transportation rights-of-way. Notice to the affected area(surrounding property owners and occupants) shall be given at least two weeks in advance of the construction. The notice will provide the time and dates of the proposed construction and discussion of potential impacts on traffic and circulation.Petitioners shall consult with local agencies on appropriate restoration ofpublic service facilities that are damaged by the construction and shall be responsible for such restoration. The notice required for Mitigation Measures F and H shall be consolidated. The petitioner's compliancewith this Mitigation Measure shall be included in its quarterly report. G) Hazards: the petitioners shall use the Transportation and Circulation mitigation measure and augment it by informing and consulting with emergency response or evacuation agencies if the proposed project interferes with routes used for emergencies or evacuations. The coordination effort shall include provisions so that emergency or evacuation plans are not hindered. If the projects result in an increase in overhead communication lines,the petitioner shall obtain the necessary ministerial permits to erect the necessary poles to support the lines. The Commission shall include these facilities as part of its overhead line regular inspections so that the requirements of G.O. 95 are met. The petitioner's compliance with this Mitigation Measure shall be included in its quarterly report. H) Noise: the petitioner shall abide by 01 applicable local noise standards and shall inform surrounding property owners and occupants,particularly school districts, hospitals and the residential neighborhoods, of the day(s)when most construction noise would occur if the petitioner plans excavation,trenching or other heavy construction activities which would cause any significant noise. Notice shall be given at least two weeks in advance of the construction. The notice required for Mitigation Measures F and H shall be consolidated. The petitioner's compliance with this Mitigation Measure shall be included in its quarterly report. I)Aesthetics: All applicable local aesthetic standards will be addressed by the petitioners for all facilities that are above-ground, in particular all types of service boxes or cabinets: The local land use agency shall be consulted by the petitioner so that any site-specific aesthetic impacts are assessed and properly mitigated by the petitioner. For example, this may include restoration of the landscaped utility rights-of-way. Petitioner's compliance with this Mitigation Measure shall be included in its quarterly report. J) Cultural Resources: The petitioners shall conduct appropriate data research for known cultural resources in the proposed project area, and avoid such resources in designing and constructing the project. Should cultural resources be encountered during construction, all earthmoving activity which would adversely impact such resources shall be halted or altered until the petitioner retains the service of a qualified archaeologist who will do the appropriate examination and analysis. The archaeologist will provide f, 10 000035 proposals for any procedures to mitigate the impact upon those resources encountered. The treatment plan will be designed through coordination with the appropriate federal, state and local agencies. The petitioner's compliance with this Mitigation Measure shall be included in its quarterly report. General Statement for all Mitigation Measures: Although local safety and aesthetic input is essential in minimizing the impact of the petitioner's construction, local jurisdictions cannot impose standards or permit requirements which would prevent petitioners from developing their service territories, or otherwise interfere with the statewide interest in competitive telecommunication service. Therefore, the petitioners'required compliance with local permit requirements is subject to this limitation. With the implementation of the mitigation measures listed in A)-.1) above,the Commission should conclude that the proposed projects will not have one or more potentially significant environmental effects. The Commission should.also adopt a Mitigation Monitoring Plan which will ensure that the Mitigation Measures listed above will be followed and implemented. The Mitigation Monitoring Plan is included with this Negative Declaration as Appendix C. Natalie Walsh, Program Manager Analysis Branch Energy Division Date 11 0000361 INITIAL STUDY CHECKLIST .ivironmental Factors Potentially Affected: The environmental factors checked below would be potentially affected by this project, involving at least one impact that is a "Potentially Significant Impact"as indicated by the checklist on the following pages. 0 Land Use and Planning 0 Transportation/Circulation 0 Public Services ❑ Population and Housing ❑ Biological Resources 0 Utilities and Service Systems 0 Geological Problems ❑ Energy and Mineral Resources 0 Aesthetics 0 Water 0 Hazards 0 Cultural Resources 0 Air Quality © Noise ❑ Recreation 0 Mandatory Findings of Significance Note: For construction outside of the utility rights-of-way,potential environmental impacts are too variable and uncertain to be specifically evaluated in this Initial Study,but are addressed in Environmental Determination 1 and Mitigation Measure(A)in the.Negative Declaration. jetermination: On the basis of this initial evaluation: I find that the proposed projects COULD NOT have a significant effect on the environment,and a NEGATIVE DECLARATION will be prepared. ❑ I find that although.the proposed project could have a significant effect on the environment,there will not be•a significant effect in this case be- cause the mitigation measures described on an attached sheet have been added to the projects. A NEGATIVE DECLARATION will be prepared. I find that the proposed projects MAY have a significant effect on the environment,and an ENVIRONMENTAL IMPACT REPORT is required. ❑ I find that the proposed projects MAY have a significant effects)on the environment, but at least one effect 1)has been adequately analyzed in an earlier document pursuant to applicable legal standards,and 2)has been addressed by mitigation measures based on an earlier analysis as described on attached sheets, if the effect is a"potentially significant impact"or "potentially significant unless mitigated." An ENVIRONMENTAL IMPACT REPORT is required,but it must analyze only the effects that remain to be addressed. ❑ . l 000037 I find that although the proposed project could have a significant effect on the environment, there WILL NOT be a significant effect in this case because all )tentially significant effects(a)have been analyzed adequately in an earlier EIR pursuant to applicable standards and(b)have been avoided or mitigated pursuant to that earlier EIR, including revisions or mitigation measures that are imposed upon the proposed project. p Signature /V- Wa�L. Date Natalie Walsh Program Manager Printed Name Analysis Branch Energy Division California Public Utilities Commission 2 000038 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact I. LAND USE AND PLANNING. Would the proposal: a) Conflict with general plan designation or zoning? O O ❑ O b) Conflict with applicable environmental plans or policies adopted by agencies with jurisdiction _ over the project? ❑ p ❑ ❑ c) Be incompatible with existing land use in the vicinity? ❑ 0 O ❑ d) Affect agricultural resources or operations (e.g. impacts to soils or farmlands,or impacts from incompatible land uses)? ❑ 1XI ❑ . O e) Disrupt or divide the physical arrangement of an established community(including a low- income or minority community)? O O ❑ ❑ The proposed projects are not anticipated to have any significant impacts on general or environmental plans, zoning,existing land usage,or agricultural resources. The projects are essentially modifications to existing facilities within established utility rights-of-way. Since these rights-of-way are already designed to be in compliance with zoning and land use plans,disruption of such plans are not foreseeable. -In the event that the petitioners need to construct facilities that extend beyond the rights-of-way, see Mitigation Measure A in the Negative Declaration. 11. POPULATION.AND HOUSING. Would the proposal: a) Cumulatively exceed official regional or local population projections? ❑ O ❑ b) Induce substantial growth in an area either directly or indirectly(e.g.through projects in an undeveloped area or extension of major infrastructure? ❑ ❑ Cl El c) Displace existing housing, especially affordable housing? ❑ ❑ ❑ 'e proposed projects will not have impacts upon population or housing. The purpose of the projects is to 3 . 0000319 • • introduce competition into the local telephone service market. Since competition will be generally statewide and not centered in one locale, it is not anticipated that the projects will have an effect on population projections or L,)using availability of any particular area. The areas that will not initially receive the competition are rural, less ,pulated areas; it cannot be seen that the initial lack of competitive services in these areas will result in significant movements of people to areas where competition will be heavy. Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact III.GEOLOGIC PROBLEMS. Would the proposal result in or expose people to potential impacts involving: a) Fault rupture? ❑ ❑ ❑ p b) Seismic ground shaking? ❑ ❑ ❑ p c) Seismic ground failure, including liquefaction? ❑ ❑ ❑ p d) Seiche,tsunami, or volcanic hazard? ❑ ❑ ❑ Q e) Landslides or mudflows? ❑ p ❑ ❑ Erosion, changes in topography or unstable soil conditions from excavation, grading, or fill? ❑ ® ❑ ❑ g) Subsidence of land? ❑ ❑ ❑ p h) Expansive soils? ❑ ❑ ❑ i) Unique geologic or physical features? ❑ ❑ ❑ O The projects will be constructed within existing utility facilities or established utility rights-of-way and will therefore not expose people to new risks for any of these impacts, except possibly erosion. Should additional cable facilities require the installation of new or upgraded conduits,trenching,excavation,grading and fill could be required. For appropriate mitigation,see Mitigation Measures (B)and(C) for details in the Negative Declaration. IV. WATER. Would the proposal result in: a) Changes in absorption rates,drainage patterns, or the rate and amount of surface runoff? E3 ❑ ❑ b) Exposure of people or property to water related hazards such as flooding? ❑ C7 ❑ 4 . 000040 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact c) Discharge into surface waters or other alteration of surface water quality(e.g.temperature,dissolved oxygen or turbidity)? O O ❑ 13 d) Changes in the amount of surface water in any .water body? ❑ ❑ ❑ p e) Changes in currents,or the course or direction of water movements? ❑ ❑ ❑. f) Change in the quantity of ground waters,either through direct additions or withdrawals,or through interception of an aquifer by cuts or excavations or through substantial loss of groundwater recharge capability? O © ❑ ❑ g) Altered direction or rate of flow of groundwater? Cl . 0 13 ' ❑ h) Impacts to groundwater quality? . ❑ ❑ ❑ i) Substantial reduction in the amount of groundwater otherwise available for public water supplies? O ❑ ❑ The projects will involve alterations to existing telecommunication facilities(underground conduits or overhead poles)but could expose additional risks if more than one petitioner decide to compete in the same locality. Efforts to install cables,or if necessary, new conduits, in utility rights-of-way that are in close proximity to an underground or surface water sources could carry significant effects for quality,flow,quantity,direction or drainage if done improperly and without coordination. See Mitigation Measures(B)and(D) in the Negative Declaration for details. V. AIR QUALITY. Would the proposal: a) Violate any air quality standard or contribute to an existing or projected air quality violation? O © ❑ ❑ b) Expose sensitive receptors to pollutants? ❑ © ❑ ❑ 5 000041 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact c) Alter air movement, moisture,or temperature,or cause any change in climate? ❑ ❑ O C] d) Create objectionable odors? ❑ ❑ O O If the projects do not require excavation or trenching of underground conduits, they will not have an effect upon air quality,movement,temperature or climate. However, should the projects require such work and, if more than one petitioner decide to work in the same locale,there is potential for an increase in dust in the immediate area. See Mitigation Measures(B)and(E)in the Negative Declaration for details. VI.TRANSPORTATION/CIRCULATION. Would the proposal result in: a) Increased vehicle trips or traffic congestion? ❑ © ❑ ❑ b) Hazards to safety from design features(e.g. sharp curves or dangerous intersections)or incompatible uses(e.g. farm equipment)? ❑ ® ❑ O c) Inadequate emergency access or access to nearby uses? ❑ © ❑ ❑ d) Insufficient parking capacity on-site'or off-site? ❑ 0 O ❑ e) Hazards or.barriers for pedestrians or bicyclists? a a ❑ ❑ f) Conflicts with adopted policies supporting alternative transportation(e.g.bus turnouts, bicycle racks)? ❑ ❑ ❑ g) Rail,waterborne or air traffic impacts? O ® ❑ O The petitioners plan to modify existing utility conduits or poles within existing utility rights-of-way initially in urban,commercial zones and residential areas. Modification of these facilities by a single party does not present significant impacts upon traffic or circulation since the installation process is not expected to be lengthy. However,if more than one of the petitioners decide to compete in the same locality,their efforts to install their own cables will have a significant cumulative effect on circulation, especially in dense,urban commercial areas. As a result, increases in traffic congestion, insufficient parking,and hazards or barriers for pedestrian are possible. See Mitigation Measures(B)and(F) in the Negative Declaration for details. 6 000042 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact VII. BIOLOGICAL RESOURCES. Would the proposal result in impacts to: a) Endangered,threatened,or rare species or their habitats(including but not limited to plants, fish, insects,animals, and birds)? ❑ ❑ Cl b) Locally designated species(e.g. heritage trees)? ❑ ❑ ❑ c) Locally designated natural communities(e.g. oak forest, coastal habitat,etc.)? ❑ ❑ ❑ d) Wetland habitat(e.g. marsh, riparian and vernal pool)? ❑ ❑ ❑ e) Wildlife dispersal or migration corridors? ❑ ❑ El O The projects will not affect any biological resources since all anticipated work will occur within existing utility facilities or established utility rights-of-way. Established utility rights-of-way are assumed to be outside of :ally designated natural communities, habitats or migration corridors. Vill. ENERGY AND MINERAL RESOURCES. Would the proposal result in: a) Conflict with adopted energy conservation plans? ❑ ❑ ❑ b) Use non-renewable resources in a wasteful and inefficient manner? ❑ ❑ ❑ c) Result in the loss of availability of a known mineral resource that would be of future value to the region and the residents of the State? L] ❑ ❑ The projects will no impact upon mineral resources or the use of energy. The projects provide competitive telecommunication services that have no direct relationship to efficient energy use or mineral resources. The installation of additional fiber optic cables are within existing facilities or rights-zf--way that are assumed to have adequate mitigation designs to avoid impacts on any mineral resources within proximity. 000043 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact IX. HAZARDS. Would the proposal involve: a) A risk of accidental explosion or release of hazardous substances(including, but not limited to: oil, pesticides, chemicals or radiation)? O O ❑ El b) Possible interference with an emergency response plan or emergency evacuation plan? O [XI O ❑ c) The creation of any health hazard or potential health hazard? ❑ ❑ ❑ p d) Exposure of people to.existing sources of potential health hazards? ❑ O O p e) Increased fire hazard in areas with flammable brush, grass, or trees? O 17 ❑ 121 to installation of fiber optic cables can be a quick, clean and simple procedure with little use of heavy machinery. However there may be situations where excavation and trenching of underground conduits is necessary if the conduits are not easily accessible. Should this occur, uncoordinated efforts by the-petitioners in one concentrated area could potentially affect emergency response or evacuation plans for that locale. See Mitigation Measures(B)and(G) in the Negative Declaration for details. Once the project is completed,the additional cables do not represent any additional hazards to people nor do they increase the possibility of fires. X.NOISE. Would the proposal result in: a) Increases in existing noise levels? O ®. O ❑ b) Exposure of people to severe noise levels? O ® O ❑ The anticipated projects can be a quick and simple procedure,but in some cases could require heavy machinery or construction activity such as excavation,trenching,grading and refill. There is also the possibility that uncoordinated efforts by the petitioners in one locale could increase existing noise levels, if their activities involve the construction described. See Mitigation Measures(B)and(H) in the Negative Declaration for details. 8 000044 Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact XI. PUBLIC SERVICES. Would the proposal have an effect upon,or result in a need for new or altered government services in any of the following areas: a) Fire protection? ❑ ❑ ❑ [] b) Police protection? ❑ ❑ ❑ O c) 'Schools? ❑ ❑ O d) Maintenance of public facilities, including roads? ❑ O ❑ ❑ e) Other government services? ❑ ❑ ❑ The proposed projects will increase competition in the local telephone service. The construction associated with the projects have potential impacts on the maintenance of public streets and roads. Numerous disturbances-to the street surfaces depreciates the quality and longevity of the pavement. Trenching projects may also impact other existing public service facilities (e.g. irrigation lines) in the utility rights-of-way. Mitigation Measure F addresses this impact. XI1. UTILITIES AND SERVICE SYSTEMS. Would the proposal result in a need for new systems or supplies, or substantial alterations to the following utilities: a) Power or natural gas? O ❑ O b) Communication systems? O OO ❑ O c) Local or regional water treatment or distribution facilities? ❑ O. ❑ O d) Sewer or septic tanks? ❑ O ❑ e) Storm water drainage? O ❑ ❑ m f) Solid waste disposal? ❑ ❑ ❑ 0 g) Local or regional water supplies? ❑ ❑ ❑ The proposed projects could substantially alter communication systems in the event that existing facilities are unable to accommodate all of the participants in the market. If this should occur,additional conduits or poles for t-lecommunication equipment will need to be inserted in existing utility rights-of-way or the petitioners may seek .:ry to other rights-of-way. If the petitioners are forced to construct outside of the existing utility rights-of-way, 9 000045 Mitigation Measure A is applicable. For work within the rights-of-way, see Mitigation Measure B in the Negative . Declaration. Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact Incorporated Impact Impact XIII. AESTHETICS. Would the proposal: a) Affect a scenic vista or scenic highway? ❑ ❑O ❑ ❑ b) Have a demonstrated negative aesthetic effect? ❑ © ❑ ❑ c) Create light or glare? ❑ ❑ ❑ p The proposed projects will occur within utility rights of way that will be either be undergrounded or on existing poles. Undergrounded facilities will have no demonstrated negative aesthetic effects. However, landscaped utility rights-of-way may be impacted by trenching activities. Additional lines on the poles may be a concern, but the proposed cables are not easily discernible and will unlikely have a negative impact. The only scenario where an aesthetic effect can occur is if the number of competitors for a particular area become so heavy that the cables on the poles become excessive. There is potential for an increase in service.boxes if the boxes cannot be installed within buildings or underground. Should this occur,the petitioners should follow Mitigation Measures(B)and (1) as described in the Negative Declaration. XIV.CULTURAL RESOURCES. Would the proposal: a) Disturb paleontological resources? ❑ O ❑ ❑ b) Disturb archaeological resources? ❑ 0 ❑ ❑ c) Affect historical resources? ❑ © ❑ ❑ d) Have potential to cause a physical change which would affect unique ethnic cultural values? ❑ ❑O ❑ ❑ e) Restrict existing religious or sacred uses within the potential impact area? ❑ 0 ❑ ❑ The projects will involve existing utility facilities or established rights-of-way that are assumed to be clear from any paleontological, historical or archaeological resources. However,some projects may require excavation or trenching of utility fights-of-way,or outside the rights-of-way. If brown or unanticipated cultural resources are encountered during such work,then the Mitigation Measures(B)and(J)should be followed. See Negative Declaration for details. 10 0n0n4r Potentially Significant Potentially Unless Less Than Significant Mitigation Significant No Impact incorporated Impact Impact XV. RECREATION. Would the proposal: a) Increase the demand for neighborhood or regional parks or other recreational facilities? ❑ ❑ ❑ El b) Affect existing recreational opportunities? ❑ ❑ ❑ CX7 The projects will have no impact on recreational facilities or opportunities since these resources have no direction relationship to increased competition in local telephone services. XVI. MANDATORY FINDINGS OF SIGNIFICANCE. a) . Does the project have the potential to degrade the quality of the environment,substantially reduce the habitat of a fish or wildlife species,cause a fish or wildlife population to drop below self-sustaining levels,threaten to eliminate a plant or animal community,reduce the number or restrict the range of a rare or endangered plant or animal,or eliminate important examples of the major periods of California history or prehistory? ❑ ❑ ❑ 0 b) Does the project have the potential to achieve short-term,to the disadvantage of long-term, environmental goals? ❑ ❑ ❑ c) Does the project have impacts that are individually limited,but cumulatively considerable?("Cumulatively considerable"means that the incremental effects of a project are considerable when viewed in connection with the effects of past projects,the effects of other current projects,and the effects of probably future projects.) ❑ a ❑ ❑ d) Does the project have environmental effects which will cause substantial adverse effects on human beings, either directly or indirectly? ❑ ❑ ❑ II 00004 '7 CREAS ti A N C7 is .-fE::LIEPrluril* t ;kc sioN UBLIC U-TIL11 UES COMM'S CALIFORNIA 7( UW%.= EA*ffoo,OOU,,OAp4gS(NPA) AAEA F4UIASC'k►,LM APEA LATA SOU,4oAFtIES r 11,11KCT ASSA r air N an, COJM." wrvkucT*"S w vos CCCOO*4^TE zlw WXW.WAf%Apo,* AM* a 6A WOW"~ WoW---w =,- t :7 C-195. _go 77-A! 4 0481� APPENDIX B PROJECT SPONSORS AND ADDRESSES 1. Eagle Communications of California, LLC 60 East 56"Street 1.95-04-044 (Pet 132) New York,NY 10022 2. US Data Highway Corp. 1113 Hopkins Way 1.95-04-044 (Pet. 133) Pleasanton,CA 94566 3. Seren Innovations, Inc. 15 South 5'b Street,Suite 500 1.95-04-044 (Pet. 134) Minneapolis,MN 55402 4. HTC Communications,LLC 2131 N.Lamer Stmt 1.95-04-044 (Pet. 135) Burbank,CA 91504 5. Network Plus, Inc. 234 Copeland Street 1.95=04-044 (Pet. 136) Quincy,MA 02169 .6. Campuslink Communications Systems, Inc. 1530 Eisenhower Place 1.95-04-044 (Pet. 137) Ann Arbor, MI 48108 7. XL Networks,Inc. 909 Via Mirola 1.95-04-044 (Pet. 138) Palos Verdes Estates,CA 90274 8. Triad Communications Corporation 2420 Sand Hill Road 1.95-04-044 (Pet. 139) Menlo, Park,CA 94025 9. NTC Network,LLC 700 Wilshire Boulevard,7' Floor 1.95-04-044 (Pet. 140) Los Angeles, CA 90017 000049 Appendix C Mitigation Monitoring Plan Competitive Local Carriers (CLCs) Projects for Local Exchange Telecommunication Service throughout California Introduction: The purpose of this section is to describe the mitigation monitoring process for the CLCs' proposed projects and to describe the roles and responsibilities of government agencies in implementing and enforcing the selected mitigation measures. California Public Utilities Commission (Commission): The Public Utilities Code confers authority upon the Commission to regulate the terms of service and safety, practices and equipment of utilities subject to its jurisdiction. It is the standard practice of the Commission to require that mitigation measures stipulated as conditions of approval be implemented properly,monitored, and reported on. Section 21081.6 of the Public Utilities Code requires a public agency to adopt a reporting and monitoring program when it approves a project that is subject to the adoption of a mitigated negative declaration. The purpose of a reporting and monitoring program is to ensure that measures adopted to mitigate or avoid significant environmental impacts are implemented. The Commission views the reporting and monitoring program as a working.guide to facilitate not only the implementation of mitigation measures by the project proponents,but also the monitoring, compliance and reporting activities of the Commission and any monitors it may designate. The Commission will address its responsibility under Public Resources Code Section 21081.6 when it takes action on the CLCs' petitions to provide local exchange telephone service. If the Commission adopts the Negative Declaration and approves the petitions, it will also adopt this Mitigation Monitoring Plan as an attachment to the Negative Declaration. Project Description: The Commission has authorized various companies to provide local exchange telephone service in competition with Pacific Bell,GTE California, Roseville Telephone Company and Citizens Telephone Company of California. The current petitioners notified the Commission of their intent to compete in the territories throughout California, all of which are facilities-based services meaning that they propose to use their own facilities to provide service. 000050 Since many of the facilities-based petitioners are initially targeting local telephone service for areas where their telecommunications infrastructure is already established, very little construction is envisioned. However, there will be occasion where the petitioners will need to install fiber optic cable within existing utility underground conduits or attach cables to overhead lines. There is the possibility that existing utility conduits or poles will be unable to accommodate all the planned facilities, thereby forcing some petitioners to build or extend additional conduits into other rights-of-way, or into undisturbed areas. For more details-on the project description please see Project Description in the Negative Declaration. Roles and Responsibilities: As the lead agency under the California Environmental Quality Act(CEQA), the Commission is required tomonitor this project to ensure that the required mitigation measures are implemented. The Commission will be responsible for ensuring full compliance with the provisions of this monitoring program and has primary responsibility for implementation of the monitoring program. The purpose of this monitoring program is to document that the mitigation measures required by the Commission are implemented and that mitigated environmental impacts are reduced to insignificance or avoided outright. Because of the geographic extent of the proposed projects, the Commission may delegate duties and responsibilities for monitoring to other environmental monitors or consultants as deemed necessary. For specific enforcement responsibilities of each mitigation measure, please refer to the Mitigation Monitoring Table attached to this plan. The Commission has the ultimate authority to halt any construction, operation,or maintenance activity associated with the CLC's local telephone service projects if the activity is determined to be a deviation from the approved project or adopted mitigation measures. For details refer to the mitigation monitoring plan discussed below. Mitigation Monitoring Table: The table attached to this plan presents a compilation of the Mitigation Measures in the Negative Declaration. The purpose of the table is to provide the monitoring agencies with a single comprehensive list of mitigation measures, effectiveness criteria,the enforcing agencies, and timing. Dispute Resolution Process: The Mitigation Monitoring Plan is expected to reduce or eliminate many potential disputes. However, in the event that a dispute occurs,the following procedure will be observed: 000051 Step 1: Disputes and complaints(including those of the public) shall be directed first to the Commission's designated Project Manager for resolution. The Project Manager will attempt to resolve the dispute. Step 2: Should this informal process fail, the Commission Project Manager may initiate enforcement or compliance action to address deviation from the proposed project or adopted Mitigation Monitoring Program. Step. 3: If a dispute or complaint regarding the implementation or evaluation of the Mitigation Monitoring Program or the Mitigation Measures cannot be resolved informally or through enforcement or compliance action by the Commission, any affected participant in the dispute or complaint may file a written "notice of dispute" with the Commission's Executive Director. This notice shall be filed in.order to resolve the dispute in a timely manner, with copies concurrently served on other affected participants. Within 10 days of receipt, the Executive Director or designee(s)shall meet or confer with the filer and other affected participants for purposes of resolving the dispute. The Executive Director shall issue an Executive Resolution describing his decision, and serve it on the filer and the other participants. Parties may also seek review by the Commission through existing procedures specified in the Commission's Rules of Practice and Procedure, although a good faith effort should first be made to use the foregoing procedure. Mitigation Monitoring Program: 1.As discussed in Mitigation Measure B, the petitioners shall file a quarterly report which summarizes those projects which they intend to construct for the coming quarter. The report will contain a description of the project and its location,and a summary of the petitioner's compliance with the Mitigation Measures described in the Negative Declaration. The purpose of the report is to inform the local agencies of future projects so that coordination of projects among petitioners in the same locality can be done. The quarterly report shall be filed with the appropriate planning agency of the locality where the project(s) will occur. The report shall also be filed as an informational advice letter with the Commission's Telecommunications Division so that petitioner compliance with the Mitigation Measures are monitored.. .In order to ensure that the Mitigation Measures are fulfilled,the Commission will make periodic reviews of the projects listed in quarterly reports. The projects will be generally chosen at random,although the Commission will review any project at its discretion. The reviews will follow-up with the local jurisdictions so that all applicable Mitigation Measures are addressed. 3 . 000052 ' !.. .t•; If any project is expected to go beyond the existing utility rights-of-way, that project will require a separate petition to modify the CPCN. The petitioner shall file the petition with the Commission and shall also inform the affected local agencies in writing. The local agencies are also responsible for informing the Commission of any project listed in the quarterly reports which may potentially go out of the existing utility right-of-way. As discussed in Mitigation Measure A, a complete environmental review of the project will be triggered under CEQA, with the Commission as the lead agency. .2. In the event that the petitioner and the local agency do not agree if a project results in work outside of the utility rights-of-way, the Commission will review the project and make the final determination. See Dispute Resolution Process discussed above. 3. For projects that are in the utility rights-of-way,the petitioners shall abide by all applicable local standards as discussed in the Mitigation Measures. If a petitioner fails to comply with local regulatory standards by either neglecting to obtain the necessary permits, or by neglecting to follow the conditions of the permits,the local agency shall notify the Commission and Dispute Resolution Process begins.. 4. The Commission is the final arbiter for all unresolvable disputes between the local agencies and the petitioners. If the Commission finds that the petitioner has not complied with the Mitigation Measures in the Negative Declaration, it may halt and terminate the project. 4 000053 �; c , v •Y N V C o S _ 0 N 3 m a N O N 40 V C C Co C H b Co °i 4 a+ a m v U J J Uo J a m n O _ A O C C t 4 -��. 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J = a+'21 _ o ,� tf 7 Q m m a H m o a o U W J +[ m t1. < W `o E m V U o E m - t7 a v `o+ S a m `o > t 000054 p.03iO4 A 70-3 3 2200 GpUG MA'��1?~2001 •c oG K� o 4 C � w .y o ,;•'Ili%- +YfG• J m 63 to N �•O Q � '�m �•O r, m N ✓ G y m tR � m W i G Q O dO J r i mgo 13 m to le 15 16 w Fs c S & m � S m G ` 1 E G 7 t W t wa a 6 Q u+ U ; p t C 'O a C1 7 G N w o f ° c g a o � m c A � mg m ?i �d iS O toV m . M m O O f m G � pI�£ O mVO g � �, � n g a � •oc� �y � � g � •• D� io p, To N tb Y o o a { ° n m m o O o .00 LP It r. r� }po is J61 aL m a °eo 2tyq� 13 c A a 0 to C 0 � s $ E ,; d 90 s 16% L� o fin ca x o• t {�k v lot E�D Op �ppE � EXHIBIT B BEFORE THE PUBLIC UTILITIES COMNIISSION OF THE STATE OF CALIFORNIA In the Matter of the Petition ) of Serer Innovations,Inc. for a ) Certificate of Public Convenience and ) I.95-04-044 Necessity to provide Competitive Local ) Petition No. Exchange,IntraLATA and InterLATA ) Service ) . PETITION FOR CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY Peter Glass, Esq. Peter A. Casciato General Counsel A Professional Corporation Seren Innovations, Inc. 8 California Street, Suite 701 15 South 5thStreet, Suite 500 San Francisco CA 94111 _ Minneapolis MN 55402 Telephone: (415)291-8661: Telephone: (612) 330-6648 Facsimile: (415)291-8165 Facsimile: (612)330-5827 DATED: March 4, 1999 00005'1 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA In the Matter of the Petition ) of Seren Innovations,Inc. for a ) Certificate of Public Convenience and ) I.95-04-044 Necessity to provide Competitive Local ) Petition No. Exchange,IntraLATA and InterLATA ) Service ) l PETITION FOR CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY Seren Innovations, Inc. ("Petitioner"),hereby respectfully requests a Certificate of Public Convenience and Necessity("CPCN")for authority to provide competitive local exchange ("CLC"), intraLATA and inter-State interLATA services in those geographical areas opened for local exchange competition as determined by this Commission. This Petition is filed pursuant to California Public Utilities Code Section 1001,Articles 4 and 5 of the Rules of Practice and Procedure of the Public Utilities Commission,and relevant Commission Decisions. By this Petition, Petitioner demonstrates that it possesses the sufficient technical experience and financial ability to provide the subject services,and that it complies with all legal and regulatory requirements for the requested CPCN. Pursuant to D.95-07-054,subsequent orders in R.95-04-043/I.95-04-044 to develop a competitive telecommunications market,Article I of Chapter 5 of the Public Utilities Code, and Sections 15-18 of the Commission's Rules of Practice and Procedure, Petitioner provides the following information: 1. IDENTITY OF PETITIONER [Rule 15(a)] Petitioner's name is Seren Innovations,Inc. It is a corporation created,organized and 1 000058 existing under the laws of the State of Minnesota,with its principal place of business located at 15 South 5t'Street, Suite.500,Minneapolis, MN 55402. 2. CORRESPONDENCE [Rule 15(b)] Correspondence and communications regrading this Petition should be sent to: Peter A. Casciato A Professional Corporation 8 California Street, Suite 701 San Francisco CA 94111 Telephone: (415)291-8661 Facsimile: (415)291-8165 With a copy to: Peter Glass,Esq. General Counsel Seren Innovations,Inc. 15 South Th Street, Suite 500 Minneapolis MN 55402 Telephone: (612) 330-6648 Facsimile: (612) 330-5827 3. DESCRIPTION OF SERVICE [Rule 151 Consistent with the requirements of D.95-07-054 and other decisions in R.95-04- 043/1.95-04-044, as well as Commission decisions pertinent to intraLATA toll and interLATA resale, Petitioner intends to provide the following services: 1. Local Exchange Service-This service will give residential and business users the ability to originate and terminate calls to other users with access to the local exchange network. The local exchange service provided by Petitioner will also enable users to select the interexchange carrier of their choice. 2. Interexhange Carrier Access Service-This service will allow 2 00O059 interexchange carriers to interconnect on a switched and dedicated basis with the local exchange network to originate and terminate calls. 3. Interexchange Service-This service will enable residential and business users to complete calls between exchanges within Petitioner's service territories. 4. Long Distance Resale-This service will be provided via the purchase of long distance service from facilities-based interexchange carriers. That service will then be resold to residential and business users. 4. CERTIFICATE OF QUALIFICATION AS FOREIGN CORPORATION [Rule 16(a)] A certified copy of the Petitioner's current Certificate of Qualification as a Foreign Corporation authorized to do business in California is attached to this Petition as Exhibit 1, as is a copy of its Articles of Incorporation. Petitioner is a wholly owned subsidiary of Northern States Power Company("NSP") which, among other things,provides electric generation, transmission and distribution facilities in Minnesota, Wisconsin,North Dakota, South Dakota and Michigan. 5. DESCRIPTION OF THE PROPOSED CONSTRUCTION OR EXTENSION [Rule 18(a)] Petitioner initially proposes to construct a hybrid fiber coaxial ("HFC") network in Contra Costa County capable of providing its customers the full range of telecommunications services, including those sought herein,as well as other communications not regulated by this Commission, such as cable television. The geographical extent of Petitioner's planned facilities- 3 000060 based network is illustrated by the service area map attached as Exhibit 2A to this Petition.' Petitioner, initially,will lease switching equipment and associated facilities to provide local exchange service. Thus,there will be virtually no construction or installation activities associated with that equipment, which will be carried out within existing commercial office space and will be routine in nature. 6. LIST OF COMPETING CARRIERS AND LOCAL AUTHORITIES [Rule 18(b)] As indicated by the appended certificate of service,Petitioner certifies that a copy of this Petition has been mailed to the official service list in R.95-04-043/I.95-04-044 as well as those facilities-based CLCs presently authorized by the Commission known to the Petitioner. Petitioner requests relief from the provisions of Rule.1 5(b)that require service of this Petition on cities and counties in California where its services will be provided given that Petitioner will not construct or extend any facilities to provide the proposed services. That relief has been granted for similar Petitions in D.91-04-046 (April 24, 199 1) and has routinely been allowed for other statewide telecommunications certificate Petitions filed before this Commission and in R-95-04- 043/1.95-04-044. 7. PROPOSED AREA OF SERVICE [Rule 18(c)] Attached to this Petition as Exhibit 2A is a map showing the approximate location of Petitioner's planned facilities-based local exchange service area. Exhibit 2B encompasses ' To the extent Petitioner cannot extend its local exchange services to a bonafide prospective customer over Petitioner's own network facilities,Petitioner may purchase bundled services or unbundled network elements from other ILECs or CLECs,if available at economical prices. 4 000061 Petitioner's projected resale area. 8. IDENTIFICATION OF REQUIRED FRANCHISES AND HEALTH AND SAFETY PERMITS [Rule 18(d)] No municipal franchise will be required by Petitioner to provide the proposed local exchange and intrastate interexchange telecommunications services. In accordance with applicable state and local requirements, Petitioner will secure any necessary health and safety permits for the provision of services as described above in connection with the deployment of its network. Additionally, Petitioner's cable television operations, in accordance with applicable state and local law, will obtain the requisite health and safety permits related to the cable television plant to be made available for the use of Petitioner. 9. STATEMENT OF PUBLIC INTEREST [Rule 15(e)] By its issuance of Decisions 95-07-054, 95-12-056 and 96-02-072,the Commission recognizes the benefits of competition for local exchange and intraLATA services. As a result, the Commission has granted Petitions for certificates to over 100 facilities-based and resale CLECs to provide local exchange and intraLATA and related services. Petitioner's proposed operations will serve the public interest by providing users of local exchange, intraLATA and interLATA service a further choice of carriers and high quality service, expanding the availability of technologically-advanced communications facilities in the state. 10. ESTIMATED ANNUAL FIXED AND OPERATING COSTS,ECONOMIC FEASIBILITY& FINANCIAL STATEMENT AND QUALIFICATIONS [Rules 17 and 18(fl, (g)] Petitioner has set forth its most recent financial statement as part of Exhibit 3. Pursuant to General Order 66-C,Petitioner has requested confidential treatment of its financial statement. 5 000062 Petitioner also submits, as Exhibit 4,the most recent SEC Form l OQ of its ultimate parent,NSP. Thus,Petitioner has cash or cash equivalents in excess of$100,000,as required by Commission Local Rule 4(B) as defined in Appendix C, thereto, and is,therefore, financially qualified to offer its services. 11. PROPOSED RATES [Rule 18(h)] Petitioner will offer its services pursuant to its tariffs, on a non-discriminatory basis. Attached as Exhibit 5 are Petitioner's illustrative tariffs relating to the rates,terms and conditions of its proposed local exchange telecommunications and other services: The illustrative tariff contains tentative rates and terms for all services to be offered,and consistent with the August 17, 1995 ALJ Ruling in R.95-04-043/1.95-04-044,these placeholder rates are specified in the tariff by *. Final rates will be filed before service is commenced. 12. GENERAL ORDER 104-A STATEMENT [Rule 18(i)] As previously noted,attached as Exhibit 4 is a copy of the December 31, 1997 Form 10- K of NSP,Petitioner's parent company which satisfies the requirements of General Order 104-A and Rule 18(i), because Petitioner, itself,prepares no reports required under that General Order or Rule. 13. EXPECTED CUSTOMER BASE [Rule 18(j)] Pursuant to Rule 180),Petitioner's estimates of the number of customers who will subscribe to its proposed local exchange service at the end of its first and fifth years of service are set forth in Exhibit 6. Pursuant to General Order 66-C,Petitioner has requested confidentiality for these estimates due to their competitively sensitive and proprietary nature. 6 000063 14. TECHNICAL EXPERTISE [INITIAL RULE 4.A] Petitioner is currently authorized to provide local exchange services in Minnesota Glynis Hi.nschberger,president and CEO of Petitioner,has more than 20 years of technical and management experience in the creation,marketing and maintenance of advanced communications systems. Jerry Compagnoli is Petitioner's Director of Network Operations and also has more than 20 years of management experience in the computer, aerospace and communications industries. Similarly,Brad Zuehlke,Petitioner's Manager,Telephony Implementation and Integration, also brings 21 years of telecommunications experience to Petitioner's management team. Thus,Petitioner has the requisite technical expertise.to receive the requested CPCN. 15. COMPLLANCE WITH RULE 17.1 (CEQA) -PROPONENT'S ENVIRONMENTAL ASSESSMENT Pursuant to Rule 17.1,and Initial Rule 4.C(2), a Proponent's Environmental Assessment ("PEA")meeting the requirements of the California Environmental Quality Act is provided as Exhibit 7. 16. DEMONSTRATION OF COMPLIANCE WITH COMMISSION RULES Exhibit 8 demonstrates Petitioner's compliance with Rule 18 of the Commission's Rules of Practice and Procedure governing the issuance of certificates of public convenience and necessity. 17. REQUEST FOR EXEMPTION Petitioner respectfully requests that, in connection with its authorization as a CLEC, it be accorded the same streamlined regulatory treatment previously accorded to other CLECs as a 7 000064 non-dominant interexchange carrier as set forth in D.96-02-075 and as adopted by non-dominant interexchange carriers("NDIECs"), and including the following: 1. Petitioner seeks exemption from the provisions of PU Code Section 816-830 (pertaining to the issuance of stocks and securities)and PU Code Section 851 (pertaining to the transfer or encumbrance of utility assets when such transfer or encumbrance is for the purpose of securing debt). The Commission has previously concluded that NDIECs should be exempt from the provisions and requirements of PU Code Sections 816-830 and 851 (insofar as these sections pertain to the issuance of securities and transfer or encumbrance of utility property for purposes of securing debt) in D.85-07-081,D.85-11-044 and D.86-08-057, as confirmed by D.90-09-032. This exemption was extended to CLECs in D.96-02-072, ordering paragraph 18. 2. Petitioner also requests that it be accorded the exemptions afforded NDIECs from the requirements of General Order No.96-A regarding tariff pagination and the setting forth of each rule on a separate page, as granted by D.90-09-032. 3. Petitioner further requests that it be exempted from any requirement to maintain its books and records in accordance with the Uniform System of Accounts specified in Title 47 C.F.R. Part 32 consistent with D.99-02-038. 18. EX PARTE AUTHORIZATION AUTHORITY Petitioner requests that this Petition be granted upon an ex parte basis. Petitioner is prepared to offer its proposed telecommunications service at reasonable rates within a reasonably short period following Commission authorization. Such ex parte action would enable Petitioner to meet competition. Petitioner is further requesting that any decision granting Petitioner the authority herein 8 000065 requested become effective on date of issuance; that Petitioner be authorized to file tariffs five days after the effective date of the Commission's decision; and that such tariffs become effective one day after filing. Petitioner believes that the introduction of its proposed competitive innovative service provides ample public interest justification for its request. 19. NUSCELLANEOUS This Petition is fully verified and contains the evidence which Petitioner believes fully supports the request authorization. If additional data or information are desired,Petitioner will promptly submit the same in verified form. 9 000066 20. CONCLUSION WHEREFORE,Petitioner requests that the California Public Utilities Commission authorize it to provide,to the extent previously determined by this Commission, (1) local exchange telecommunications service as a competitive local exchange carrier and(2) intraLATA and interLATA telecommunications services,within California. DATED: March 4, 1999 Respectfully Submitted, SEREN INNOVATIONS,INC. Peter Glass,Esq. General Counsel Seren Innovations, Inc. 15 South 5'Street, Suite 500 Minneapolis MN 55402 Telephone: (612)330-6648 Facsimile: (612) 330-5827 Email: glsp02@nVco.com e k Casciato A Professional Corporation 8 California Street, Suite 701 San Francisco CA 94111 Telephone: (415)291-8661 Facsimile: (415)291-8165 Email: casciato@dnai.com Attorney for Seren Innovations,Inc. 10 00006'7 VERIFICATION I, Glynis Hinschberger, President of Seren Innovations, Inc., do hereby verify that the information in the foregoing "Petition for a Certificate of Public Convenience and Necessity to Provide Competitive Local Exchange Service" and its exhibits are true, correct and complete to the best of my Imowledge and belief. I verify that the foregoing is true under penalty of perjury. Dated this Yd day of March, 1999 at Minneapolis,MN. Gl s Hinschberger Pre ident Seren Innovations, Inc. 000068 2 Sib • , i , ��1 ",•' ��r-� �\ - •. ', ^. is 1. .•,S s =l.,r��' � Fig,.d '.'..'::':;i;�• .. �. -:;• �—,- _ ..: '�� ',�� ' ( v ��ros�.• _'`4�;. �.i•; �. is /..`t ..L' �i��r _ _ ....i s_ fI;L _:k•�'� ��.�o, c•,;.•, _Y1�Iir, _ _ _ . _:� :y'' .1.� �.�.� : :AFF-.`�f=t •�.�a,�� ,:$ ,s- .. .. ^rC, .-�,(/.��. �_'3 •� �� • �U. � � �•r•-�' ,.1-"y A+Ii/� '�T� \: - /':� ,�:•'f12 �.� ,, tea;, �..�. �L,,,r �r:�.: ^`—i., �`'�. '-`; ` - _� —'• •.e;:�. ice... J•�F _r .�Oi• �i. =�.•`j�• -.1�' _ •� ,�Af: .y/- ;� ,�';F,,:� .-;b ��Y �• � f ..� r• � ' .. •. -'�'.�,, 1 ��L `e<' ��art,. .::-.L_:L:'a`A: � �y� `��' '1 '! .�e .yid lair � .1 Y��ti�V''' •��.' �� ,±�,�:_ r,.•';� `:�� ;s. :- •\V _'I :.�1'cfi- � _ .•gip �P�f 7,•'y `�:�` .... � '� [-:r• /� G��._ .•tet. ;=Y�� '_ •"•' ! i5 • ^_ �..� �� f ' FA el V4 s '�i�l.�•\,\ \\..k��` '`moi;� r� \\�� I Y. •\s s :«� \ i •• ' \, LJ`�" \mac' �I�i Y dw Q _.7:..: _,�� i0► r l�. 'I rr s:':•'Ir��- _ ..�.:;t _.. .,.�\.. .,ice:-. ,�, J;qCH • r � r r/ l�• -Y-z1� ;c— QUI i - .� I::� s, iC'dK. �� .1 ar's v. :} .y a �• ;_..�� I ' BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA In the Matter of the Petition ) of Seren Innovations, Inc. for a ) Certificate of Public Convenience and ) I.95-04-044 Necessity to provide Competitive Local ) Petition No. Exchange,IntraLATA and InterLATA ) Service ) Exhibit 7 PROPONENT'S ENVIRONMENTAL ASSESSMENT OF SEREN INNOVATIONS,INC. Pursuant to Rule 17.1 of the Rules of Practice and Procedure of the Public Utilities Commission,Applicant submits this assessment of the environmental impacts that would accompany the grant of its Petitioner. 1. Petitioner seeks a Certificate of Public Convenience and Necessity to provide local exchange and related services,as a competitive exchange carrier authorized by this Commission. The Commission determined,in Decision No. 95-07-054 (July 24, 1995), that competition in local exchange services is in the public interest and will promote the public convenience and necessity. 2. Petitioner's facilities-based telephone services will be provided using a hybrid fiber coaxial network built to provide cable television services. Initially, switching facilities will be leased from an existing provider. Petitioner's cable operations will address with local authorities the environmental issues applicable to such infrastructure 000072 prior to making such facilities available for telephony,as authorized by this Commission. In addition, Petitioner's cable operations will secure any required ministerial permits from the appropriate local entities. Petitioner's network facilities will be limited to existing rights of way and the use of existing conduits or ducts in existing utility rights of way. If Petitioner ever intends to extend its construction local exchange facilities beyond the utility right-of-way into undisturbed areas or other right-of-way, Petitioner will file a Petition to Modify its Certificate of Public Convenience and Necessity,to the extent such modification is required by the Commission. 3. For these reasons, a grant of this Petition is reasonably certain to have no significant environmental impacts, within the meaning of the California Environmental Quality Act of 1970, Public Resources Code Sections 21000,et se4. and the petition fits within the"common sense"exception to CEQA, warranting a Negative Declaration. Similarly, no purpose would be served by completing the"Environmental Checklist Form"attached to Decision 89905 (January 30, 1979), as every item would be checked "no." The Commission should issue a Negative Declaration to that effect. 2 000073 _0 c 9 co z W 0 0) 0 9 < z a) 00 0 CD E 4) O)V— I-- E vp 0 (n U) T LD Lu ?T I a OO 1 §-0 ca L, C: a a) woga > 0) LU cc U) E cr Baa5, ZZ,C', 0 24i 0 U) 72 :F( 'n ca--e E E 0 o Q>) .a 0 w'm CL mc: — - -'s 2E:E ca 44 /\\Z! 0 av) {kE Z zq ;3 OD ce) o E E E'a , o 0 < LL (0)■ ou) ■ (5 CL CDCL m CD fl . 71 0 CD r CD m -v < � rn CD a ... 0 CD O ro Q) y • CD G D.5 THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA Adopted this Order on November 6, 2001, by the following vote: AYES: Supervisors Gioia, Gerber, DeSaulmer, Glover and Uilkema NOES: None ABSENT: None ABSTAIN: None RE: Hearing on Administrative Appeal by Seren Innovations,Inc. On this date, the Board of Supervisors considered the above hearing. Silvano Marchesi, County Counsel and Lillian Fuji,Deputy County Counsel presented the staff report and recommendations. The Board discussed the matter and opened the public hearing. The following people presented testimony: Peter A.Casciato,Seren Innovations Inc.,8 California Street, Suite 701',San Francisco; William Kaphing,Seren Innovations,Inc., 220 Mason Circle,Concord. The matter was returned to the Board,. After further discussion, Supervisor Uilkema moved to close the public hearing and continue this matter to December 11'2001 and to schedule a closed session on this item. Supervisor Glover second the motion. The Board voted unanimously to continue this item to December.11,2001 at 1:30. I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. Attested:November 6, 2001 John Sweeten,Clerk of the Board of Supervisors and County Administrator By: Deputy Clerk r ` • REQUEST TO SPEAR FORM ei (THREE (3) MINUTE LIMIT) Complete this form and place it in the box near the speakers' rostrum before addressing the Board. Name: \/V i !It -nn KA-&P41^16- Phone: 6/z--395-- 3.So7J Address: t% ado iytA5ony cIrccc City: Go/uGo/�t� I am speaking for myself or organization: S�/C,E� Zn%✓a��7o.rS (name of organization) CHECK ONE: I wish to speak on Agenda Item # D-5 Date: My comments will be: general for against I wish to speak on the subject of I do not wish to speak but leave these -comments for the Board to consider: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT MEDIAONE GROUP, INCORPORATED; MEDIAONE OF VIRGINIA, INCORPORATED; AT&T CORPORATION, Plaintiffs-Appel 1ees, V. COUNTY OF HENRICO, VIRGINIA, Defendant, BELL ATLANTIC CORPORATION; BELL ATLANTIC-VIRGINIA, INCORPORATED; BELL ATLANTIC INTERNET SOLUTIONS, INCORPORATED, Intervenors/Defendants, No. 00-1680 and GTE INTELLIGENT NETWORK SERVICES, INCORPORATED,d/b/a GTE.net, Intervenor-Appellant. VIRGINIA CITIZENS CONSUMER COUNCIL; CONSUMER FEDERATION OF AMERICA; CENTER FOR MEDIA EDUCATION; DISTRICT OF COLUMBIA; CITY OF TACOMA,WASHINGTON; MONTGOMERY COUNTY, MARYLAND; U.S. CONFERENCE OF MAYORS; NATIONAL LEAGUE OF CITIES; t NATIONAL ASSOCIATION OF COUNTIES; NATIONAL ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS;VIRGINIA ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS;TEXAS ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS; MINNESOTA ASSOCIATION OF COMMUNITY TELECOMMUNICATIONS ADMINISTRATORS; OPENNET COALITION;HANDS OFF THE INTERNET; FEDERAL COMMUNICATIONS COMMISSION; NATIONAL CABLE TELEVISION ASSOCIATION;VIRGINIA TELECOMMUNICATIONS ASSOCIATION; WEST VIRGINIA TELECOMMUNICATIONS ASSOCIATION; CABLE TELECOMMUNICATIONS ASSOCIATION OF MARYLAND, DELAWARE AND THE DISTRICT OF COLUMBIA, INCORPORATED; NORTH CAROLINA CABLE TELECOMMUNICATIONS ASSOCIATION; SOUTH CAROLINA TELEVISION ASSOCIATION, Amici Curiae. 2 • s MEDIAONE GROUP, INCORPORATED; AT&T CORPORATION; MEDIAONE OF VIRGINIA, INCORPORATED; Plaintiffs-Appel lees, V. COUNTY OF HENRICO, VIRGINIA, Defendant, GTE INTELLIGENT NETWORK SERVICES, INCORPORATED, d/b/a GTE.net, Intervenor/Defendant, and No. 00-1709 BELL ATLANTIC CORPORATION; BELL ATLANTIC-VIRGINIA, INCORPORATED; BELL ATLANTIC INTERNET SOLUTIONS, INCORPORATED, Intervenors-Appellants. VIRGINIA CITIZENS CONSUMER COUNCIL; CONSUMER FEDERATION OF AMERICA; CENTER FOR MEDIA EDUCATION; CITY OF TACOMA, WASHINGTON;MONTGOMERY COUNTY, MARYLAND;DISTRICT OF COLUMBIA; U.S. CONFERENCE OF MAYORS; NATIONAL LEAGUE OF CITIES; 3 NATIONAL ASSOCIATION OF COUNTIES; NATIONAL ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS;VIRGINIA ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS;TEXAS ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS; MINNESOTA ASSOCIATION OF COMMUNITY TELECOMMUNICATIONS ADMINISTRATORS; OPENNET COALITION; HANDS OFF THE INTERNET; FEDERAL COMMUNICATIONS COMMMISSION; NATIONAL CABLE TELEVISION ASSOCIATION;VIRGINIA TELECOMMUNICATIONS ASSOCIATION; WEST VIRGINIA TELECOMMUNICATIONS ASSOCIATION; CABLE TELECOMMUNICATIONS ASSOCIATION OF MARYLAND, DELAWARE AND THE DISTRICT OF COLUMBIA, INCORPORATED; NORTH CAROLINA CABLE TELECOMMUNICATIONS ASSOCIATION; SOUTH CAROLINA TELEVISION ASSOCIATION, Amici Curiae. 4 MEDIAONE GROUP,INCORPORATED; MEDIAONE OF VIRGINIA, INCORPORATED;AT&T CORPORATION, Plaintiffs-Appel lees, V. COUNTY OF HENRICO,VIRGINIA, Defendant-Appellant, and GTE INTELLIGENT NETWORK SERVICES, INCORPORATED, d/b/a GTE.net; BELL ATLANTIC No. 00-1719 CORPORATION; BELL ATLANTIC- VIRGINIA, INCORPORATED; BELL ATLANTIC INTERNET SOLUTIONS, INCORPORATED, Intervenors/Defendants. VIRGINIA CITIZENS CONSUMER COUNCIL; CONSUMER FEDERATION OF AMERICA; CENTER FOR MEDIA EDUCATION; CITY OF TACOMA, WASHINGTON;MONTGOMERY COUNTY, MARYLAND; DISTRICT OF COLUMBIA; U.S. CONFERENCE OF MAYORS; NATIONAL LEAGUE OF CITIES; 5 NATIONAL ASSOCIATION OF COUNTIES; NATIONAL ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS;VIRGINIA ASSOCIATION OF. TELECOMMUNICATIONS OFFICERS AND ADVISORS;TEXAS ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS; MINNESOTA ASSOCIATION OF COMMUNITY TELECOMMUNICATIONS ADMINISTRATORS;OPENNET COALITION; HANDS OFF THE INTERNET; FEDERAL COMMUNICATIONS COMMMISSION; NATIONAL CABLE TELEVISION ASSOCIATION; VIRGINIA TELECOMMUNICATIONS ASSOCIATION; WEST VIRGINIA TELECOMMUNICATIONS ASSOCIATION;CABLE TELECOMMUNICATIONS ASSOCIATION OF MARYLAND, DELAWARE AND THE DISTRICTOF COLUMBIA, INCORPORATED; NORTH CAROLINA CABLE TELECOMMUNICATIONS ASSOCIATION; SOUTH CAROLINA TELEVISION ASSOCIATION, Amici Curiae. Appeals from the United States District Court for the Eastern District of Virginia, at Richmond. Richard L. Williams, Senior District Judge. (CA-00-33-3) Argued: September 27, 2000 Decided: July 11, 2001 Before WIDENER,WILKINS, and MICHAEL, Circuit Judges. 6 Affirmed by published opinion.Judge Michael wrote the opinion, in which Judge Wilkins joined.Judge Widener wrote a concurring opin- ion. COUNSEL ARGUED: Edward Joseph Fuhr,HUNTON &WILLIAMS, Rich- mond, Virginia; Andrew Gerald McBride, COOPER,CARVIN& ROSENTHAL, P.L.L.C.,Washington, D.C., for Appellants.David William Carpenter, SIDLEY&AUSTIN, Chicago, Illinois, for Appellees. ON BRIEF:Stacy C. Taylor, Eric H. Feiler,HUNTON &WILLIAMS, Richmond, Virginia;Joseph P. Rapisarda,Jr.,Joseph T. Tokarz, II, Karen M.Adams, COUNTY ATTORNEY'S OFFICE, Richmond,Virginia, for Appellant Henrico. Michael A. Carvin, Noel J. Francisco, COOPER, CARVIN &ROSENTHAL, P.L.L.C., Wash- ington, D.C., for Appellant GTE; Brett M. Kavanaugh, Theodore W. Ullyot, KIRKLAND &ELLIS, Washington, D.C., for Appellant Bell Atlantic. Peter D. Keisler, David L. Lawson, SIDLEY&AUSTIN, Chicago, Illinois;James C. Roberts, Carter Glass, IV, Dabney Carr, IV, MAYS &VALENTINE, L.L.P., Richmond, Virginia; Mark C. Rosenblum, Laura A. Kaster,AT&T CORPORATION, Basking Ridge, New Jersey; Sean Lindsay, David White,MEDIAONE GROUP, INC., Englewood, Colorado, for Appellees. Andrew Jay Schwartzman, Cheryl A. Leanza,Harold J. Feld, MEDIA ACCESS PROJECT, Washington, D.C., for Amici Curiae Consumer Council, et al. Nicholas P. Miller, William Malone,Joseph Van Eaton,John F. Noble,James R.Hobson,MILLER&VAN EATON,P.L.L.C., Washington, D.C., for Amici Curiae NATOA, et al. William P. Cook, Pamela J. Marple, MANATT, PHELPS &PHILLIPS, L.L.P.,Wash- ington, D.C., for Amicus Curiae OpenNET. Christopher Wolf, Bruce E. Boyden, PROSKAUER ROSE,L.L.P., Washington, D.C.;Tanya L. Forsheit, PROSKAUER ROSE, L.L.P., Los Angeles,California, for Amicus Curiae Hands Off. William B. Schultz,Acting Assistant Attorney General, Jacob M. Lewis, Mark Davies, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.;Christopher J. Wright, General Counsel,Jonathan E.Nuechterlein, Deputy General Counsel,James M. Carr, FEDERAL COMMUNICATIONS COM- MISSION, Washington,D.C., for Amicus Curiae Commission. How- 7 and J. Symons,Tara M. Corvo, MINTZ, LEVIN, COHN, FERRIS, GLOVSKY&POPEO, P.C., Washington, D.C., for Amici Curiae National Cable Television, et al. OPINION MICHAEL, Circuit Judge: AT&T Corporation is still the largest long distance telephone com- pany in the country, and this case is about its recent entry into the broadband telecommunications market that provides high-speed access to the Internet. AT&T has acquired MediaOne Group, Inc. (MediaOne), which has a cable franchise in Henrico County, Virginia. In approving the transfer of control of the franchise, the Henrico County Board of Supervisors (the County) required MediaOne to pro- vide any requesting Internet Service Provider (ISP) with access to its cable modem platform. AT&T and MediaOne sued the County in fed- eral court, arguing that the open access provision was preempted by federal law (the Communications Act) and, in any event, violated state law.The district court agreed and granted summaryjudgment for AT&T and MediaOne. We affirm as follows. Under Bell Atlantic Md., Inc. v. Prince George's County, 212 F.3d 863 (4th Cir. 2000), we must consider the state law question first. However, because Vir- ginia law does not provide an independent ground for disposition of the case, we proceed to the preemption question. Henrico County's open access provision violates the federal Communications Act, 47 U.S.C. § 54 1(b)(3)(D), by forcing MediaOne to provide its telecom- munication facilities (its cable modem platform) to any ISP as a con- dition for the County's approval of the transfer of control of the franchise. Because the open access provision is inconsistent with the federal Communications Act, it is preempted and superceded. I. Most residential and small business consumers gain access to the Internet through slower narrowband technology, specifically, through the traditional dial-up telephone modem that is connected to copper lines. Broadband technology is beginning to provide many of these 8 consumers with a high-speed alternative to Internet access, and ana- lysts are forecasting substantial growth in the demand for broadband services.The most common forms of broadband technology are cable modem platforms and digital subscriber lines (DSLs).A broadband pipeline, like the basic telephone infrastructure,serves as a conduit between an Internet user and an ISP, such as America Online,Juno, or Prodigy. In 1998 and 1999 AT&T began a major effort to establish a foot- hold in broadband markets around the country. AT&T sought to enter these markets by acquiring existing cable television companies. One of its first acquisition targets was MediaOne, a large cable company with a franchise in Henrico County, Virginia. Like most cable opera- tors,MediaOne provides traditional cable television service. How- ever, the company has upgraded its cable systems, including the one in Henrico County, to include a cable modem platform that provides a high-speed link to the Internet. In connection with this upgrade MediaOne joined with others to form a company doing business as "Road Runner."Road Runner provides a"bundled"service that com- bines MediaOne's broadband pipeline (the cable modem platform) with the Internet services usually offered by an ISP. MediaOne cus- tomers who want Internet access over cable do not have the option of using just MediaOne's cable modem platform; rather, they must sub- scribe to Road Runner and take the Internet services it offers. Although Road Runner customers may subscribe to an ISP unaffili- ated with MediaOne, most customers have no incentive to do that because the features offered by most outside ISPs are nearly identical to those offered by Road Runner. Instead of paying for a duplicative Internet service from an outside ISP,most MediaOne customers sim- ply stick with the bundled service provided by Road Runner. On May 6, 1999, AT&T and MediaOne entered into an agreement to merge. The merger, which has now been finalized, gives AT&T control of all of MediaOne's cable television systems, including the system that holds a franchise in Henrico County. In July 1999 AT&T and MediaOne applied to the County for formal approval of the trans- fer of control.The County gave its approval in an ordinance adopted in December 1999.The County's approval,however,was conditioned on the requirement that"[n]o later than December 31, 2000, [Medi- aOne] shall provide any requesting Internet Service Provider(ISP) 9 access to its cable modem platform (unbundled from the provision of content) on rates, terms, and conditions that are at least as favorable as those on which it provides such access to itself, to its affiliates, or to any other person."This open access condition would require Medi- aOne to open its broadband pipeline to unaffiliated ISPs. MediaOne customers would thus be able to access the Internet over MediaOne's cable modem platform without subscribing to the bundled Road Run- ner service.* AT&T and MediaOne chafed under the open access condition mandated by Henrico County. They sued the County in federal court in the Eastern District of Virginia, seeking a declaratoryjudgment that the condition violates the First Amendment and the Commerce Clause, is preempted by federal law, and is void under Virginia law. AT&T and MediaOne also asked for an injunction against the enforcement of the condition. They moved promptly for summary judgment on the grounds that the open access requirement is pre- empted by the Communications Act of 1934, as amended by the Tele- communications Act of 1996, Pub. L.No. 104-104, 110 Stat. 56 (1996), and is unenforceable under Virginia law. GTE Intelligent Net- work Services, Inc., Bell Atlantic Corp., Bell Atlantic Virginia, Inc., and Bell Atlantic Internet Solutions, Inc. (collectively"Verizon") were allowed to intervene as defendants on the side of the County. Verizon, of course, offers a DSL service that competes with Medi- aOne's Road Runner service. The County and Verizon filed a cross- motion for summary judgment asserting that the open access condi- tion was not preempted by federal law and that it was a valid exercise of the County's authority under Virginia law. *In its order approving the transfer of control of MediaOne's federal licenses to AT&T, the Federal Communications Commission noted that MediaOne has"committed to open [its] cable modem platform to unaffil- iated ISPs as soon as . . . its exclusive contract with Road Runner expires in December 2001."In the Matter of Applications for Consent to the Transfer of Control of Licenses and Section 214 Authorizations from MediaOne Group, Inc..Transferor, to AT&T Corp.Transferee, 15 F.C.C.R. 9816, T 120 (2000). Specifically, MediaOne has agreed to negotiate, upon the expiration of its exclusive contract with Road Run- ner, mutually acceptable access agreements with unaffiliated ISPs. See id. ¶ 121. 10 The district court granted AT&T and MediaOne's motion for sum- mary judgment. See MediaOne Group, Inc. v. County of Henrico, 97 F. Supp. 2d 712 (E.D. Va. 2000). The court concluded that the open access condition was preempted by several provisions of the Commu- nications Act. First, it held that the condition violates 47 U.S.C. § 541(b)(3)(D) by requiring MediaOne to provide its telecommunica- tions facilities "to any requesting ISP"as a condition for the County's approval of the transfer of control. Id. at 714.Second, the court held that the open access condition violates 47 U.S.C.§ 544(e) because it would condition and restrict the use of MediaOne's transmission tech- nology. Id. at 715.Third, after concluding that Road Runner is a "cable service," the court held that the open access condition is also barred by 47 U.S.C. §§ 541(c) and 544(f)(1). Because the condition would require MediaOne to provide all ISPs nondiscriminatory access to its cable modem platform, the court concluded that the County was attempting to regulate MediaOne as a"common carrier"in violation of§ 541(c). Id. at 715-716.The court also held that the condition is contrary tc § 544(fj(1)'s prohibition against"requirements regarding the provision or content of cable services."Id. at 716. Finally, the dis- trict court held that the open access requirement is void under Vir- ginia law because nothing in the Virginia Code (as it relates to the regulation of cable systems) expressly or impliedly authorizes the County to impose such a condition. The County and Verizon appeal the district court's order granting MediaOne and AT&T's motion for summary judgment. We review a summary j udgment decision de novo. See AT&T Communications of Va. v. Bell Atlantic-Va., Inc., 197 F.3d 663, 668 (4th Cir. 1999). II. This case boils down to two questions: (1) the federal constitutional question of whether the Communications Act preempts any power Henrico County has under the Virginia Code to enact an open access provision and (2) the state law question of whether the County has the authority under the Virginia Code to enact such a provision. Recently, in Bell Atlantic Md.. Inc. v. Prince George's County, 212 F.3d 863 (4th Cir. 2000),we observed that the question of"whether a federal statute preempts a state statute . . . is a constitutional ques- 11 tion."Id. at 865. We went on to hold that when a court is faced with a constitutional question of federal preemption and a question of state law, the court should"decide only" the state law question if it pro- vides an independent"ground upon which the case may be disposed of." Id. at 866 (quoting Ashwander v. Tenn.Valley Auth., 297 U.S. 288, 346-47 (1936) (Brandeis,J., concurring)).This rule is based on the principle that"courts should avoid deciding constitutional ques- tions unless they are essential to the disposition of a case."Id. at 865. To complete the point, we state the obvious: an independent state law ground is one that allows us to avoid deciding a constitutional ques- tion. See id. at 865 (noting that the federal statute at issue reserved to local governments "specific powers"that might provide grounds for deciding the case). In sum, according to Bell Atlantic, if a case with a constitutional question of preemption also presents an independent and dispositive question under state law, we should confine ourselves to the latter. We turn, then, to Virginia law to see whether it provides an independent ground for disposition of this case. A Virginia county's authority under state law to license and regu- late cable television operators is found in Va. Code Ann. § 15.2-2108 (the"cable statute").The General Assembly's grant of regulatory authority to the county (or locality) under the cable statute is broad: Localities may by ordinance exercise all the regulatory pow- ers over cable television systems granted by the Cable Tele- vision Consumer Protection and Competition Act of 1992 (P.L. 102-3085, 1992).These regulatory powers shall include the authority (i) to enforce customer service stan- dards in accordance with the Act, (ii) to enforce more strin- gent standards as agreed upon by the cable television system operator through the terms of the franchise, and (iii) to regu- late the rates for basic cable service in accordance with the Act. Va. Code Ann. § 15.2-2108(F). A Virginia county must exercise this regulatory power in a way that prevents cable operators from taking unfair advantage of their franchises. Specifically, a county must regu- late in a manner consistent"with the policy of the Commonwealth to provide for the adequate, economical, and efficient delivery of[cable] systems to the consuming public [and] to protect the public from 12 excessive prices and unfair competition."Id. § 15.2-2108(E). Again, the Virginia cable statute confers broad authority on counties to regu- late cable television systems, and there is no specific provision in the statute that prevents a county from enacting an open access ordinance. The Virginia statute does have a catchall provision that limits a coun- ty's authority to regulate cable operators: section 15.2-2108(E) of the Virginia Code prohibits any cable regulation or ordinance that is"in- consistent with either the laws of the Commonwealth or federal law." We have searched and have not found any Virginia statute or any decision of the courts of the Commonwealth that would prohibit the County's open access provision. The provision is thus not inconsistent with the laws of the Commonwealth.Because the open access provi- sion is not prohibited by either the Virginia cable statute or by other laws of the Commonwealth, we do not (thus far) have any indepen- dent state law ground that allows us to avoid the federal preemption question. The Virginia cable statute does, of course, prohibit any cable regu- lation or ordinance that is"inconsistent . . . with federal law."Va. Code Ann. § 15.2-2108(E). This raises the question of whether Vir- ginia law, by embracing federal law, provides an independent state law ground for decision, thereby requiring us to avoid the constitu- tional question of federal preemption under the rule of Bell Atlantic Md., Inc. v. Prince George's County, 212 F.3d 863 (4th Cir. 2000). If we were to decide this case under§ 15.2-2108(E) of the Virginia cable statute, the question would be whether Henrico County's open access provision is "inconsistent . . . with federal law,"that is, the Communications Act.This is the same question we would ask under a federal preemption analysis. See 47 U.S.C.§ 556(c) ("[A]ny provi- sion of law of any . . . franchising authority. . . which is inconsistent with [the Communications.Act] shall be deemed to be preempted and superceded."). If we were to decide the state law question first,we would in effect be deciding the federal preemption question as well: Thus, the state law ground in this case is not independent because it does not allow us to"avoid deciding [the] constitutional question[]" of federal preemption. Bell Atlantic, 212 F.3d at 865. We are there- fore free under Bell Atlantic to proceed to the question of federal pre- emption and determine whether Henrico County's open access provision"is inconsistent with" the Communications Act. See 47 U.S.C. §556(c). 13 The district court held that the open access provision is inconsistent with 47 U.S.C. § 541(b)(3)(D) because it would require MediaOne to provide telecommunications facilities as a condition for approving transfer of control of MediaOne's cable franchise to AT&T. See MediaOne Group, Inc. v. County of Henrico, 97 F. Supp. 2d 712, 714 (E.D. Va. 2000). Section 541(b)(3)(D) says that"a franchising author- ity may not require a cable operator to provide any telecommunica- tions service or facilities, other than institutional networks, as a condition of the initial grant of a franchise, franchise renewal, or a transfer of a franchise." 47 U.S.C. § 541(b)(3)(D) (emphasis added). The term"telecommunications"is defined as"the transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the informa- tion as sent and received." Id. § 153(43). Although the Communica- tions Act does not define the word"facilities"as used in "telecommunications facilities," it is evident from the language of the statute that these facilities are the physical installations or infrastruc- ture necessary for transmission. MediaOne's Road Runner service combines the use of a cable modem platform with access to the Internet. Road Runner's cable modem platform, separated from its Internet service component, is a telecommunications facility because it is a pipeline for telecommuni- cations, that is, for"the transmission . . . of information of the user's choosing,without change in the form or content." Id. § 153(43) . (defining"telecommunications"). As a condition for approving the change in control of the MediaOne franchise, the County required MediaOne to provide its"cable modem platform (unbundled from the provision of content)"to"any requesting Internet Service Provider." The provision unbundles Road Runner's Internet access service from its cable modem platform and compels MediaOne to offer the plat- form to unaffiliated ISPs for use as a transmission pipeline for their services. The open access provision therefore requires MediaOne to provide"telecommunications . . . facilities . . . as a condition of. . . a transfer of a franchise"in violation of§ 541(b)(3)(D). The County and Verizon argue that even if the cable modem plat- form is a telecommunications facility, § 541(b)(3)(D) still does not outlaw the open access provision. Section 54 1(b)(3)(D), they say, only prohibits localities from requiring cable operators to construct 14 new telecommunications facilities, and the provision here does not impose any such requirement.That argument ignores the statute's plain language. Again, § 541(b)(3)(D) declares that franchising authorities may not require cable operators"to provide any telecom- munications . . . facilities" as a condition to the transfer of a franchise. The section does not limit itself to new construction. Rather, it bars any condition that requires a cable operator to provide telecommuni- cations facilities regardless of whether the facilities are in existence or must be built. The.County makes a separate argument that MediaOne's facilities qualify as a"cable system"that cannot be said to include any tele- communications facilities. Under the Communications Act a cable system is defined as"a facility. . . that is designed to provide cable service which includes video programming and which is provided to multiple subscribers within a community."47 U.S.C. § 522(7). The County points out that MediaOne offers traditional"cable services," like video programming, over its facilities. It therefore asserts that because its system is"designed to provide cable service"it cannot be considered a telecommunications facility. According to the County, providing Internet access over its cable system does not magically transform the cable system into a telecommunications facility. We disagree with the County.The Communications Act recognizes that some facilities can be used to provide more than one type of ser- vice. The Act therefore contemplates that multi-purpose facilities will receive different regulatory classification and treatment depending on the service they are providing at a given time. For example, under 47 U.S.C. § 522(7)(C) the definition of"cable system"does not include a facility of a common carrier that offers telecommunications services "except that such facility shall be considered a cable system . . . to the extent that such facility is used in the transmission of video program- ing directly to subscribers, unless the extent of such use is solely to provide interactive on-demand services."In addition, under 47 U.S.C. § 153(46) the term"telecommunications service" is defined as"the offering of telecommunications for a fee directly to the public . . . regardless of the facilities used." (emphasis added).Therefore, although MediaOne maintains a"cable system ," its facilities can be properly classified as telecommunications facilities when they pro- vide a transmission path to the Internet. 15 Because the open access condition violates§ 541 (b)(3)(D) of the Communications Act, our analysis of federal law may stop at that. Some of the parties want us to go further, however, and determine the specific regulatory classification of MediaOne's Road Runner service. The County argues that Road Runner is a"cable service"under the Communications Act. See 47 U.S.C. § 522(6) (defining the term "cable service"as "(A) the one-way transmission to subscribers of(i) video programming, or (ii) other programming service, and (B) sub- scriber interaction, if any,which is required for the selection or use of such video programming or other programming service"). It is very much in the County's interest to have Road Runner classified as a cable service. This would allow the County to regulate a cable opera- tor's provision of Internet access over cable lines. See 47 U.S.C. §§ 541-49 (authorizing localities to establish and enforce require- ments for cable facilities, equipment, and customer service). Verizon, on the other hand, urges us to hold that the Road Runner service is a"telecommunications service."47 U.S.C.§ 153(46) (defining the term"telecommunications service"as"the offering of telecommuni- cations for a fee directly to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used"). Verizon has an incentive to make this argument. Any determination that Road Runner is a"telecommunications service" could have significant regulatory consequences. Certain federal com- mon carrier obligations could arise,see, e.g. , 47 U.S.C. §§201(b), 251, and all providers of"interstate telecommunications services" must contribute to the universal service fund supporting affordable telephone service, see 47 U.S.C. §§ 153(44), 202, 254.At bottom, Verizon seeks regulatory parity because its DSL service is already regulated as a telecommunications service. See, e.g., In re Deploy- ment of Wireline Servs. Offering, Advanced Telecommunications Capability, 15 F.C.C.R. 385, 19 (1999). Finally, although no one makes the argument here, Road Runner might even be considered an "information service"under the Communications Act. See 47 U.S.C. § 153(20) (defining"information service"as"the offering of a capa- bility for generating, acquiring, storing, transforming, processing, retrievin , utilizing, or making available information via telecommu- nications'l. If Road Runner is classified as an information service, it would not be subject to local franchising or common carrier regula- tion. See Federal-State Joint Bd. on Universal Serv., Report, 13 F.C.C.R. 11,501, ¶39 (1998). 16 As the preceding paragraph illustrates, the issue of the proper regu- latory classification of cable modem service, such as Road Runner, is. - complex and subject to considerable debate.The outcome will have a marked effect on the provision of Internet services.The FCC, in its amicus brief, has diplomatically reminded us that it has jurisdiction over all interstate communications services, including high-speed broadband services. The FCC also advises us that it has initiated a proceeding, through a notice of inquiry, to examine classification and open access issues. See Inquiry Concerning High-Speed Access to the Internet Over Cable and Other Facilities, 65 Fed. Reg. 60,441 (2000). The FCC's notice seeks comment on whether cable modem technol- ogy should be classified as a cable service, a telecommunications ser- vice, or an information service, and it also seeks comment on the implications of adopting any particular classification. See In the Mat- ter of Inquiry Concerning High-Speed Access to the Internet Over Cable and Other Facilities, No. 00-355, 2000 WL 1434689, 1 15 (Sept. 28, 2000). In addition, the notice indicates that the FCC is interested in determining whether open access to cable modem plat- forms is necessary to further the"goals of promoting competition, deregulation, innovation,and the deployment of high-speed services." Id. 132. Of course, the merits of open access are not before us.And, as we have already indicated, we do not have to reach the question of whether MediaOne's bundled Road Runner service is a cable ser- vice, a telecommunications service, or an information service. For the time being, therefore,we are content to leave these issues to the expertise of the FCC. We simply hold that Henrico County violated§ 541(b)(3)(D) when it conditioned the transfer of control of MediaOne's cable franchise by requiring MediaOne to unbundle its Road Runner service and pro- vide open access to its telecommunications facilities, that is, its cable modem platform. Because the open access provision is inconsistent with the federal Communications Act, it is preempted.We therefore affirm the judgment of the district court. AFFIRMED WIDENER, Circuit Judge, concurring: I concur in the result. I arrive at that result, however, by a different route from that of the majority. 17 i • In this case, Henrico County, by ordinance, required open access to its cable modem platform,which requirement is in violation of the. Federal Communications Act, 47 U.S.C. §541(b)(3)(D), slip op. at 8. A Virginia statute,Virginia Code§ 15.2-2108(E) (1998), provides, in pertinent part, that"[n]o locality may regulate cable television sys- tems by regulations inconsistent with either laws of the Common- wealth or federal law relating to cable television operations." (italics added) Thus,Virginia has tried, as best as she may, even by specific stat- ute, to prevent her counties from running afoul of the Federal Com- munications Act. The determination of whether or not a local law has been pre- empted by federal law is a Constitutional question. It"is essentially a two-step process of first ascertaining the construction of the two statutes and then determining the Constitutional question of whether they are in conflict."Chicago &NWTR Co. v. Kalo Brick&Tile Co., 450 U.S. 311, 317 (1981) (internal quotations omitted). In Virginia, a county has only the powers expressly granted to it by the Commonwealth, or necessarily implied, and a local ordinance in violation thereof is invalid. Bd. of Supervisors of Augusta County v. Countryside Inv. Co., 522 S.E.2d 610, 613 (Va. 1999). The second rule of construction in Ashwander v. TVA, 297 U.S. 288, 346-47 (Brandeis,J., concurring) (1936), is:"The court will not anticipate a question of Constitutional law in advance of the necessity of deciding it . . . . It is not the habit of the Court to decide questions of a Constitutional nature unless absolutely necessary to a decision of the case." (internal quotations omitted) And the fourth rule of Ash- wander is: "The Court will not pass upon a Constitutional question, although properly presented by the record, if there is also present some other ground upon which the case may be disposed of."Ash- wander, 297 U.S. at 346-47. I suggest the majority decision violates both these rules. In my opinion, the Henrico County ordinance is in violation of state law, being"inconsistent with. . . federal law"under Virginia 18 Code§ 15.2-2108(E). Thus, our decision should rest on the fact that the Henrico County ordinance is contrary to state law, that ground _ .. having presented itself, instead of, contrary to Ashwander, deciding a Constitutional question which gets the same result. What purpose is served by States trying to cooperate, as here, if their statutes are to be routinely Constitutionally preempted? 19 • Page 1 of 2 Peter Casciato From: Jeffrey Sinsheimer<JS@calcable.org> To: <bill.rosendahl@adelphia.com>; <janet.spatz@adelphia.com>; <Ibrown@adelphia.net>; <rfisher@adelphia.net>; <dan.deutsch@adelphiacom.com>; <gmtele@aol.com>; <hancock@aol.com>; <mel4ccta@aol.com>; <bdevine@att.com>; <davidjmiller@att.com>; <deutsch@att.com>; <kmcneely@att.com>; <mhurst@att.com>; <Susanritchie@att.com>; <witherington@att.com>; <dpicciolo@broadband.att.com>; <jharkman@broad band.aft.com>; <leacock.kent@broad band.aft.com>; <molina-amparan.bea@broad band.aft.com>; <odurnJoni@broad band.aft.com>; <pparks@broad band.aft.corn>; <schena.don@broad band.aft.com>; <cj@calcable.org>; <frank@calcable.org>; <gsemow@calcable.org>; <jerome@calcable.org>; <jerry@calcable.org>; <jsinsheimer@calcable.org>; <julie@calcable.org>; <lesla@calcable.org>; Sent: Thursday, July 12, 2001 8:37 AM Attach: , MediaOne Group v. County of Henrico, Virginia.pdf Subject: AT&T Wins Forced Access Case in 4th Circuit Memorandum Date: July 12, 2001 To: CCTA Board of Directors CCTA Law& Public Policy Committee Communications Services Committee From: Jeffrey Sinsheimer Lesla Lehtonen Re: MediaOne v. Henrico County Attached please find a copy of AT&T's forced access victory case: MediaOne Group v. Henrico County. If you have any questions, please do not hesitate contact our Oakland office. j s/ll:sew Attachment Jeffrey Sinsheimer Vice President, Law& Public Policy California Cable Television Association 4341 Piedmont Avenue Oakland, California 94611 (510) 428-2225 (510) 652-3749 fax J sinsheimer@calcable.org Lesla Lehtonen Vice President, Legal & Regulatory Affairs California Cable Television Association 4341 Piedmont Avenue Oakland, California 94611 (510)428-2225 (510) 652-3749 fax leSla@calcable.org Statement of Confidentiality 7/12/01 Page 2 of 2 The information in this electronic message may be confidential and/or legally privileged information only for the use of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that any copying, dissemination or distribution of confidential or privileged information is strictly prohibited. If you receive this communication in error, please immediately notify us by telephone. For problems or questions relating to this electronic message,please contact Sylvia Wiggins at 510.428.2225, or by electronic mail at Sylvia@calcable.org. Our facsimile number is 510.652.3749. 7/12/01 • REQUEST TO SPEAR FORM o (THREE (3) MINUTE LIMIT) Complete this form and place it in the box near the speakers' rostrum before /addressing the Board. Name: �l,c'ter /�. &SC i ATI Phone: y/S - Z 1%- F(U(�/ Address: &.t t City: SO.J F;,,cj,�cc gY11/ I am speaking for myself or organization: �z ✓ (name of organization) CHECK ONE: - I wish to speak on Agenda Item # Date: t /� My comments will be: general for against I wish to speak on the subject of I do not wish to speak but leave these comments for the Board to consider: I 1 I rJ ,r ' 1 VVI/.ey,,,,•'�. ^.\\//��•.• �� \\II. /[?�- � `II � � unj� u� / / i �.�- I.�/j f�4'. •:h:'_' ::� 1 i'.•.'.' � 11 r CD C ..f',- _f.. moi:' •.; � `.ti•:J<. •.:. :• st;• - E{:'' 3' i;%i f:.. �� c 1 \ -c _ IL"`_ �-}• n?� •:l.'i; '_ ; �.„'::.::' :•:$.�•: ,I,I�I:��r I I\`' i '1 i � I '!`r--_:i, ��'\.'i• .fPi•.•�.- �$:: ..�';:r.�i:i'. �i' I:: ;:::` �.-` :��?.:��c'�y� �\%I-� �if�: � I \S M — r+ 'N ✓:'. % . x.ur�..//JJ •.'r `.. - :y.:' :''✓� .' `_ d I rJl ':.=� ,-I Nj `� a �� `9` ;i/� '-sd 'ti.�:�'.• �tr.o.;.....!'}` .Y.: •r- .{' ,�%: J_- -LI YYY J�� - . t;r..•.. ?tom 'r i.,l >II`' S''r,� �, r=_I"I—'• ; I! — - n 'r:• I /I :M1 �� ,n`y�� I v:':•E�;.k`,:�..:74 •.�. i�c�i',' - d �\`�I' I ...1r4 �., r"�_ll� - r .I • ' _I �....: �z>=:� -..., :: . i—y, .,. .,.;, .. w.;�., ,rte — •,s: Q�.. � f.. + _� I •J'\ IS }: e ..... ..:,. :.. ......,:.Y\r`+�`' '�"'-i'� 1. -- - - �� •;<:a I Cri P: (sl �'. •:vi'"..,,�.� ..to \ � v�'��J'�. 1/\ i/.,--'-''�l� �U, (��\ r�v"�$!'S'`''Y,��) �J�,r •y' � ��i•'t.t k.;r u , \, Yi.^. I � ':J�'� �`�4 h:':`J`�Fi,.:' 1 \-Ii-: s��II /�• ll�;a ...i. � 'a. � •� : , �, `\ �5;.•.c. IU z rj al, \ ,. ` - 1•.•:' 1, _�. _ y le" .,gw ,7a / ,A ✓ ✓/ s - 1 A e Q 1 y y vt. 1- \ I ` \ !1 .Y xyy moi. l.. , j F .5 n•-• Ic rm t' LL2,11 r I to ' •-:.11.x',._,.. .i" .;!» t"+''V^ - `-�—�1� lli-- (;_\vi � U _ - _ I.r.�.;!�'' .•t�f ;` '.�_ rte;�L`I�” _ 5,��rl�=� \i `� N ,LII YJ I-,li i ;�;(�Lr�•• L !C / 7 N G � ' CO - -' _J11` `I X111'\\Il \' f ... <�\ _ Cp tP is ((D C O rn IM o� The Board of Supery rs Contra John Sweeten COt1 Clerk of the Board and County Administration Building Costa County Administrator 651 Pine Street,Room 106 Martinez,California 94553-1293 County (925)335-t900 John Gioia,1st District Gayle B.Uilkema,2nd District �?`'_` ;'�<• Donna Gerber,3rd District - -L Mark DeSaulnier,4th District ;;I Federal Glover,5th Districtfa:= October 22, 2001 Debra E. Keller, Esq. Shapiro, Buchman, Provine, Pattton, LLP 1333 N. California Boulevard, Suite 350 Walnut Creek, Ca 94596 Re: Notice of Appeal of Seren Innovations, Inc. Dear Ms. Keller, Pursuant to.Section 14-4.006 of the County Ordinance Code, notice is given that November 6, 2001, at 1:00 p.m., at 651 Pine Street, Room 107, (the Board's Chambers) Martinez, California, has been set as the time and place for the hearing by the Board of Supervisors of the administrative appeal, from the decision of the Contra Costa County, Office of the County Administrator, the denial of the application from Seren Innovations for encroachment permits. If you challenge this matter in Court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the County, at or prior to the public hearing. Very truly yours, n , JOHN SWEETEN, Clerk of the Board of Supervisors and , L ^ County Administrator (� By a-� �/Vll �Wt k", Danielle Kelly, Deputy Clerk cc: Lillian Fuji-County Counsel Sara Hoffman-County Administrator ! A� Jl/` Pat Burke-CCTV Catherine Kutsuris,Community Development Department Maurice Shiu,Public Works Department .Patty Friesen, Seren Innovations Peter M. Glass, Seren Innovations Peter A. Casciato, Lav Office of Peter A.Casciato David Baiter, Esq. BOARD OF SUPERVISORS, CONTRA COSTA COUNTY, CALIFORNIA AFFIDAVIT OF MAILING Administrative Appeal4f, ) Seren Innovations ) I declare under penalty of perjury that I am now, and at all times herein mentioned have been, a citizen of the United States, over age 18; and that today I deposited Certified Mail with the Contra Costa County Central Services for mailing in the United States Postal Service in Martinez, California, first class postage fully prepaid, a copy of the hearing notice, and the code section in the above matter to the following: P 160 .254 C 2 6 Debra E. Keller, Esq. Shapiro,Buchman,Provine,Patron, LLP P 160 254 027 1333 N. California Boulevard,Suite 350 .. Walnut Creek,Ca 94596 P 160 254 028 Patty Friesen ----- wernment Affairs& Community Relations Manager t,c•�- Seren Innovations �- ` 16 0 2 5 4 1,-9 215 Mason Circle Concord,Ca 94520 P 160 254 030 Peter M. Glass S Postal Service Seren Innovations eceipt for Certified Mail 15 South P Street,Suite 500 Ki„i.,e„rnn—L`n„nrana armArlul _ Minneapolis,MN 55402 1 David Baiter,Esq. i Peter A. Caseiato C/O Law Offrce of Peter A. Caseiato Law Office of Peter A. Caseiato 8 California Street,Suite 701 8 California Street,Suite 701 San Francisco, Ca 94111 San Francisco,Ca 94111 i -___ David Balter,Esq. Postage $ C/O Law Office of Peter A.. Caseiato Certified Fee , 8 California Street,Suite 701 San Francisco,Ca 94111 Spedal Delivery Fee I� Restricted Delivery Fee Return Receipt Showing to ,ury that the foregoing is true and correct, executed at 651 Pine Whom&Date Delivered a Return Receipt Showing to Wham, Q Date,&Addressee's Address 0 TOTAL Postage&Fees $ r Postmark or Date Li .k The Board of Su ervilrs • John Sweeten Contra n1I ra ll a Clerk of the Board Covmty Administration Buildingand Costa County Administrator 651 Pine Street,Room 106 (925)335.1900 Martinez,California 94553-1293 County John Gioia,1st District se- c Gayle B.Uilkema,2nd District ?t _moo.• Donna Gerber,3rd District Mark DeSaulnier,4th District Federal Glover,5th District rj cou October 22, 2001 Debra E. Keller, Esq. Shapiro, Buchman, Provine, Pattton, LLP 1333 N. California Boulevard, Suite 350 Walnut Creek, Ca 94596 Re: Notice of Appeal of Seren Innovations, Inc. Dear Ms. Keller, Pursuant to Section 14-4.006 of the County Ordinance Code, notice is given that November 6, 2001, at 1:00 p.m., at 651 Pine Street, Room 107, (the Board's Chambers) Martinez, California, has been set as the time and place for the hearing by the Board of Supervisors of the administrative appeal, from the decision of the Contra Costa County, Office of the County Administrator, the denial of the application from Seren Innovations for encroachment permits. If you challenge this matter in Court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in writtcn correspondence delivered to the County, at or prior to the public hearing. Very truly yours, JOHN SWEETEN, Clerk of the Board of Supervisors and County Administrator 0 a' By �(:� Danielle Kelly, Deputy Clerk cc: Lillian Fuji-County Counsel Sara Hoffman-County Administrator Pat Burke-CCTV Catherine Kutsuris,Community Development Department Maurice Shiu,Public Works Department Patty Friesen, Seren Innovations Peter M. Glass, Seren Innovations Peter A. Casciato, Law Office of Peter A.Casciato David Balter,Esq. CONTRA COSTA COUNTY Clerk of the Board Inter-Office Memo Date: October 10, 2001 To: Sara Hoffman, Assistant County Administrator Office of the County of Administrator From: Danielle Kelly, Deputy Clerk Clerk of the Board of Superviso Subject: Seren Innovations, Inc. We are in receipt of $125.00 and an administrative appeal filed by Debra E. Keller, Esq., Shapiro, Buchman, Provine, Patton, LLP, and Peter A. Casciatio, Law Offices of Peter A. Casciato, on behalf of Seren Innovations, Inc., from the September 6, 2001, denial of Seren's application for encroachment permits. This matter has been scheduled for hearing by the Board of Supervisors on November 6, 2001, at 1:00 p.m. If this matter is untimely or there is any other reason it should not be heard by the Board of Supervisors, please advise this office in writing by October 17, 2001. If the appeal is to be heard, please provide the Clerk of the Board with any known addresses that should receive certified notice of the hearing. Please provide material relative to this appeal to be presented to the Board by October 25, 2001. cc: County Counsel- Lillian Fuji Pat Burke • • ■ SHAPIRO BUCHMAN PROVINE PATTON LLP ■ 1333 N.California Boulevard,Suite 350 Walnut Creek,California 94596 T 925 944 9700 F 925 944 9701 MCI October 31, 2001 J" Reply to: T 1 2001 Debra E.Keller,Esq. V E{nail:dkellerosbllp.com COCNN COUNSEL BY HAND DELIVERY tAARTINEZ,CALIF. Lillian Fuji Deputy County Counsel County Administration Building 651 Pine Street, Room 106 Martinez, CA 94553-1293 Re: Appeal Hearing, Seren Innovations, Inc. Our File No.: 30066.005 Dear Lillian: Last Friday afternoon you requested information regarding the areas of Contra Costa County in which Seren Innovations, Inc. ("Seren") desires to construct pursuant to the pending encroachment permit..Per your request of, I enclose two maps (one of Walnut Creek and one of Concord), which illustrate the unincorporated areas within each of these cities. Seren needs to be able to install fiber through these "pockets" of unincorporated areas in order to deliver its services to all of the residents of Walnut Creek and Concord. Please refer to Seren's original encroachment permit application to the County(under the "Construction Project Description"), for an explanation of the overall Construction Phasing. As each Phase is ready to be commenced, the appropriate map will be prepared and provided to the assigned Planner. This is also to address several details of the hearing itself. Seren is electing to have the hearing stenographically reported, and will make those arrangements. In addition, Seren requests that specific written findings be issued with and as a part of any decision by the Board of Supervisors in this matter. Finally, this will confirm that your office will make available the staff report (and any and all exhibits) for the hearing sometime on Thursday, November 1, 2001. A Seren representative will contact your office to confirm that the report is ready and make arrangements to pick up'a hard copy. If possible, I would request that a copy be e-mailed to me at the above-address as soon as it is finalized. ■ www.sbllp.com ■ 154786.1 Lillian Fuji Page 2 Deputy County Counsel October 31, 2001 If you have any questions with regard to the above, please contact me. Very truly yours, SHAPIRO BUCHMAN PROVINE &PATTON LLP Debra E. Keller, Esq. DEK:vf 16 s fol. Enclosures ( �S � l f -'ire c i cc: Peter M. Glass, Esq. �� Peter A Casciato, Esq. Patty Friesen 5 154786.1 ,y i 1 1 o � a N_ O ' O O cr D r� = g A 0 S i Y � C�l N a 2c x � � 6 � 'x o At 0 O a dC� ® SHAPIRO BUCHMA.N PROVINE PATTON LLP o 1333 N.California Boulevard,Suite 350 Walnut Creek,California 94596 T 925 944 9700 F 925 944 9701 October 2, 2001 RECEIVED Reply to: A 200♦ Debra E.Keller,Esq. BY HAND DELIVERY OCT11 �j 1 E-mail:dkeller@sbllp.com ek Location om Walnut Creek Location CLERK BOARD OF SUPERVISORS Clerk CONTRA COSTA CO. Contra Costa County Board of Supervisors 651 Pine Street, 11th Floor Martinez, California 94553 Re: Notice of Appeal of Seren Innovations, Inc. Our File No.: 30066.005 Dear Clerk: Pursuant to Contra Costa County Ordinance § 70-36, enclosed please find Seren Innovations, Inc.'s ("Seren") Notice of Appeal of the September 6, 2001 denial of Seren's application for encroachment permits from Contra Costa County made by Ms. Sara Hoffinan, Assistant County Administrator for Contra Costa County. Please file the enclosed Notice of Appeal, conform the enclosed copy and notify me of the first available date for hearing on this matter. Thank you in advance for your anticipated cooperation. I can be reached the address and telephone number listed above with any questions or comments you have. Very truly yours, SNAP RO BUCHMAN PROVINE & PATTON LLP G Debra E. Kellcr, :Esq. DEK:dxb Enclosures cc: P. Glass, Esq. (w/o enclosures) P. Friesen (w/o enclosures) P. Casciato, Esq. (w/o enclosures) ■ www.sbl.lp.com ■ 153505.1 30066-013 Admitted: • Law Offices • Telephone:(415)291-8661 Califomia of Facsimile:(415)291-8165 District of Columbia PETER A . C A S C I A T O voiceMail:(415)291-8843 New York Email:pcasciato@rcn.com Oregon A Professional Corporation 8 California Street,Suite 701,San Francisco,CA 94111 September 28, 2001 Clerk �E Y E Board of Supervisors OOT 2 2001 Contra Costa County County Administration Building 651 Pine Street 11"' Floor Martinez, CA 94553 Re: Notice of Appeal of Seren Innovations, Inc. Clerk, Board of Supervisors: Pursuant to Contra Costa County Ordinance 70-36 Section 1, Seren Innovations, Inc. ("Seren"), by its attorney, hereby files its Notice of Appeal of the September 6, 2001 letter from Sara M. Hoffman, Assistant County Administrator, denying Seren's June 7, 2001 application for encroachment permits, Exhibit 1 hereto As discussed below, that denial is contrary to both federal and state law. Seren hopes that the denial is somehow based on a lack of awareness of applicable law. However, if the Board of Supervisors does not reverse the denial and issue the requested permits, Seren will immediately seek relief in an appropriate court of law to remedy the County's error. I. Background Facts Concerning Seren's Requested Encroachment Permit On June 7, 2001, Seren applied for an encroachment permit, a copy of which is attached as Exhibit 2 hereto.2 That requested permit would allow Seren to construct a hybrid fiber coaxial ("HFC") network in various portions of the county that would deliver voice, video and high-speed data services to communities in the County. That network would also be capable of providing cable television service to customers in the County when and if the County approved a cable television franchise for Seren. In the meantime, the encroaclunent permit sought by Seren is for the telecommunications services allowed under federal and state law and not for the offering of cable television service. 11. Seren's Federal and State Authority Seren is a telecommunications carrier under federal law and has a certificate of public convenience and necessity ("CPCN") as a public utility and telephone corporation under Public Utilities Code ("PU Code") Section 234, authorizing it to construct and On July 9,2001, Seren deposited$5000.00 with the County to be used for County planning and review of the proposed construction. Clerk Board of Supervisors Contra Costa County September 28, 2001 Page 2 offer telecommunications services in Contra Costa County and the state of California. . Section 253 of the Communications Act of 1934, as amended, precludes the county from adopting or using any local statute or regulation that prohibits or has the effect of prohibiting Seren from providing its telecommunications services. Similarly, Section 7901 of the PU Code grants Seren a statewide franchise to use public rights of way to construct its telecommunications facilities and precludes cities or counties from imposing regulations or requirements that inhibit such construction and limit local authorities to "exercis[ing] reasonable control as to the time, place, and manner in which roads, highways, and waterways are accessed." Ibid.-, Pacific Tel. & Tel Co. v. City and County of San Francisco. 197 Cal. App. 2d 133, 152 (1961 III. The County's Refusal To Issue Seren An Encroachment Permit Violates Federal and State Law Under the federal and state authority noted above, the County does not have the authority to deny Seren an encroachment or excavation permit to construct its facilities for telecommunications use based on the fact that Seren does not have a cable television franchise. Similarly, the county lacks the authority to deny Seren the requested permits because Seren's CPCN and the PU Code specifically entitle Seren to construct the noted facilities for telecommunications uses. Further, Seren's CPCN, as set forth in California Public Utilities Commission Decision 99-06-083, places no condition on Seren that it construct its telecommunications system for cable television use as a prerequisite for Seren constructing and offering telecommunications services. It is untrue, as stated in Ms. Hoffman's letter, that Seren's application to the CPUC indicated that it would install its cable system before any local phone service could be installed. Rather, Seren specifically stated therein that it "proposes to construct a hybrid fiber coaxial ("HFC") network in Contra Costa County capable of providing its customers the full range of telecommunications services, including those sought herein, as well as other communications not regulated by this Commission [CPUC], such as cable television." Application at 3. You should be aware that the CEQA review and authorization granted Seren specifically studied Contra Costa County and the CPUC granted Seren full authority to construct its telecommunications facilities in accordance with an adopted CEQA mitigated negative delaration.2 Whether the County believes this 2 In its environmental assessment attached to its CPCN application, Seren also indicated that its cable operations would address environmental issues applicable to making cable television facilities available for telephony as authorized by the CPUC with local authorities. Seren is unaware that any such issues presently exist. However, if and when Seren cable operations use cable-only infrastructure for telephony they will raise any applicable issues with the county. However,no such issues arise until that time and,at this time, Seren is not seeking by way of the encroachment permit to offer any cable television service with the telecommunications facilities that are to be constructed under the encroachment permit. Clerk Board of Supervisors Contra Costa County September 28, 2001 Page 3 to have been "liberal" of the CPUC, as indicated in Ms. Hoffman's letter, is irrelevant. The County had the opportunity to comment on Seren's CPCN application while pending and it did not. The CPUC decision exists as a matter of law and the County does not have the authority to overturn the finality of the CPUC's decision and its contents at this late date, or act in a manner contrary to PU Code Section 7901, as it has in Ms. IIoffman's letter. Ms. Hoffman's letter also amounts to a denial of the encroachment permits to Seren because it has not agreed to a cable franchise with the County. Seren is not aware that any court has ever supported the view that a telecommunications carrier must obtain a cable franchise to construct its telecommunications facilities, even if such facilities could also be used at a later date for cable television purposes when so authorized. Most recently, the United States Circuit Court of Appeals has struck down local authority attempts to impose regulations or requirements that inhibit a telecommunications carrier froth constructing its facilities. See Qwest Communications Corporation v. City Auburn et al., 2001 WL 410043. Even more recently, the United States District Court for the Northern District of California has granted a preliminary injunction against the City of Berkeley for its attempt to impose franchise restrictions on Qwest Communications Corporation as a condition of constructing telecommunications facilities under its CPCN. See Qwest Communications Corporation v. The City of Berkeley No. C 01-0663-SI, filed May 23, 2001. A copy of these decisions are enclosed for the Board's review as Exhibits 3 and 4 hereto. Moreover, in the City of Berkeley decision, the Court specifically held that the issuance of an encroachment permit is a ministerial act and that its issuance does not even trigger CEQA. In that regard, there is no reason to believe that local statutes governing the issuance of encroachment permits by Contra Costa county under title 10 of the Ordinance Code would constitute anything other than ministerial acts and that the County can not deny those permits to Seren anymore than Berkeley could deny similar permits to Qwest.3 As the court recited with approval in City of Auburn v. Qwest, ("[A]ny 'process for entry' that imposes burdensome requirements on telecommunications companies and vests significant discretion in local governmental decisionmakers to grant or deny permission to use the public rights-of-way `may . . . have the effect of prohibiting' the provision of telecommunications services in violation of the [Act]."); a requirement to obtain a franchise, see AT&T Communications v. City of Dallas, 52 F. Supp. 2d 763, 770 (N.D. Tex. 1999) ( a representation by the city that "without a new franchise . . .AT&T ' We have been advised by Qwest's outside counsel that since the issuance of the federal court injunction, the City of Berkeley has issued to Qwest the encroachment permits at issue. Clerk Board of Supervisors Contra Costa County September 28, 2001 Page 4 may not offer [services]" is "sufficient proof of the requisite prohibitive affect that triggers the preemptive force of Section 253(a).)", vacated and remanded on other grounds, F. 3d_, 2001 WL 197926 (5"' Cir Mar 15, 2001). . . ." IV. Conclusion The County's September 6,2001 letter denying Seren its requested permit commits serious reversible legal error. Seren requests that it be rescinded immediately and the requested permits be issued, or Seren will fully utilize all of its appeal rights and hold the county responsible for all damages that it incurs as a result of its inability to construct and offer telecommunications services in Contra Costa County. In the latter regard, you should be aware that those damages will include the costs to re-design the network to avoid the county areas, re-application of previously granted permits with the cities of Walnut Creek and Concord as well as Pacific Gas and Electric and other authorities. It will also result in the abandonment of previously installed facilities, construction delays and lost revenues all of which will easily run into the millions of dollars. Very t y yours. J ter . Casciato tier Corporation Attorney for Seren Innovations, Inc. cc: Peter Glass, General Counsel David Balter, .Esq. Board of Supervisors VERIFICATION I, Peter M.Glass,am Vice-President and General Counsel of Seren Innovations, Inc. and I make this verification on its behalf. I have read the foregoing Notice of Appeal and am informed and believe that the matters stated therein are true and correct and on that ground certify same under penalty of perjury. This verification was executed on September 26,2001 at Minneapolis MN. Peter M. Glass 09/07/2001 13:16 FAX 925 459 1 CCCFAI=B -- • t l�j 002 County Administrator Contra Board of Supervisors Costa John M.Gioia County Administration Building tst Oictricl 651 Pine Street, 11 th Floor /1 County Gayle B.Ullkema ICMartinez, California 94553-1229 2nd Disvk t (925) 335-1080 FAX:(925)335-1DonnaGerber 3rd District r Mark DeSouinter John Sweeten f % 47h Dlctrict County Administrator Federal D.Glover L • " 51h District i September 6, 2001 Patty Friesen Government Affairs & Community Relations Manager Seren Innovations 215 Mason Circle Concord, CA 94520 Dear Ms. Friesen: t t As you know, County staff was looking forward to Seren eni`ering into franchise agreements to provide cable N service in some of the unincorporated areas of Contra Costa_County, as well as in the Cities of Pleasant Hill, Clayton and Danville. As the County and Cities have discussed with you, such franchises would be a natural extension of the territories covered by Seren's recent cable franclhise agreements with the Cities of Concord and Walnut Creek. The County has met with Seren on numerous occasions to work out a mutually agreeable franchise agreement for the unincorporated areas. At our last meeting on July 25, 2001, County staff even offered to consider a franchise agreement that would be implemented in phases In response to your representations of current management constraints. That optlori remains a possibility from the Countys perspective. We understand that Seren is eager to complete construction of. the part of its cable system that will be used to meet its commitments under the WOlnut Creek franchise. Since there are portions of Concord contiguous to Walnut Creek ajnd no areas of Walnut Creek are completely surrounded by unincorporated territory, Sdren can complete the necessary infrastructure to meet Its Walnut Creek cable obligations without having to encroach upon unincorporated area roads. Nonetheless, Seren has continued to seek encroachment permits in the unincorporated areas near Walnut Creek for its cable system. County Counsel has reviewed Seren's Certificate of Public Convrenience and Necessity (CPCN) documents and has concluded that Seren's CPCN does riot entitle it to excavate County roads for its cable or other facilities absent a cable franchise with the County. The California Public Utilities Commission (CPUC) has been liberal In Issuing CPCNs for the purpose of encouraging competition in the provision of local phone service. i 7 --09/07/2001 13:16 FAX 925 459 �1 --_ CCCFA�-B a003 However, we do not believe that the CPUC will allow Seren to construct its primarily cable system under the existing CPCN. In the application to the IQPUC, Seren stated that the cable system would be Installed before any local phone service could be provided, and that permits to install the cable system would be obtained from cable authorities, i.e., Contra Costa County In the unincorporated meas. Seren also represented that only minimal construction would be required undef the CPCN. Based at least In part on such representations, it appears that the CPOC conducted only minimal environmental review before issuing the CPCN. We therefore conclude that Seren Is not entitled to use the CPCN to access the County's rights of way to construct its cable or any other system. The County hereby denies Seren's application for encroachment permits. Very truly yours; Sara M. offman; Assistant County dminlstretor cc: Board of Supervisors John Sweeten, County Administrator Ullian Fujii, Deputy County Counsel Patricia Burke, Cable TV Administrator Maurice Shiu, Director, Public Works Department Catherine Kutsuris, Deputy Director, Community Developmeht Seren Innovations, Inc. Construction Project Description Contra Costa County General Description Seren intends to use HFC (hybrid fiber coaxial) networks to deliver voice, video and high-speed data services to communities in Contra Costa County. Our technology will fundamentally alter the way communications work, making communicating easier and life more convenient and manageable for our subscribers. Our services will bring a new generation of high-speed Internet and data services and more choices in cable television and telephone services at competitive prices. We will bring to Contra Costa County a strong commitment to stellar customer service and corporate involvement in the communities we serve. System Overview The system platform proposed is a 860 MHz hybrid fiber coaxial (HFC) bi-directional cable distribution system. Seren's HFC system is capable of delivering hundreds of cable channels, with over one hundred channels to be energized upon system activation. With Seren's advanced system, the platform provides a tree-and-branch topology, high-bandwidth, bi-directional communications network between community homes, businesses and the cable system's headend. The headend facility, including satellite channel earth stations, off-air channel towers and antennas, public access offices and the network operating center is located in Concord. The headend is the heart of the system; it includes substantial backup facilities to ensure system reliability: an uninterruptible power supply, electrical generator, environmental control equipment, lightning protection, bonding and grounding systems and redundant electronic equipment. The distribution system will consist of a combination of fiber optic links and a coaxial cable distribution system. Each fiber link will provide two-way communication between the headend and one or more optical nodes, each serving a cluster of up to 400 homes. The technology uses optical fibers with very low signal loss. The loss is so low we can place nodes at distances of up to 15 miles from the headend without needing any intervening signal amplification devices. This will create an extremely reliable distribution system to points distant from the headend, since there are no intervening electronic devices that could fail. From the node to and from customer dwellings, we will use tree-and-branch coaxial cable distribution. We also use redundant paths of fiber for backup which allows the nodes to be easily upgraded. Construction Activities Seren is in the process of "Walking Out' the County. This is a stage of discovery, which involves the gathering of all information as it relates to network routing. We measure each pole and we make note of what is on each pole and existing clearances as well as measure distances between each pole. In areas where poles do not exist (i.e. underground services), proposed routings and public easements are identified, and pedestal and power supply placements are defined. Streets are measured along with the addressing of each house and business. All of this data is turned in to our CAD-design team who designs the network, starting with the neighborhood coaxial network, then connecting the neighborhood networks to the fiber nodes. The final design stage is the routing of the fiber backbone as it runs back to the headend. Once construction begins, we follow existing utility service lines. Trenches are dug for underground conduit to be placed and existing poles are used where there are aerial services. Construction generally runs along roads and highways where there are residences and businesses to serve. It is not anticipated to cross open spaces or creeks during the construction process. The County will receive a set of "as built' maps once system construction is complete. County Service Areas& General Phasing Seren plans to build from its head end location in Concord to Walnut Creek and then south to Danville. At the same time, it is our plan to build contiguously through Pleasant Hill and Martinez east to Pittsburg, Antioch, Oakley and Brentwood. All of the unincorporated pockets of Contra Costa County would be included in our build. Initially, Phase One includes unincorporated areas around the cities of Concord and Walnut Creek. Currently Phase Two comprises southern Walnut Creek through the unincorporated county areas down to Danville. Phase Three includes Pleasant Hill, Pacheco and Martinez. Phase Four begins in Bay Point, Pittsburg, and Antioch. And Phase Five is completed with Oakley and Brentwood. Phasing is subject to change. At this point, it is premature to determine the exact construction project phases. _ _ �'.r CON10 COSTA COUNTY PUBLIC WORKS DEPA&ENT APPLICATION AND PERMIT CENTER 651 PINE STREET,2YD FLOOR,NORTH WING,MARTINEZ,CA 94553 PHONE:925-335-1375 FAX:925-335-1376 e-mail:rhendry@pw.co.contra-cost2.c2.us ENCROACHMENT PERMIT Revs/l/01 For Office Use ❑Small Permit$ Receipt No.:G- Permit No.: Road No.: ❑ Large Inspection$ Area: TBM: •Utility Bond$ Fed Tax ID No.: USA No.: Permit to do work in accordance with Title 10 of the Ordinance Code of Contra Costa County,County Standard Plans and Specifications,and any Special Requirements shown or listed herein. Read both sides of this Permit and all the attachinents carefully.Keep this Permit at the work site. Permittee: Sc R E kf ;c N NO V 1!1-10 w S Contractor: u ,'R ,r, ( COMWIPEK 1 50. Contractors License a Address s it 1:1 ,500 Address: SIEE ArrAelAA b argses City/State/Zip: 0 1 1 4 EQ?O W S, M l a a S S4pZ City/State/Zip: Contact Person: W 11,1„ M 1 A'1AV> Telephone Number:CaS-45q- 101$ Fax Number:q2S -45q- 1101 Expiration Date: All work described in this permit,including finish paving,shall be completed on Xn NE 30,Z.00Z, If all work covered by this permit,including finish paving is not completed by this date,you must acquire a new permit. Permitted Activity: OF TELE COMMMICA-MO k fWORK Start Date: TUNE V5, 200 k Projected Completion Date: T1T>aE 3D, 2aDZ Site Address: APN: General Permit Conditions: I. ALL WORK MUST BE INSPECTED. ARRANGE for an INSPECTION by phoning at least two working days before you begin work. WORK DONE WITHOUT NOTIFICATION IS SUBJECT TO REJECTION AND/OR A PENALTY OF$100. 2. IF WORK is perfortned without a permit, the fee shall be double the amount per fee schedule or a minimum of$300. All work performed without a permit is subject to removal and/or reinstallation. 3. IF this permit is for an EXCAVATION in the County road right-of-way, it is not valid without a current USA Number. 4. THE INSPECTOR may modify this permit to meet field conditions. 5. Standard Road Encroachment Permit Conditions;Sections I, II, III,and IV on the back of this permit apply. READ CAREFULLY. 6. INSPECTION CHARGES - Will be billed to whomever takes out the permit. Any exceptions must be resolved before the permit is issued. Permits will not be signed off as complete until all the review and inspection charges are paid in full. 7. You must schedule a FINAL INSPECTION by phoning your inspector. After the Final Inspection has been completed and the inspector has signed off on the permit, refunds of fees or deposits will be processed. Refunds will be sent out 90 days from the date the permit was signed off. A signed off permit from another permitting agency or utility company does not guarantee the work performed under this permit has been Icompleted satisfactorily. Items Attached or Referred to Herein and Made Part Hereof: ❑General Permit Conditions:attachment ; ❑ Special Road Encroachment Permit Conditions; ❑ Preserving Survey ivlonumentation; The Permittee agrees to save,,indemnify and hold harmless the County of Contra Costa, its officers, employees and agents from all liabilities imposed by law by reason of injury to or death of any person(s) or-damage to property, including without limitation liability for trespass, nuisance or inverse condemnation,which may arise out of the work covered by this permit and does agree to defend the County,its officers,employees and agents against any claim or action asserting such a li;kbility. Accepting this per or s:a ing any work hereunder shall constitute acceptance and agreement to all of the conditions and requirements of/is permit and the or in c nd speci cations authorizing issuance of such permit. Signature of Perinittee: Date: 1-07/1/,0/ Print Name: /4.[./A0 /N /�R�.+� By: Date: Robert B. Hendry Ill,Permit Technician For: Maurice Shiu,Public Works Director,Contra Costa County ❑ Work Completed Inspector: . ❑ Expired ❑ APPLY PENALTY—No Inspection Requested Date: C`.Pemrits'.ENCROACH`.EP-FOR%is%Encroa6mcm?emm 00 revised dix ST,*RD ROAD ENCROACHMENT PERMIT CONDIOS 1. GENERAL INSTRUCTIONS 1. WORK MUST BE INSPECTED-The inspector will answer all questions. Work done without inspection may have to be removed and be reconstructed. 2. PROTECTION - Provide and maintain enough barricades, lights, signs, cones, flaggers and other safety measures to protect the public, in accordance with the State Department of Transportation Manual of Traffic Controls for Construction and Maintenance Work Zones(Current Edition). 3. TRAFFIC-A County road may not be dosed to public traffic without the approval of the Board of Supervisors. Unless noted otherwise in attached General or Special Road Encroachment Permit Conditions,keep one 3 meter(10')wide traffic lane open to traffic while working;at all other times,two 3 meter(10')wide lanes shall be open. 4. STANDARDS-Work shall be in accordance with the County Standard Specifications and Standard Drawings. " 5. UTILITIES-U61ity relocations are the responsibility of the permittee. 6. UNDERGROUND SERVICE ALERT(USA)-Must be contacted prior to excavating in a County road right of way. Telephone 800-642-2600. Any work found in progress without a valid USA number will be shut down and the roadway cleared. 7. SURVEY MONUMENTS SHALL BE PROTECTED. Any survey monuments removed, or disturbed, shall be replaced using surveying practices acceptable to the County Surveyor,who can be contacted at(925)313-2314 11. SPECIAL REQUIREMENTS-DRIVEWAYS(THE DRIVEWAY SHALL BE CONSTRUCTED FROM EDGE OF PAVEMENT TO PROPERTY LINE)" 1. Minimum driveway construction shall consist of 50mm(2')of asphalt pavement on 150mm(6')of Class 2 Aggregate Base. Concrete driveways within the County road right of way shall consist of a minimum of 150mm(6')of Type B concrete over 75mm(3")of Class 2 Aggregate Base. The driveway is to be sloped to prevent storm water runoff to flow onto the County road and shall not interfere with roadside drainage or cause erosion or deposition of silt 2. The driveway shall not enter a roadway within 1.5 meters(5')of existing or planned curb returns,shall not interfere with a legal encroachment or create a hazard or nuisance, and shall be spaced to make maximum street parking available. 3a. "The top elevation of driveway 1.5 meters(5)behind curb is to be 0.18 meters(.60'or 7'/:)higher than the flow line of the gutter. 3b. The driveway elevation at the property line shall be within 0.3 meters(1')of the elevation of the near shoulder and shall merge with the shoulder to preserve the roadbed section. 4. If existing driveway depression is not used,it shall be completely removed(curb,gutter and sidewalk)by saw cut at next nearest expansion joint or score mark and replaced with . concrete to conform to adjacent improvements-form board to be used at gutter lip and the pavement restored with asphalt concrete.Sidewalk and curb which is replaced shall be doweled. (See CA 74) 5. Existing curb and gutter,or curb,gutter and sidewalk shall be removed for full width of driveway with saw cut at next nearest expansion joint or score mark.(See CA 70)A form board must be used at the gutter lip and the pavement restored with asphalt concrete. The new sidewalk and curb shall be doweled.(See CA 74) 6a. Where driveways connect to County roads without curbs,shape a valley gutter across the driveway. The flow line shall match the flow line of existing roadside ditch. 6b. Install a culvert for full width of driveway. This culvert is to be laid to the flow line grade of existing roadside ditch. Only corrugated galvanized metal,corrugated aluminum pipe or reinforced concrete pipe may be used. The minimum culvert diameter is 450mm(18'). 7. The driveway will require the use of a template to determine acceptable clearances. The template will be 5.6 meters(13'6")long and have two 150mm(6")projections from its bottom plan,one located 0.9 meters(3')and one 1.5 meters(5')from an end. This template shall be used to control finished grades. 8. All broken curbs,gutters and sidewalks shall be completely removed by saw cut at nearest expansion joint or score mark and replaced to he grade and cross-section. The new curb and sidewalk shall be doweled.(See CA 74) 111. SPECIAL REQUIREMENTS-STREET CUTS(See County Standard Specifications for Detailed Requirements).. 1. TRENCH EXCAVATION-The minimum excavated trench width shall be 300mm(1'). The Permittee shall not excavate trenches in advance of pipe placement No more trench shall be excavated than can be finished,including pipe placement,backfill and temporary paving on the same day. Shoring shall comply with current CAL-OSHA safety orders. Pavement to be removed shall be scored to neat straight lines: Pavement removal shall not cause damage to pavement outside the scored lines. Excess excavated material shall be removed immediately from the site. 2. TRENCH BACKFILL-Trench backfill shall conform to the following requirements unless otherwise directed by the inspector or the Special Road Encroachment Permit Conditions. a. Within the paved area of the roadway including the shoulder,curb/gutter and sidewalk areas,the minimum trench backfill shall match the existing structural section of the. road or have a minimum of 30Cmm(12')of Class 2 aggregate base and 75mm(3.0")of asphalt concrete,whichever.is greater. The minimum relative compaction of the Class 2 aggregate base and the asphalt concrete shall be 95 percent b. For trench backfill in other road right-of-way areas,the trench backfiil shall consist of existing material or suitable backfill material as approved by the inspector.The trench backfill shall have a minimum relative compaction of 90 percent No jetting is allowed under any paved roadway or within a distance of 1.25 meters(41 from the edge of existing pavement.Backfill shall be compacted by impact,vibration or any combination of these. Jetting will be allowed only when more than four feet from the pavement and when the backfill and trench are suitable for jetting and shall be supplemented with mechanical compaction to obtain required relative compaction. 3. TEMPORARY PAVING-Temporary paving(or permanent paving)shall be placed at the end of each work day and shall have a minimum thickness of 40mm(1.5'). The permittee shall maintain the temporary trench paving until the permanent paving is performed. IV. SPECIAL REQUIREMENTS-SIDEWALK DRAINS 1. Install a 75mm(3")inside diameter non-corrosive pipe through curb or through curb and sidewalk. One panel of sidewalk,curb and gutter,or where there is no sidewalk,0.3 meters(1')of curb only(don't remove gutter)to be removed by a saw cut Pipe flow line shall match gutter flow line,and pipe shall be cut off flush with face of curb.Sidewalk concrete shall encase pipe in 75mm(31 concrete jacket Replace curb,gutter,sidewalk and pavement to match adjacent improvements.(See"CD06) CITY OF CONCORD • CRY COUNCIL 1950 Parkside Orive MIS 06 Laura M.Noffineister,Mayor Concord.California 94519-2578 811 McManigal,vice Mayor FAX: (925)671-3353 Helm M.Allen Mark A.Peterson Telephone:(9Z5)671-3307 Michael A.Pastriek LWm d KedU,.CIty Cleric CA9ftdThomas . ig,CityTreasurer May 11,2001 Edward RJarn.James,.CIry Manager one OSBORN JAY 3225 NEIL ARMSTRONG BLVD APT 500 EAGAR, MN 55121 Dear Business Person: Thank you for renewing your Business License. The City of Concord appreciates the contribution your enterprise has made to our local economy. This Business License does not imply conformance with applicable City codes and ordinances. Approval from the City Planning Department for compliance with zoning codes and use restrictions must be received before operating your business. Your Business License is in effect until the expiration date shown on the upper right hand comer of the license below. As a courtesy to the business community the City will send a renewal notice each year. It is the responsibility of the business owner to be aware of the Business License tax due date and to remit payment in a timely manner. To avoid penalties, payments must be made within thirty days from the expiration date. We are working on ways to make it easier to renew your Business License. In the future, all businesses will be able to make their payments by debit or credit cards displaying the Visa or Mastercard logo. Also,we are striving to give you the option of renewing and paying for your Business License electronically in the next year. We will inform you when this service becomes available. Please tear your license off at the perforation mark and post it in a conspicuous place in your business. Again,thank you for choosing to do business in the City of Concord . Business Class:Contractors Business No. BL01000408 EXPIRES 04/30/2002 Concord City of Concord•Finance Department Under Provisions of Concord 1950 Parkside or.,MS/o6•Concord.CA-94519-2578 Municipal Code,a;on-transferable POST IN A CONSPICUOUS PLACE Eicense is hereby granted to: BUSINESS l , C E N S F. Licensee must comply.with.Chy zoning requirements.: 2 This license is issued-without veriticaflan,. that the licensee is subject to or exempf;- ` from ticensing by the state of Cal'ifiomia ' UTILITY RESOURSES OSBORN JAY 3225 NEIL ARMSTRONG BLVD #500 Director of Finance&Management Services• =1h-71B OEC 99 CD 106 :0 too tp vy CD ch oa- 'P-A 176 76 v 111 tn. 0— "VE -i r 7y� ra'o Fc, A.A. LO IP -10 COD VP CD mIDC) Im oc 0) 0W jCD wren innovations•. C NO. VENDOR IVUMBER::>` v 5 602215 :..:::VENDOR:-NAME: ::>:»`<::»: <<:.::.............. ><:» <'': Di4TE`<:.: -PAGE:'.... . . CONTRA COSTA CTY PUBLIC WORKS 6/5/01 1 ;. MARNOCNUMBER . . . ...... : DAM: . GRO SS:.AMOUNT :.....:..;:.DISCOUNT:::> : > : 6/5/01 6/4/01 PERMIT 1,300.00 1,300.00 TOTALS: 51,300.00 $1,300.00 DETACH VOUCHER BEFORE DEPOSITING VOID AFTER US BANK 93-455.;:' :. _90 DAYS Havre,Montana.5940t_';;,:,:: 3625 2.4-Hour Banking-1 800-673.3555 .. CHE 929'' seren innovations DATE 15 South 5th Str6i4 Suite 500 : .. .... .... 6%5/01 Minneapolls,MN'55402 • ZCHECK:AMOUNTs PAY EXACTLY:. ......$1,300.00 One thousand three hundred and 00/100 Dollars TO THE ORDER CONTRA COSTA CTY PUBLIC WORKS = OF: Application&Permit Center 651 Pine St. 2nd Floor,North Wing = Martinez,CA 94553 Lyn F. 1120000 3 6 2 511' 1:09 2904 5 541: L5008066543GO pomp--- :7E -A yj r 2 ♦ p t NA It �� Ilk�'�� Von- 1-4 iQ �1 ��ja`• 4 I �ry�=Y may-24-0! 0e:49a. Fror 303 T9 T-388 P.02 F-360 ST (WED) h. 'Lj,�17:j1151. u:ju/nu. quoi 141u[s r t ON UTHI9 � WATUNS-S ax I[aebine �1 l FILIED i MAY 2 s 2001 2 RICHARD W. w►Rur 3 NOR�RW DI&MC7 pFTCAUUt�c' 4 IN THE UNITED STA'T'ES DISTRICT COURT S FOR THE NORTHERN DISTRICT OF CALIFORNIA 6 7 QWEST COMMUNICATIONS CORP., No. C 01-0663 SI 8 .plaintiff, ORD$R GRANM NG PREL tMARY INJUNenON 9 V. 10 THE CITY OF BERKELEY, et al., ll Defendants. / 3 . z2 13 Oa April 25, 2001, the Court heard argrrm=an defendants' motion to dismiss and plaintiff 9 3 I4 motion for a preliminary iryunctioa. HSving carefully considered the arguments of the parties sad th } 15 papers submitted, including supplemental briefing, the Court hereby DENIES defendants' motion t, 16 dismiss, and GRANTS plainti$'s motion,for a preWWnaty injunctioa, for the reasons set fortis below. 17 18 BACKGROUND 19 Plaintiff Qwest Communications Corporation CQwest") is a telephone company defined as i 20 public utility under California Public Utilities Code § 216. Compl.9 4. The California Public Uulitim 21 Commission(` TUC")has granted Qwe9t certificates of public convenience and aooessity C'CPCN")tc 22 provide interexchange,or long distance;Wecommunication services. 14,at 11;2m Declaration of Anne 23 Mcheson is Supp.Prelim. Inj. C?jcheson Dacl.")19 and Ex. A Qwest provide broadband Internet- 24 based data, voice and image connectivity to businesses, consumers and otbcr conu=Wc$tions service 25 providers. Compl. 128. 26 Li December 1999, Qwest won;a competitive bidding procoes and emarod into a gov.:nrmt 27 contract to provide faster sad expanded Reiecomrrwmieationl cape ty to the Lawrum]JUwaWNsdow 28 Laboratory C''LBN L4borstory"). Cortipl. ¶ 30; Richcson DW. 8. LBN L otuory is the tochrticai _ SEP, 17. 2001 2:03PM VI V.Jj/Y1. U.JLINO. 300474JP. 3' 1 administrator and central hub of a program-operated by the United States�Departmt to of Enter 2 ("b0E") known as the Energy Sciences Network ("ESNEI"). Pichesotl Decl. 17. The ESNET is a 3 high-speed communication network that allows Department of Energy rewxchers and collaborators 4 throughout the nation access to a community of research facilities,resources aria infbn ration, id.at 11 5 3-5. 6 In order to upgrade LBN Laboratory's telecommunications capacity,Qwcst must install a''locW 7 loop"between LBN Laboratory and Qwest's central system. Compl. 131;Picheson Ded.110. This 9 involves constructing a conduit—"a pipeline of sorts"--through which fiber optic cable is strung. Id at 9 132. Sometime in March 2000,Qwest began to formulate a construction plan to lay its conduit through to public rights-of-way in oho City of Bcrkcicy ("City" or -Berkeley"). ! ., at 9 32, Qwest met and t 11 communicated with city officials from April through December 2000 to negotiate an acceptable V12 construction plan to encroach upon the City's public rights-of-way. Let cd. at 1133, 35,41-45. The y C 3 13 parties were unable to agree, and Qwest eonseyuently did not obtain the necessary pernn is to begin 4 a 14 ' construction. Qwest claims that the City reFused to process its application slier July 10,2000 pursuant 15 to a de facto moratorium on telecomrnunications infrastructure construction pending enactment of an 4. x ordinance afticti � 16 ng installation of telecommunication services itf Berkeley. R.at IN 350. 17 On December 22, 2000, Berkeley enacted Ordinance No. 6608_N.S. (codified at Berkeley 18 Municipal Code§§ 16.10 et seq.)(the"Ordinance7%effective January 21,x001. 0,at 146. On January 19 23, 2001, the City passed a Fee Schedule to accompany the Ordinance. hLat 148. The City's new 20 Ordinance creates a comprehensive scheme intended"to more speciheslly regulate Telecommunications 21 cancers providing telecommunications services using public rights of ways and other public property." ' 22 Ordinance§ 16.10.010(attached at Complaint,Ey- B). 23 The Ordinance applies to all telecommunications carriers seeking to encroach upon Berkeley's 24 public rights-or-way to provide telecommunication services. Ordinance§ 16.10.030. All carnets must 25 first obtain registration and pay related registration fees, which must be updated annually. Ick at § 26 16.10.040; see aIsQ Fee Schedule 2-3 (attached at Complaint, Ex. C). All carriers must also obtain a 27 Special TeleCOMMuttications Permit pursuant to § 16,1.O.OSO of the Ordinance and pay additional fees. 22 .510 Also Fee Schedule 3.4. Unless a carrier calms exemption under 16.10.070, and the City 2 i SEP. 17. 20.01 2:04PM `" "'"'NO. 3004-""P. 4' 4 1 affirmatively deteltnines that an exemption does indeed apply, all cutlers are subject to a franchise fee 2 to provide telecommunications services using the City's public rights-of way. Sm ft id 5-7. 3 Qwest filed this lawtuit against the City of Berkeley on February 13, 2001,seekiag primarily to 4 invalidate the new Ordinance and Fee Schedule pursuant to the Supremacy Clause of the United States 5 Constitution U.S. Const. an. VI, c1. 2. and the"conflict with general laws"provision of the CaUrornla 6 ConStitution, Cal. Const. an. X1. 17. According to Qwest.Berkeley's Ordinance is preempted by the 7 Fcdctal Telccommunicadom Au of 1996 C'FTA"), 47 U.S.C. §§253(a) and(c),the California Public 8 Utilities Code§§ 7901 and 7901.1, and the California Govenuneat Code 150030. Qwest also asserts 9 a claim of intentional interference with contractual rclationWp. t0 Presently before the Court aro ■ Motion by the City to dismiss the complaint and a motion by 11 Qwest for a preliminary injunction hued on the preemptlon claims_ These motions were fully briefed and tj 12 scheduled for argument on April 2S,2001. On April 24,2001,the Ninth Circuit decided Qty of Arrburn ++ b 13 et al. v. OwWg�o_ncio,�, �. 1~.3d _ _ 2001 WL 410043 (9th Cir. April 24, 2001), which 14 addresses and resolves many of the questions presented in the instant motions, The parties addressed the el 15 new case during oral argument, and were also given the opportunity to submit, and did submit. 16 supplemental briefs on the impact of the City o Au oo ease. The Court has considered the supplemental dw a 17 briefing in deciding the questions before it.' � 18 19 DISCUSSION 20 L Berkeley's Motion to Dismiss 21 The City seeks dismissal of the First(federal preemption)and Fifth(intentional interference with 22 contractual relationship) Causes of Action, aad any claims in the complslnt which challenge the Fee 23 Schedule,pursuant to Rule 12(b)(6)of the Federal Rules of Civil Procedure Rule 12(b)(6)requires that 24 a district court must dismiss a complaint if it falls to state a claim upon which refief can be granted. The 25 26 `Defhndant requests additional oral argument to follow-up on the es'coppletner►tal briefing. 27 Sm Deft.'s t tr. to Court(dated May lo, 2001). The supplernental bra , elaborated on questions thia were reached either in prior brieC�ng or at oral argumcM. The parties respective posltto= on these 28 uestiotls are now c]earty established, and thus,a second hating is not needed. ibefiendant s request for tlJrthor oral argument is DMgWD. 3 f SEP. 17. 2001 2:04PM `" " NO. 3004.4"P 5' 1 question presented by a motion to dismiss is not whether the plaintiff will prevail in the action, but 2 whether the plaintiff is entitled to otter evidence in support of the claim, 5dgger v Rhodes. 416 U.S. 3 232,236(1974),overruled an orhergrounds byMvis v cher .r 468 U.S. 183. 104 9.Ct.3012(1954). 4 In answering this question,the Court must amtric that the plaintiff's allegations are true and mast S draw all reasonable inferences in the plaintiffs favor. Usherv._City of t,os Arigj-ts, 8211F,2d SS6,S61 6 (9th Cir. 1987), Rven if the face of the pleadings suggests that the chance of recovery is remoter the 7 Court must allow the plaintifrto develop the case at this stage of the proceedings. United St IS v.Qbt S of Redwood City, 640 F.2d 963,966 (9th Cir. 1981). 9 If the Court dismisses the complaint,it must then decide whether to grant leave to amend. The 10 Ninth Circuit has"repeatedly held that a district court should grant leave to amend even if no request to I 1 amend the pleading was trade,unless it deternnnes that the pleading could not possIly be cured by the i j 12 allegation of other facts." Lopgz v, Smitll, 203 F.3d 1122, 1130 (9th Cir. 2000)(citations and internal 13 quotation marks omitted). 14 r 15 A. federal preemption (First Cause of Action) 16 Qwest's Mrst Cause ofAAction seeks a declaration that the Ordinance is void under the Supremacy 17 Clause of the United States Constitution, because it is preempted by 253 of the Federal 1 s Telcco mfiunications Ate.a . 19 20 147 U.S.C. §253 provides as follows,in pertinent put: 21 (a) In sencral: No State or local statute or regulation, or other State or local legal requirement, may 22 prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecemmunicMions WxVice. 23 (b) State re"torr authority:Nothing in this section shill aged the ability of a State to impose, on a 24 competitive y neutral basis and consistent with section 254 of this soction, requiretnents necessary to preserve and advanec universal servim protect the public safety and welfare,ensure the continued quality 25 of tekeominunieatioos services and safeguard the rights of Consumers. 26 (c)State and local government authority:Nothing in this section affects the authority ora State or local government to a a"Se tho public 6&3-of way or to require fair and masouabte,co etwtloa from 27 teleC4mmunic$tiotts provider%on a competitively neutral and nondiscriminatory basis,foruse ofpublic lights-of-way on a nondiscriminattory basis, if the compensation required is publicly disclosed by such ZS government. 4 SEP. 17. 2001 2:04PM S "'N0. 3004""P, 6' ° I In its motion to dismiss, the Chir argued that the First Cause of Action must be dismissed 2 because § 253 of 111e PTA does not crcatc an eryrcss or implied private right of action undur which 3 Qwest could sue. At oral argument, however,the City withdrew this challenge to Qwcst's standing in 4 light of the recent decision,City_afAubLurnyQvestCorp.._F.3d _,2001 WL 410043(91h Cir.April 5 24,2001). The Ninth Circuit in 1Qity_PCAubut:n allowed Qwest to raise a Wend preemption challenge 6 based on § 253 against several local ordinances regulating telecommunications service carriers. The 7 court did not discuss wheilicr Qwcsi could stlQ under 4 253 bVi instead cited the Supremacy Clause or 8 the United States Constitotion? The couti held that§ 253 of the FTA expressly preempts any state or 9 local law that is contrary to its provisions,and tlne only question for the court"is whether the ordinances 10 'intcrrcr�with,or are cuntrary Icy' clic ncl," ld.nt"10(tiling llillsburuugh County v.Automated Mol. ' 11 L&hs...i=. 471 U.S. 707, 712, 105 S. Ct. 2371 (1985)), Qwcst's challenge to the Ordinance liere is also based on the Supremacy Clause, Compl.,In 2, u' 13 67,73. The Supreme Court has affirmed firmed what QLY—OL 9hum implicitly licld:private plaintiffs seeking r O 14 injunctive or declaratory relit[ may challenge a state statute or local ordinance pursuant to the A d E 15 Supremacy Clause,regardless whether a federal statute confers a private right of action on the plaintiffs. 16 Shaa�PtAkli=,463 U.S.85,96 n.14, 103 S.Ct. 2890,2899 n.14(1983)("A plaintiff who seeks w 17 injunctive relief from state regulation, on the ground that such regulation is pre-empted by a federal H .D 18 statute which, by virtue of the Supremacy Clause of the Constitution, must prevail, thus presence a 19 federal question which the federal courts have jurisdiction under 28 U.S,C.j 1331 w resolve,");xctzal= 20 Bud Antle.,jnc_v- IlAtbagA, 45 FJd 1261, 1269 (9th Cir. 1994) ("Even in the absence oran explicit 21 statutory provision establishing a cause ofactioo.a private party may ordinarily seek declaratory and 22 injunctive rellefagainst state action ort th'c basis of federal preemption."), 23 24 (d)Preemption: If,after notice and an opportunity for public comment,the Commission determine that a State or local gavcmment has pc niltted or imposed any statute.regulation,or legal requirement that 25 violates subsection (a) or(b) of this section, the Commission shall preempt the enforcement of such statute, regulation, or legal requirement to the extent necessary to correct such violation or 26 inconsistency, 273 Anicle Vt,Clause 2:This Constitution and(lie Laws of the United States which shall he made in Pursuance-thereof-,and all Troatias made,or which shall be made tinder the Authority of the United 28 States.shall be the supreme Law of the Land;and the Judges in every State shall be bound thereby,any Thing in the Constitution or Laws of any State to the Contrary notwithstanding. 3 _ SEP. 17. 2001 2:05PM ....... R. J. L7 un "104- a;)ZIN0. 30004311P. 7' 7 . • • I The First Cause of Action for federal preemption of the ordinance states a claim upon whichrew 2 can be granted; the motion to dismiss this claim is DENIED. 3 4 B. Intentional Interferepec with Contractual Rclativnship (Fifth Cause orActiort) S The City argues that the intentional interference with contractual relationship claim US becwse 6 Qwest has not submitted a compensation claim with the City is required by the California Tort Claims 7 Act, Califomia Government Code 810 et seg. With respect to Qwest's claim for damage% the City 8 is correct. 9 The Tort Claims Act represents a limited waiver of sovettign immunity to bring tort claims 10 against the State of California and its public entities,including munidpalities such as Berkeley. ft Cal. I 1 Gov. Code§815 and § 811,2(defining public entity to include City or City Council). Plaintiffs desiring •� 12 to bring tort claims against a public entity trust comply with the detailed procedural requirement) 13 enumerated is the Tort Claims Act,and failure to do so is a bar to suit. IMUiam v.Horvath 16 Cal.3d 14 834, 836 (1976);San nosey. Superior CourL 12 Cal, 3d 447. 4SS (1974). As the City correctly notes. 3 15 one procedural prerequisite under the Tort Claims Act is that a claimant seeking monetary damages trust 16 file a written claim with the proper public entity before commencing suit. Sm Cal.Gov. Code§§905 A ly and 905.2. Such a claim must be presented no later than six months after the cause of action aoetved_ lg U ac §911.2. 19 Qwest alleges in its Fifth Cause of Action that it"has suffered and continues to suffer damages" 20 as a result of the City's unlawful conduct.and requests"such consequential damages. . .as Qwest may 21 prove to the Court." Compl. 1 107 and prayer for Relief,I rx}, Yet. Qwest does not allege that it has 22 submitted a claim with the City to seek compensation for such alleged damages. Thus. Qwest's claim 23 for damages is barred. 24 Qwest points out,however, that its tort claim against the City also seeks injunctive relief which 2.5 is not subject to the procedural requirements of the Tort Claims Act, See Minsktt_y Qxoa&x Aa9 es_ 26 ]1 Cal. 3d 113, 121 (1974);t o Pau&Oas&Electric Q-v,Sear Stearns&-Co..50 Cal.3d l 118, Z7 1130 n,9 (1990) ("Injunctive MW is available to restrain unjustified interference with contractual 29 relations when damages would not afford an adequate remedy.')(citations ondtted). At oral argument, 6 . S�:c10. 17. 2001. 2.05PM ...�, N0. 3004""P. 8' o I gwcst withdrew salr claim for damages asserted in its cause of action for intentional intexfetence of 2 contractual relationship. 3 Qwest':claim for monetary damages in the Fifth Cause of Action is barred and the City's motion 4 to dismiss it is GRANTER. As to Injunctive relief only,the 1r"iEth Causo OfAation:sues a claim upon S which relief can be granted, as to this claim, the motion to dismiss is DENMO. 6 7 C. Challenges to the Fee Schedule 8 As it more general matter.Berkeley awes that all claims in the Complaint whidt challenge the 9 Fee Schedule or portions of the Ordinance implementing the Fee Schedule must be dismissed as barred 14 by the Tax Injunction Act o f 1937("'X W),28 U.S.C. 11341. Qwest responds that the dwges imposed 1 I by the Fee Schedule are not taxes within the meaning of the TIA, and thus the Court is not required to s , j 12 abstain. 13 The TIA stater."The district courts shall not enjoin,suspend or restrain the assessment,levy or 14 collection of any taut under State taw where a plain,speedy and efficiatt remedy may be had in the courts 15 of such State." 28 U_S.C. $ 1341. It is ti question of federal law whether a tnuuicipal chase constitutes 93 16 a tax, Wrihd t v-Riveland. 219 F.3d 905,911 (9th.Cir. 2000),Mg-also Trailer Martine Transy-W Com.. q 17 v, Ptiverayazauez 977 F.2d 1, (1 st Cir. 1992)(label placed on assessment by state may be pertinent in 18 dedding whether asst=e t is"tax"but label is not determinative). The Moth Circuit relies on three 19 considerations in making this determination: (1) the entity that imposes the charge; (2)the parties on 28 whom the charge is imposed-,and(3)whether the funds collected fbr the charge are ncpended for general 21 public purposes, or used for the,regulation or benefit of the parties on whom the charge Is Imposed. 22 WdW Bros.v- CaUo is Aenlc_Comtn'n,731`.3d 425,931 (9tb Cit- 1996),Ace so baa hat Cellular - 23 Tc Co. v.Public Sere. _omm'n of P`w2 P;i_m 967 F.2d 683, 685 (191 Cir. 1992)(describing clossic 24 taut as"impo=cd . . . upon malty.or=11.citizens(arid)raises money,contributed to a general fund.and 25 spent for the benefit o f the entire community,"whereas classic regulatory fee woe ia+pased upon narrow 26 class to serve"regulatory purposes . . . [byj raising money placed in a specW fund to help dc&ar the 27 agency's regulation-related expenses"). 28 Applied in this case,the first two factors under Ndart Bros.offset each other and provide no clew 7 i SEP. 17. 2001 2:05PM NO, 3004"..P, 9` ' I guidanoc as to whether the Fec Schedule exacts fess or taxes. The City Council of Berkeley(a leoslsting 2 body)imposes the exactions,but the parties subject to the charges(service providers seeking installation 3 of telecommunications equipment and conduits) are a namowty defined target rJass. &—e Flexont v: 4 Oregon Dedt. ofjMsD. -_ 177 Fad 1134, 11.36 (9th, Cir. 1999) ("(C]laasio 'tax' is imposod by a 5 legislature upon many, or all, citizens_");aidNI Bos,.73 F.3d at 931 CM assessment hWsed upon a 6 broad class of panics is more fikely to be a tax than an assessment imposed upon a narrow class,"). In 7 cases tike this, where the first two factors are not dispositive,courts exin4ning whether&a asuftment 8 is a tax``have tended., ,to emphasize the revenue's ultitnateuse." Bi art Hot. 73 F_3d at 932(citation 9 omitted); s also Hexorn. 177 F.3d at 1136 ("Courts ficins cases that lie near the middle of this 10 spectrum have tended to emphasize the rcvtnue:'s ultimate use, asking whether it provides a general y ' t 1 benefit to the public. of a soft often financed by a general tax, or whether it provides more narrow j " 12 benefits to regulated companies or defrays the agency's costs of regulation"}. a 13 The Cit relies on west's owns pleadings to argue that the Fee Schedule exrtcts not . ,. Y Q P S gat � taxes, 14 regulatory fees. It cites allegations made by Qwest that the ices exacted "are classic franchise fees 1S designed to generate general aaunicipal revatues,and do not recover any actually incurred costs." Reply 16 in Supp.Mtn.to Dismiss 9(664a Compl.U 59.72.71). 'These allegations ate induded to dettmonsttste ` t7 why the fees violate§253(c)of the FTA,wWch allows mutuapalities to assess only reasonable and fair 18 charges as compensation for use of public rights-of-way- However,a fee that violates j 253(e)does not 19 nccc&wUy amount to a tax as defined under the TIA. Such at ntle would vitiate the preemptive purpose t 20 of the FTA because fadaral courts would have to abstain, pursuant to the T[A„ every time there is a 1 21 chatlOnSe that a fec violates j 253(c),` Rather than rely OttQ west's aticgations.tete Court turns instead 22 to the Fee Schedule itself which gives aunple description of tau purpose and use for the fats. 23 The Fee Schedule 1*66 the changes it imposes"ices"and notes that they"arc intended to recover 24 ZS `The Court notes*A interrw inconsistency in aha City's argumcaat,whiCb was recognized by the district coup in �ca ,�,lcat� f Sauthwest Itte �► t`.rt��f Austin_42 F.Supp.2d 708,711 26 nA (S.D. Tex. 1993); 4n the one hand,the City argues the frttttchise fees sought under the Gs+dinanee at not tied to 27 a local telephone provider's use of the public rights-of-way,and therefore the feet xX%U are a taut under the Tait 14unction Act. On the other hand,the City ugues than the franchise&e tluy 28 vay well to fled to use of the public tights-of-w y,its which cast the fnuneMse fees fall under the protective umbrella of§M(c)of the FTA. 8 _ W. L7 %11 o:)tNO. 300034P. IOP 10 SEP. 17, 2001 2:06PM • • 1 'all reasonable costs associated with the City's activities needed to regulatethe installation,operation,and 2 maintenance of systems and equipment of telecommunication carriers within the City I161S." neo 3 Schedule 3. Two categories of charges are imposed: cost-recovery fees(registration And permit fes) 4 and annual rent compensation races(fimchise fees). 5 Cost-recovery few seek to compensate the City"for the implementation and administration of 6 the City's new Telecommunications Ordinance." Id_ costs include 1)all Ordinance Surcharge 7 amounting to"upfront costs"for developing and implementing the Ordinance,2)an Annual Registration 8 Fee to recover ongoing adminiatrative costs "to process and monitor all aspects of the [regulatory] 9 program,"and 3)z permit and Inspection Fee to oover the costs of processing permit applications and 10 conducting site inspections. fd.at 14. By its awn terms,the Fee Schedule asserts that the cost-recovery 11 fees aim to recoup specific costs related to implementing and administering the Or&mncc. This urges j . 12 a finding that the 1;cc Schedule exacts a regulatory fee, not a tax. She Marcus V. KatgM Der,'t of Y a 13 Ryvenue 170 F.3d 1305, 1312(10th Cir.1999)(surcharge for disabled person placard was a fee because a 14 "(njot only are the charges expressly linked to a specific regulatory scheme but also the monies collected 15 pursuant to the charge are used to defray the expeAses assbciated with admioistaing the scheme:'l. 16 The annual rent compensation rates seek recovery"for use of the public right-of-wxy owed by 17 .• telecommunications carriers." a.at 1. 'These rater essentially are rent for use of city-owned property. c 18 Fee Schedule S ref �. ( erring to telecommunication carriers as"frartchiseesAiCensees"), which do not i9 amount to taxes under the TIA. .M City of Dallas v.= 118 F.3d 393. 397-98 (5th Cir, 1997) 20 ("Franchise fees ue not a tm however, but essentially a form of rent: the price paid to rent of public 21 right-of-ways,"); ITni[ed States v. City of Hu6ngjg& 999 F.2d 71, 74 (4th Cir. 1943) ("User fees 22 [which]are payments given in return for a government-provided benefit.-);A'Cdr GoMmurrieatiort�of 23 Southwest_inn.v. Cittigf A-- istin.42 F. Supp,2d 708,711 n.4(S.D.Tex. 1998)(franchise fee imposed nvn 24 on telecounieation carriers for use of public rights-of-way do not amount to lues); it sin 25 of Obio,. ne v Columbus Muni Airport Auth 13 F. Supp. 2d 640, 649-52 (S.D. Owe 1998)(fee 26 27 28 9 4 NO. 3004 SPP. 17, 2001 2:06PM 1 charged for use of airport spice considered rent, not a tax under the TIA)' 2 The Court finds that the fees imposed by the Fee Schedule:constitute regulatory fees rather than 3 taxes. The TIA thus does not apply.and the City's argument that all Claims challe4ng the Fee Schedule 4 mast be dismissed. 5 Having rejected all of the City's challenges to Qwest's claims on the pleadings, the Court 6 ,DENIES the City'e motion to dismiss the complaint for failure to state a claim upon which r4efcaa be 7 ,grated. g 9 U Qwetr's Motion for Preliminary Injunction 14 The Court now turns to Qwest's motion for a prelintittary injcmwou C401AVO the City from 11 enforcing its Ordinance and Fee Schedule and ordering the City to issue the pernaits necessary to a11ow j12 Qwest to complete constntetion in accordance with its contraetuat obGgatiotts. J 13 A distract court has authority to grant a preliminary injunction in the exercise of its erledtabk � P 14 powers. Fed. It. Civ. P. 65. As the court is acting in equity, the decision to enter a preliminary 15 injunction is largely left to its discretion. tee SiQ Countrsr Foods I c v Bagd efEdua.ofAnchgWe 16 SChvol Disr.,.868 F.2d 1085, 1087(9th Cir. 1989). Traditionally,this rule has been interpreted to require 17 the trial court to consider the likelihood that plai»tiffwill pmevaB on the meriu !�1 the possible hum to a 18 the pities from granting or denying the injunctive relief. ,fie n+d V tal Air Unes_Inc, 19 914 F.2d 93 S,937(9th C`tm, 1967);Sim -LIl inv-lnc v P-h2Lutc SoawM be 739F.241415.1421 70 (9th Cir, t984)- 21 At the extrem,the party secking injunctive relieftnust show either(1)a combination ofprobabie 22 success on the merits and the possibility ofirreparable hunt,gr(2)that saious"ions my raisad ad Z3 the balance of hardships tips sharply in the moving party's favor. Miss Wov Ma.America 2A Paettttnts.Inc_.8S61F.2d 1445, 1448(9th Cir. 1988);Rgdtot:o ext(on.Ltd v Welt Scverrtl�812 F-2d 25 ' ' At oral t,the City sated to 1Kekhemr v New P.ttt d Tdetahont:dt Tde�947 26 F.2d$47,549(2d Cir. 1991),tar the proposition that team fees are taxes vutttsttt thR;tnosr�;+g;ithe TLA. The underlying f9uual and leo queWons involved in are di fw t from those tmoived 27here. In any event„the Second Circuit's holdiag in c! Cr,C+OACertting dee reach of'the jurisdictional bar 28 imposed by the TIA,was ryected by the Supreme Court to l County A1ab +*�++ Ate' 527 U.S. 423,433, 119 S-Ct. 2069.2016(1090). 10 N0. 3004 P. 12 SEP. R 2001 2,06PM • i 1 1217 (9th Cir. 1987). "These are not two distinct tests, but rather the opposite ends of a single 2 'continuum in which the rcquircd showing of harm varies inversely with the required showing of 3 meritoriousness. nc Wo4d. 856 F.2d at 1448 (quotingrtnd.�_.en C to ►„, oA, 812 F.2d at 1217). 4 However, in any situation, the court must rind that thea is some threat of an immediate irreparable 5 injury, even it it is not of great magnitude. B.ig_.Cswtugr., 868 F.2d at 1088 (citing cases); laak W 6 JdhU te.lnr v,.Qtirnnicle�Puhzlislung..Ca Pc., 762 F.2d 1374, 1376 (9th Cir. 1985)(citing cases). 7 A. pr-obwtity or Success un (lie Merits 8 The Ninth Circuit very recently published a decision that has great relevance to this action, 9 City_of.Auburn.ct:ll.,v-.Q%vest Corporation. F_3d 2001 WL 410043(9th Cir.April 24,2001),the 10 court considered Whether the FTA preempted several new ordinances that attempted to regulate y 1 l telecommunications services providers. The ordinances required providers to submit a"lengthy and j 12 detailed application form, including snaps, corporate policies. documentation of licenses, certain 0 13 speci f ed items, and 'such other and furtht:r infarmation as may be requested by the City."'IL at•11. e la Application ices were charged,ranging from an undetermined amount to$5,000. Two of the ordinances j 15 required, a public hearing before granting or revoking permission to operate in the city. All of the x n z 16 ordinances regulate transferability of ownership and require providers to report stock salts. The 17 'ultimate cudgel'was that each city reserved discretion to grant,deny.or revoke permission to provide C 18 telecommunications services, even allowing removal of a company's facilities. The ordinances also 19 provided for civil and criminal penalties should any of their provisions be violated. 20 The Ninth Circuit held that each of these requirements individually "ha(s) the ctFect of 21 prohibiting"the provision of telecommunications services,and taken together,"they create a substantial 22 and unlawful barrier to entry into and participation in the cities' telecommunications markets" in 23 violation of§253(a). U At *12. The court then considered whether the ordinances were saved under 24 the safe harbor provision of§ 253(c), artd concluded that they were not. The court round that the 25 ordinances imperntissibly attempted to regulate companies with facilities in the public right-of-way,as 26 opposed to effecting right-of-way ivarwgeinctrt. 1c„ at *13. The ordinances imposed "an extensive 77 application process that is not directly related to management of the public rights-of-way . . . . 28 inelud(ing) date gathcrad by the cities in order to detcnninc the llnancial soundness, technical 11 . ... .._ ,.�,,, �. �� ►SEP, 17: 2001 2:07PM 0:))101- �;�INO. 3004134.p. 13' 13 4 - • •• L qualifications, and legal ability to provide telecommunications scrviccs: a description of all services 2 provided currently or in the future;and unnamed discrelionaty factors... . UL The most problematic 3 aspect was that the ordinances granted local govcnumwats unfottcrctl Jiscrctiun tv grant,deny,or rtvoke 4 permission based on unnamed factors. 5 Qwest argues that, like the preempted ordinances considered in ,A.ublim Berkeley's new 6 Ordinance creates an unlawful Barrier to entry,and ilio accompanying Fee Schedule exacts fees that 7 exceed the lair and rc-asonalile t:vst uC regulaling 111c City's imblic rights-ur way, For these reasons. 8 Qwest contends that the Ordinance and Fee Schedule violate 6 253(x) and(c)of the FTA. The City 9 conlends lust that the FTA docs not evc»apply because Qtvest's contract with LBN laboratory does 10 not call for common currier services,and Nis docs not involve"telecommunications scrviccs" within 11 the meaning of 253; and, nmore generally,that its Ordinance does not violate 253. s j € 12 r " 13 1. Common Carrier Status M 4 14 Section 253(x) preempts State and local statutes or regulativas tt►at create barriers to entry 15 against any ''teleconitnunications service:' The FTA defines "te-leQOmmunicatiOns serv(ce- as "time a a 16 offering of telccommunicationS for a rm directly to the public, or to such classes of users a5 to be 17 effectively available directly to the public, regardless of the facilities used." U at j 153(46). 18 Funhcnmiere.n"telecommunications carrier''is Wined as"any provider of telecommunications services 19 . . • -A telecommunications carrier shall be treated as a common carrier under this cbspter only to the 20 extent that it is engaged in providing lcteconmlnullicatiotms services.. . :'ld,at§ 153(44). For purposes 21 of coverage,§ 253(a)treats telecommunications scrviccs as common carrier services. So in at AIAI 1 22 ;,%hmA►inc-Sar=, 13 F.C.C.R. 21585,''J 6 n.12, 1998 W1.709391 (1998),review denied, 198 F.3d 23 921 (D.C. Cir. 1999)("[T]he 1996 Act indicans that the definition of telecommunications services is 24 intended to clarify that telecommunications services are common carrier services:1(citing CIRCA .25 Wirelsss. 12 F.C.C.R.8516,8521-8522. 1997 WL 339269(M.C. 1997)), 1„re rm 1 gntadnn ol'thr, 26 b[0n-lccnuati0g.Safeguacd5 of Sr goo 2UAAdMZ pf the 'e,nmuglCatiens Act 1934_ae Amend d. 27 11 F.C.C.iL.21905,1263. 1996 WL 734160 (1996) (same). 28 12 i i - .. �..L.NO. 3004"":p. 14' 14 SEP. 17. 2001 2:07PM • • 1 The upshot of the various dciinitions under the FTA is that the statute applies only to 2 telecommunications services offered on a common carricr basis. Sieg Hawarrd m riCa QA11II -1m. 3 208 F.3d 7a 1, 7$1-53 (9th Cir, 2000); lova Y. FCC,218 F.3d 756,758(D.C. Cir.2000)("(Al cattier 4 that provides a service on A non-common carricr dosis is not a 'Iciceommunications carricr'and hence 5 is ineligible(under§ 254 of tite fTA),");Sputhweslem Bell T_tlepl=Ar4..Y,EM 19 f3d 1475, 1480 6 (D.C. Cir. 1994);lt�as,£cArra�-,S►atc,;JQ;t�1_O.Qarsf cin,J,llti.x..SsrYs,.Repa tr.and Ordex, 12 U.C.R. 8776, 7 9171,¶785, 1997 WL 276333 (F.C.C. 1997)(l=t,'C teas delcrmined Bent"(elecommunications sem-icec" 8 means"only telecommunications provided an a common carrier basis."). The Supreme Court defined 9 a common carrier as one that"makes a perblie ofr'cring to provide(communications facilities)whereby 10 all members of the public who choose to employ such facilities may communicate or transmit 11 inteliigenco of their own design and choosing." KC_�-„WdvxA Y do ajgL 440 U.S.689,701,99 s " 12 S. Ct. 1435, 1442 1979 (adopting anal is of National Association of to rev r-n m're y- 013 o LCC, 525 F.2d 630, 641 (D.C. Cit'.), cert. denied, 425 U.S. 992 (1976). Furthermore,"(sj common j14 carrier does not`make individualized decisions,in particular cases,whether and on what terms to deal.` a 15 LL;see, p In tl► .[uattcr.off:edgealtate.�iot.!)4attLU�itictsalS�xice. 13 F.C.C.R. l 1501,1124, x 16 1998 WL 166178 (F.C.C. 1998) ("Common carriers can be distinguished from private network a 17 operators,which serve the internal telecommunications needs of,for example,a large corporation,rather 18 than selling telecommunications to the general public. . , , (A) carrier may be a common tsrrit.r if h 19 holds itself out"to service ind'rf7crctttly all potential users."). 24 The Califorltia PUC has issued QweSt CPCNs to provide telecommunications services an It common carrier basis. U4 Richesoo Decl.19 and Ex. A. Nonetheless, the City argues that Qwcst's 2 ontmet with L1BN Labomlor suited from a competitive bidding process, which suggests that"the business relationship between Qwcst and LBNUDO1r was intended to'ntake individualized decisions, .� 24 whether and on whet terms to serve' and not to undertake to carry to all people indifferently." Oppo. 25 to Prelim. Inj. 16:11-24. it further notes that the LON Laboratory contract allowed for custom tailored 26 customer premiscs equipment and rhe assign1t1C,rt of spcciFt:personnel. DcQ.'s Suppl.grief 7.8. 83sed 27 on its reading of the LQN Laboratory cunlract,tlee City argues that Qwest"appears to choose'its clients 28 on an individual basis and deerrMinc in each particular case whether and on what terms to serve."' 13 i N0. 3004 P. 15 SEP. 17. 2001 MUM • 1 Oppo. 17A-2. Thus,according to the City, notwithstanding lite California Public Utility Commission 2 granting CPCNs to Qwcst, the C-SNCT contract in particular involves services provided on a non- 3 common carrier basis_ $rn�S+►tional-Aaa�+,v.Ll�cbt+lutorySJ.tiUlY ortun•rs v-FC 533 F.2d 601,605 4 (D.C.Cir, 1976)("NARU,C 1")("Since it is clearly possible for a given entity to coley on many types 5 of activities, it is at least logievl to conclude that one can be a catrnnnn csRier with regard to some 6 activities but not others.").. 7 The City rocuses too narrowly of tl,e type of acrvicc Qwcst is offering to LUN Laboratory. E Common carrier service docs not require that ilia particular services offered be made practically 9 auaitable to the entire public. "(A)specialized carrier whoso service is of possible use to only it fraction 10 of the population may notncthtelass be a common carrier if he holds hirnselrout to scree Indifferently all 11 potential users. " MRUC 11, 533 F.2d at 608-09, Consequently,the tact that the LBN Laboratory j 12 conrract resulted from a ccnipctilive bidding process and contemplates tailored services does not meats a 13 that Qwest it+tcrtds to offer lion-common carrier services. Sec !n_ro Frdu&6SWL lour RA&aW r O 14 tlniverSal Service, F.C.C.00,449,112 n.33, 2000 W1, 1869492(F.C.C. 2000)(common carrier may A a t: 15 enter into separate agrec+ncnis with each of its customezx if it docs not charge negotiated individual rates Q `e 4 x 16 and tarns); In re AT&T C.gmMuAl;XiQaa Re.v cions MlAriff FjCC b", 6 F.C.C.R. 7039,166, 17 1991 WL 637944 (F.C.C. 1991) ("A common carrier may suppiemetlt its generic offerings with Z8 offerings that are designed to meet the needs of a particular customer or limited number of customers 19 without violating the unreasonable discrimination prohibition it;that carrier makes that more customized 20 offering av3il3ble to anyone who"might find it useful and the offering is not otherwise unlawlblly 21 discriminatory.") (citing Sca:),and UjYicc,,h1c,,y I.C,C.,7381:.2d 1311, 1317(D.C. Cir, 1984)). 22 Qwest describes itscif as"a global icadcr its delivering high-quality broadband Internet-based 23 data, voice, and Imagery cotneetivhy securely and reliably to businesses, consumers, and other 24 communications service providers." Compl.124;see also Richeson Dccl.12. Some of these services, 75 such as that contemplated by tltc Li3N Laboratory contract,ate practical and useful only to consumers 26 with a need to rapidly imosmit large quantities or informatiotn bctwccn two fixed points. Declaration 27 of Anne Riciteson in Supp,of Rcply("Nelteson Reply NO.")(April 5.2000 12. "it is not an obstacle 28 to common catriier status that[Qwest may]offer a ser-ico that may be of practical use to onlye,fraction 14 i • . .. A N0. 3004'JT"P. 16 `" SEP. 17. 2001 2:HPM 1 of the population,,. ,. the key factor is that the operator offers indiscriminate service to whatever public 2 its service may legally and practically be of use." National-A$s.:10C R#,gitlaiflrj_ ►tility a r+'rY y 3 EM, 525 F,2d 630, 642 (D.C. Cir. 1976) (N4RVC,j). Qwcst avers that it offers high-speed 4 telecommunications scrvices on a nondiscriminatory basis to any other consumer who might find it 5 useful and practical, In fact,Qwcst notes that "(tja tttc COME it has capacity and means to do so.Qwest 6 will offer any.enccss eapscily in the fiber opt;c cable hidifr'emntty to all other potential users of this type 7 of service, and is willing to make (lie secure rates. terms and conditions eonlaincd in the LUNUDOE 9 Contract available to any other similarly situated users" R;clte5on Rcply Dect.14. 9 The City has brought forth no other evidence to dispute Qwest's showing that its contract with 10 LBN Laboratory involves the offering of high-speed telecommunication scrvices to a particular class 11 of consumers on a nondiscritllinatory,common carrier basis. The facts and pleadings on record indicate 12 that Qwcst has standing to raise a preemption challenge to the City':new Ordinance and Fee Schedule 16. 13 based on §253(a) and(c)of flit FTA. r e a 14 W 15 2. Barriers to entry Ib Read together, § 253(a) and (c) bsr"all state and local regulations that 'prohibit or have the 17 ef(cu of prohibiting' any company's ability to provide telecommunications services unless the 7 t$ regulations fall within the statute's'safe harbor' provisions." COX of Auburn,2001 WL 410043, ''t 1. -19 sce.Alsa 1 hew Year tnc,yty or---- .r Plains, 125 F. Supp, 2d 81,87(S.D.N.Y, 2000)C'Tbe 20 strucrure and language or§, 253 embodies the balance between Congress' 'new free market vision'and 21 its recognition of tltc 'continuing aced fol•state and local governments to regulate telecommunications 12 providers on grounds such as consumer protection and public safety.')(citing Cpblevision of Boston. 23 (nc. .P_ubluclmtxa++�snt .cuattitissiowaflhc_City of AQston, 184 F.3d 88,98 (1st Cir. 1999)). • 24 Like the ordinances in MX_aGB,itl=. Berkeley's Ordinance requires all telecommunications 25 carriers seeking to install telecomtnuiiirations facilities in or on Berkeley's public-rights-of-way to 26 undergo a titorough application and pennit process. Ordinance § 16.10,030. The carrier must first 27 obtain registration and ptly an annual registration fec of$3,400, So Ordinance § 16.10.040; Fee 28 .Schedule. A Special Telccommunieations Permit is also required of all carriers,along With a 51,000 15 i SEP. 17, 2001 2:08PM 1 permit fee per project. Id. at§ 16.10.050. A5 with registration, fees are charged to reimburse the City 2 for its costs in processing the permit applications. Irl, at§ 16.10.100. Unless the cercus satisfies the .3 City that it is exempt from franchising tinder§ 16.10.070, the carrier must further obtain a license 4 pursuant to § 16,10.090 and execute a written franchise pursuant to Chapter 9.60 of tate Berkeley 5 Municipal Code for."Ilia privilege of using"tlic City's public rights-of-way, Id. These requirements 6 stand in addition to any other requirements imposed by federal,state or local law, including existing 7 excavation and cneroachmentl nernuts uudcr Title 16 6f the Berkeley Municipal Code. (d, at 6 8 16.10.030(A)(6), After permission to procccd is granted, the Ordinance maintains regulations 9 concerning the installation,maintenance,operation,removal and upgrade of any equiptntsntor facilities 10 installed, including record-keeping,reporting, insurance,indemnity,and financial requirements. l(.at 16.10.250-300. /a M 4 J o 12 After all required information is disclosed, tine City is required to provide reasonable advance - i► 13 notice to affected tnernbets of the public and (told a public hearing. JA at § 16.10.080(B). A final 14 decision is within the discretion of the City,which ultimately considers the following additional criteria: w 15 1) the legal and technical ability of the carrier, 2)the capacity of 1110 affected public right-of--way to A Z 16 accommodate the proposed encroachment and any further utility and telecommunications facilities; 3) -� 17 the damage or disruption to public or private facilities, improvements, and aesthetics; 4) the public 18 interest in minimizing the cost and disruption of construction within the public right-of-way. S) the 19 availability of alternate routes or locations,for the proposed encroachment;6)the aesthetic and blighting 20 efrect ofany aboveground encroachment;and 7)convictions or findings by any govemm.ntal authority 21 that the applicant has violated any law or ordinance, Id,at§ 16.10.080(C). In addition,if carrier is 22 not entitled to exemption from the licensing and franchise requirements, the 'Qity further considers: 13 1)the service that the carrier will provide to the community and region.2) the effect on public health. 24 safety and welfare,and 3) 'such other factors-as may demonstrate that the grant to use the PROW 25 will serve the community interest," The`other factors"are never identified. bi at ¢ 16.10.110. 26 The Ordinance vests significant discretion in the City to gtaut or deny permission to use its 27 public rights-of-way based oft alt open-ended set of criteria and requirements. In addition to the 28 numerous disclosure requirements for registration and permits, the City is authorized to require any 16 - -- -• ,,..�r �,. o•�a'13Q. 3004'~'P. 18 to SEP. 17. 2001 2,08PY I other information that it deans accessary, Ordinance §§ 16.10.40 and 16.10.460. sad may cease 2 processing an application if a carrier fails to satisfy these requirements. Id.at§ 16-10.080(C)(6). Any 3 violation of the Ordinance 211oWs the City to revoke or terminate a carrier's registration, permit or. 4 license, and franchise, U at § 16.10,400. Furlhcrmore,a violation of the Ordinance may also incur 5 criminal and civil sanctions. Id. Rt§ 16.10.420. 6 'the Court finds that the Ordinance imposes an uncrous burden on any carrier which seeks entry 7 into the teleeommunIca lions market in Scrkctey. Cxccpt for the license and franchise requirements,all 8 other requirements under the Ordinance arc absolute prcrcgvlsitcs to entry. The license and franchise 9 requirements.which are even more onerous,presumptively apply unless a carrier proves to the City's 10 satisfaction that it is t:xcmpt. Taken individually,many of the requirements under the Ordinance"have 11 the effect of prohibiting entry" of telecommunications services providers. Viewed in its totality, the U E 12 Ordinance creates a substantial barrier to entry. „ s -U u 13 The Court concludes that Qwcst has demonstrated a substantial likelihood orsuccess on its claim . 9 y. M 14 that§ 253(a)of the FTA preempts Berkeley's new Ordinance. The Ordinance cannot stand unless it a a 15 falls within the safe harbor provision of F 253(c). i6 w � t? 3. Reasonableness of Regulations and Tees l8 Section 253(c) allows local governments to regulate management of public rights-of--way. 19 "Congress (] recognized the continuing need for state and local govemments to regulate 20 telecommunications providers on grounds such as consumer protection and public safety, which are 21 separate from any intent to create or tllaintain barriers to entry." ODblc.vttio of Basten_, 184 F.3d at 98. 22 1n determining the scope of a city's awltority to regulate public rights-of way,the Ninth Circuit looked 23 to the Federal Communications Comptission,witictl has stated: 24 vocal governments must be allowed to perform the range of vital tasks necessary to preserve the 25 physical-integrity of streets and higl►ways, to control the orderly Row of vehicles Ind pedestrians, to rmanageas, water. cable (both electric and cable television), and telephone 26 farilifts that crisscross(lie streets and public rights-of-way. _ . .(T]ho types of activideS that fait within the sphere of appropriate rights-of-way management- . . include coordination of 27 construction schedules, detUrnination of insurance bonding and indemnity requirements, cStablislunent and enforcement of building codes,and keeping track of the various systems using 28 the rights-of-way to prevent MicAreucc between them. 17 } NU. SUU4 i SEP. 17. 2001 2:098, I Cit�Au6ttar. 2001 WL 410043. "*12-13(quoting!nlA-T.CLCab Ivjsionof r)slclaud r unr - Ear,. 2 12 F.C.C.R. 21396, 9 103 (F.C.C. 1997)). The Ninth Circuit also considered statements made by 3 Senator Dianne Feinstein during clic nuur debate On 4 253(e). Senator Feinstein stated that§ 253(c) 4 would permit requirements that' 5 (1) 'regulate llic time or ioc*tiwt of excavation to preserve effectivt traffic now, prevent hazardous Toad conditions, or minimize notice impacts' (2) `require a company to place its 6 facilities under;round,rntlur tha0 overhead,consistent with Ute requirements imposed on other utility companies,' (3) require a company to pay fees to recover an appropriate share of the 7 increased street repair and paving costs that reSutf Froin repeated eAcavation,'(4)'enforce local zoning regulations.' and (5) 'roqu+rc a company to indemnity the City against any claims of 8 injury arising from the company's excavation.' 9 ld.at"13 (quoting tnrr{_._..-I'+ TsJepb0neJzz, )1 F.C,C.R" 13082(F.C.C. 1996).139(quoting 141 10 Con&_ Rce. S8172((!ally ed. lune 12, 1995))). Ultimately,"right-of--way management means control I I over the public rightS-0f-a13y i(Self,trot c0+1trol over compenics with facilities in the righWf-way:' W. o 13 Berkeley's Ordinance exceeds thr permissible scope of regulating public rights-of-way. The a 14 Grdin3nce imposes a lengthy application and permit process which requires detailed disclosures• Uadcr y, A 1 S the registration and permit provisions,all carriers must disclose: .!)the identity and legal status of the 3 = z 16 carrier, 2) a map of the location of and a description of the carrier's existing and proposed 3 17 encroachments Within clic City,3)a description of the services the carrier already provides and services 18 it intends to provides, 4) a three-year business plan and construction plan Car proposed 19 tctccommunications service activities within the City. 5) the carrier's technical qualifications, 20 cxpericiccc and expertisc, 6) information to establish that the carrier has obtained all other mAuircd 21 governmental approvals and pc+7nits.7)all convictions or findings by a governmental authority that rare 22 carrier has violated any law or ordinance, license agreement or franchise agregmetit,and 8)all other 23 information that the City may rouaacnbty deet((necessary. ft Ordinance§¢ 16.10.040 and 16.10.060. 24 The ordinance also requires that all carriers pennitted to use its public rights-of-way maintain 25 and submit detailed reports and records which do not appear to be related to permissible regulation. The 26 reports must include the names and addresses of every person or entity that has entered into any ' 27 agrecl»ent Which authorizes the use of the carrier's telecommunications facilities in the City. Ordinance 28 § 16.t0.260(8)(1). The City also has the right to inspect all carrier's records, books and other data l8 _. .. �. ,� v .vii►. a:�tNO. 300417g.1'. cu' cu SEP. 17. 2001 2:09PM .1 concerning the carricr's business and operations for at least the preceding 3 yen's arising from its 2 telecommunications servlccs under ilio City's public rights-of-way. EJ at 116_l0.270(A)and(E). 1f 3 it wishes, the City has the power to lure an outside certified public accountant or other business expert 4 to review the carrier'c records, id,at § 16.10.270(C). 5 As the Ninths Circuit Betel, a carrier's financial, technical and legal qualifications to provide 6 service are not rtlevant to a city's managcatetnt of its public rights-of•way,and cities cannot collect 7 information about the description of tetccommunications-services to be provided or a carrier's future 8 business and construction plans. C;Sy—of_Auhurit, 2001 WL 410043, *13. Funhermore, the broad 9 discretion vested in the City to grant, deny* modify or revoke a carrier's access to the 10 telecommunications tnarket un the basin of unrelated and open-ended criteria is not permissible under : 11 § 253(c). Id.at*14, 12 Tht foregoing requirements apply to all telecommunications carriers.whether or not exempt V IU D under federal or state law, Thus wholly undctmints the City's effort to save the Urdinance by a , p 14 emphasizing the Ordinance's exemption provision. Sec Dclt.'s Suppl. Brief 12-15, The City argues 0 15 Uist under the Ordinance,a telcco,limunications carrier is not required to obtain a license and franchise c 'n Z 16 agreement if it satisfies the City that it is exempt under federal or state law. Ordinance § M10.070, .y " 17 According to the City,the Ordinance is"specifically designed to allow the City to ascertain at an early 18 stage whether and to what extent a telccommunications provider is protected by federal or state law." 19 DeR.'s Suppl. Oriel 12;24.26, An exempt carrier is only subjected to"minimal regulation based upon 20 the City's legitimate interest in its public rights of way." Id.at 12:19. 21 Howevcr, the provisions of the Ordinance describes] in die preceding paragraphs arc imposed 22 on ail telecommunications services providers,not just non-exempt licensees and franchisees. Moreover. 23 the Ordinance is dratted to Presume that a license and franchise requirement applies to any applicant, 24 unless the applicant proven that it is exempt. This scheme itself imposes an unnecessary barrier to entry. 25 The detcrtnin#tion whether a carrier is exempt involves Further onerous disclosures and ultimately rests 26 within the City's discretion. Ste Administrative Guidclinc No. 1 Re: Determination of Exempliun 27 (attached at Supplemental Dcclaratio►i of Phil Knmiarn, Ex. A). The Court rinds that Qwest is 28 substantially likely to succeed on itn claim that Ilse Ordinance fails to fall within the protection of 19 '10 3004'- SEP, 004'SEP. 17. 2001 2:09PM 1 4 253(c)allowing regulation of the City'S public rights-of-way. 2 Qwcst also cimuengcs the imposition of particul:,r foes under Lite Fee Schedule as nut reasonably 3 related to the regulation oCpublic rights-or-way permitted under§ 253(c). In mgulatingpubllc rights-of- 4 way pursuant to§ 253(c), local governments are allowed to"require fair and reasonable:compensation S front telecomilwiticalions providcfs . . , for use of public rights-of-way." Fees charged against 6 tclecotllmunicotions czrriers must be directly related to the Carrier's 3cluail use of the local rights-of- 7 way. Sot:Now jersey.Payphonc Ass',t, tic.v, Town of Wcst..Ncw York, 130 F. Stipp. 2d 631, 638 8 (D.N.1, 2001)("Plainly, a foe thm'docs more thine make a municipality whole is not compensatory in 9 the literal sense, and risks becoming an economic bonier to entry. Belt Allanrir-MuWand v- ednr;e 10 Gcorge.s,Couaty, 49 F. Supp. 2d R05, 1517 (D. W. 1999) governments may not stat their 11 franchise fees above a level that is reasonably calculated to compensate them for the costs of j 12 adminisrering their rranchise progmnts and of inaintaining and improving their public rights-of-way,"). —U, d 13 Berkeley's Fee Schedule aims "to recover all reasonable costs associated with the City's J 14 actinides needed to regulate tlu installation,operation,and maintenance of systems and equipment of 0 E 15 tciccomn1Unit2t10n carriers within the City limits." Fee Schedule at 3 (attached at Compl., Ex, C). V C 0 x 16 Tr,cre are two categories of fees imposed,cost recovery rets and annual rent eompemiloa rates. Cost- 17 recovery fees seek to recover costs "for the implementation and administration of the City's new 3 18 Telecommunications Ordinance:' Id. These costs include 1) an Ordinance Sureharse amounting to 19 "upfront costs" for developing and itttplem(htting the Ordinance, 2) an Annual Registration Fee to 20 recover ongoing ad+ninistradve cost$"to process and monitor all aspects of the(regulatory)program," 21 and 3)a Pcmtit and inspection Fee to cover the costs of processing permit applications and conducting 22 site inspections. Ld.at 1.4. The annual rcpt compensation rates seek recovery"for use of the public 23 right-of--way owed by telecommunications carriers" ld,at 1. A caMer must pay rent compensation 24 only if it is required to obtain a license and franchise, Because eominen carriers would be exempt from. 25 these charges, the'Court focusas only on the ivasot,ablcness or the cost-recovery fees. 26 The cost-recovery rets attempt tQ recoup costs itt adtninisteting and implementing the 27 Ordinancc. The City has subtnitied a detailed explanation of calculations and considerations supporting 28 each of the fees. Sce; Declaration of Phil Kamlar-r, ("Kamlart MO.") 1127-34- Qwest offers no 20 s ' 'i . .... . .. W.'NO, 3ON"P. 22r u SSP, 17. 2001 2:09PM I evidence to refute these calculations. On the pre of record,the Court cannot fired that the cost-recovery 2 tees arc likely to he round invalid under§253(c)_ 11 wevcr.this doterntination is riot disp"itive to the 3 motion before tho Court,givcsl clic tbteguing conclul�ions that tate Ordinance itself crates barriers to 4 entry in violation of§ 253(:) that do net fall within it le safe harbor provision of§253(c), 5 j 6 4. Preemption Undcr Callfornin Lely ti 7 Qtivcst also isscrts chair»s under Calirantia 114ilic Utilities Code§ 7901 Pod 7901.1.acrd tilt 8 'California Telecommunications hifr3structure Developiitcnt Act,Gov.Code§50030,arguing that these 9 statutes preempt the Ordinance and Fee Schoduiv. Tltc,California Constitution and state statutes have i 10 vested exclusive jurisdiction in the Public Utilities Commission to regulate the conditions under which 1 l public utilities render their services. S.ze Cal_Const.art.X11. § 8;Nacrnw v Pati vt 0:WN0. 3004A-P. 23' 23 - SPP. 17. 2001 2: NPM S controlling location and manner of installation."). 3 A much newer statute, the California Telecommunications infrastructure Development Act. 3 requites that any permit tcc imposod For the placement, installation. repair, or upgrading pE 4 telecommunications facilities"shalt not exceed the reasonable costs of providing the strvice for which S the fee is charged and shall trot be lcvictt for geticrti revenue purposes." Cal.Gov.Code§50030. Read 6 together, the statutes govern what son or local regulation and fees Would be permissible under 7 Califantia taw. 8 However.relevant case law is sparse. QNvcst did not cite,and tete Court could not find,any cases 9 addressing the nteaning of the state telecommunications act. Moreover,the cases interpreting 17901 i 0 of the Public Utilities Codc date back ut I*mi 40 yctv;s and arc nuxstly inapposite to the facts here. The y l i one relevant case,CiV,Q ' aitama, involved preemption of an outright attempt to impose a franchise j 12 on a telephone cotilgatty. here, the rmilchise and license provision of the Ordinance are subject t4 d 'v 13 exclusion if an applicant proves that it is excilipt. it is not clear that such a scheme violates§7901,not J Q ~' 14 that the Ordinance as a whole:cote icts with the state[clecommunications act. 15 Given the ambiguity and novelty of sonic of tltc stats;law questions prtsatted,the Court declines } 16 to exercise supplemental jurisdiction over Qwest`s state preemption claire_ Su 181 U.S.C. 1367(r)(1) 17 (district courts may decline to exercise supplemental jurisdiction if the claim raises a,novel or complex _ 16 issue of state law);Qty-aUuhurn.2001 WL 410043, ,*9-10(declining review of question whcthcr 19 local telecommunications ordinances violate new Washington laws where issues were matter of first 20 impression and no state court had published an opinion addressing the new taw). 21 27 S. Severability 23 The Ordinance cotntaios a severability clause which attempts to separate any provision that is 24 declared invalid or unconstitutional. Winance 116,10-380. 1n order to determine whether invalid 25 portions or tin ordinance are scvcrobla, it is necessary to look to Califontia law. $re Qy aFA b=, 26 2001 WL 410043. 416(citing Leaxitt.yr lartc-L..518 U.S. 137, 139, 116 S.Ct.2068(1996)). Under 27 California law, a statute that is invalid is not McMcctive and inoper4tive to the extent that its invalid 28 parts can be scvcrcd from any vapid onca, lxlgtcl F-mpJgy.CSS and10�U,t1i0n 22 SEP. n. 2001- x. 10 PM� ". , °" IN4111111L nc i.1W J. 29'01 8:5613T. 3:5'NO. 3004134P.. .24P 24 I Y..Quis,21 Cal.4th 585,613 (1999). An offending provision can be-severed from an ordinance if the 2 provision is grammatically, ftrnclionaily.and volitionally separable. If'axtax CA X- r,.W=Wian. 3 48 Cal.3d 805, 821 (1959). 4 The provision is grammatically severable if h is distinct and separate and, hence, "can be S rcinovcd as a whole willioul alTCeling the wording orany' ortlte pleasure's other provisions. ldal G Emplo�.yeec_,21 Cal.411t at 614(citing Calfanu.48 Cal. 3d at 622). It is functionally severable if it is not 7 necossary to the measure's operation and purpose. Id. Fii»lly. it is "volitionally"severable if it was 8 not of critical importance to the measure:'S enactinent. I.d. 'The final determination depends on whether 9 the remainder . . , is cornptetc In itself and would have been adopted by the legislative body had the 10 latter foreseen the partial invalidity ormc stalglC.'* Calfarm, 4$Cal. 3d at 821. 6 11 It is not possible to seer the many provisions and portions of the Ordinance that appear to be j d 12 preempted by the FTA. Tho entire application process and registration and permit requirements are rife L 'u" 13 with invalid requirements. Striking theso requircmctus would render the remainder of the Ordinance e � J 14 awkwardly disjointed and confusing_ Moreover, elimination of the many offending disclosure W% is a# c 15 requirements would vitiate the sort of decision-making originally intended by the City in determining A z 16 whcdur to permit use of its public rights-ofway. The rcc Schedule is inseparably tied to.the vx to i7 registration and permit requirement, and likewise, could not stand-if those provisions were deleted. l8yr Iii . These many Castors require that the Court enjoin the cnUrQly of the Ordinance. �['bl r , 19 2001 W 1, 410043. 016 ("(0)rdinances contain a complex mix. of application procedures, approval 20 requirements,required franchise;terns,financial and operations disclosure,and diacretionwy'catcttall' 21 clauses whose prectiipted provisions arc so pervasive 111.11 . , . .(severability of offending provislonc) 22 would result ill regulation requiring a disjointed Franchise application,a lack of standards for approval, 23 disapproval or revocation by the cities, and cross-references leading the reader to non-existent 24 provisions."). 25 26 B. Irreparable Injury and BalAuce of interests 27 Having found that Qwest has demonstrated a substantial likelihood of success on the merits,the 28 Court must next detenuinc whothcr Qwest faces a probability of immediate Irreparable harm. Qwest 23 4::ItN0, 30041Y1;P. 25 L SEP, 17. 2001 2, 1 GPM .10 i argues that it is suffering irreparabtc harm to its goodwill and reputation within the telccotnntutucatiom 2 Industry. Establishc%J in 1997, Qwcst`s Government Systems Division is relatively new to the 3 telecommunications market. Richeson Dccl. 1 17. The LIEN Laboratory contract Is Qwest's second 4 largest nonclassiticd governmental contract. iI, its procurement of the contract has enhanced Qwest's S reputation. but Qwest claims that its ability to secure Cuture business is heavily dependent an its 6 perfotmancc under this contract. I,d. According to Qwcst.continued delay in completing the conduit 7 link will irreparably harm its goodwill and reputation as well as the reputation of LBN Laboratory as 8 the F-SNET adminisinitor. Irl,,: Declaration octim Leiglhton VUighton Decl.')J 16. At oral argument, 4 counsel represented,that Qwcat*.vile 1o5c the contract if it dogs not have LBN Laboratory operational 10 by around September 2001- - l l Injury to a business's goodwill and reputation is not easily measurable, and thus supports a ;r 12 futding of irreparable harm, t1suL-k.Centcr.J0r.-% CAuPaXP. r; lan-A.'►R .S SaI•. n. 9d4 13 F,2d 597,603(9th Cir. 199 1)("[i]ntaagible injuries,such as damage to ongoing recruitment efforts and 0 t4 goodwill,qualify as irreparable harm")(citing RegerilLOWAilixECA � £ 15 747 F.2d 511, 519-20(9th Cir. 1984));AT&T CommvtsiCA1WUZ py gEDAL ts•8 F.Supp.2d.5829 x 16 594 (N.D. Tex. 1996) (lost revenues, loss of customers and goodwill "would be very dMicult to 17 calculate for the purposes of monetary damagts"). The Court is satisfied that Qwest has demonstrated 18 a probability of immediate irreparable hann. 19 The Court also recognizes the Marin to LON Laboratory and the ESNET by Qwest's delay in 20 finishing construction of its conduit, Sse Richcson Decl,yq i 1.14; Leighton Decl,94 11•16. The delay 21 in upgrading LON Laboratory's link to the ESNL--T dampers the network's full capacity,which in turn 22 may affect government-based or sponsored research endeavors, Leighton D"L 114-15, By tonere:t, 23 any injury incurred by tile.City if its Ordioance were enjoined would hot compare to the present harm 24 to Qwcst and LBN Laboratory. Tile City argues that "tete legislative authority of tha City would 25 e,f{cct;vcly be usurped by the cotta"if a prclimitsary injunction issued nullifying the Ordinance. OPPo. 26 to Prelim. hij. 25:12-13. However,the City is free to legislate provided it docs so wilhin the constraints 27 of federal and state law. 28 24 S .• .i rl VJf/YJ. ��J��O, 300411 .P. lb iu SEP. 17. 2001 2: IRM I C. Appropriate Relief 2 In addition to a preliminary injunction ouilifying flit Ordinance and Fes Soltcdule, Qwest 3 requests an alTir nadve order compelling rho City to issue all necessary permits for installat;on of the 4 LBN Laboratory conduit. Motion for Prelim. hij. 25:14-17. 1Ttc City objects to the proposed relief, 5 asserting that"the appropriate rcmedy would tut include automatic,reckless,and wholly uninformed 6 permitting orae undisclosed and poictitially ctivirottmentally Significant project." Oppo,to Prelim.IqJ. 7 21:13-15. The City argues that Qwest has trot complied%villi all rcquireinents for excavation permitting 8 under its Municipal Code and has not complied with tnAronmental certification requirements. 9 According to the City,Qwest railed to comply with cstoblishcd application procedures to obtain 10 a permit for excavation,even before the new Ordinance took effect. Many of the facts relating to this 11 issue are in dispute. Qwest commenced plans for installation of the LBH Laboratory conduit in March J 'E 12 2000. Declaration of Crispin Kurbanick("Kurbanick Dccl.")1n 5-6. Working with an independent 0 13 engineering firm to finalize details on the plan.Qwest submitted a formal Application to the Berkeley 14 A City Inspector on July 10,2000, Kurbanick Der-1.110. The City claims that it continued to work with ! 15 Qwest to complete an application rnr permitting. but that Qwcst refused to disclose information to C a 16 necessary to the application, Declaration of Phil Kamlarz("K=Iarz Dccl.") n 14-18. Qwest's partial 17 and non-responsive disclosures,according to the City.peevented apermit from being granted. It at 9 V 19 16, Qwest argued that lltc information sought was confidenrial and was not needed by ttte City to grant 19 a permit. -SW Declaration of Wesley Skow ("Skow Vccl:).Ex, 1. 20 Anonctr completed application packci was sent to the City Inspector On Octobcr 4, 2000, 21 Declaration orTim Ricluirdsun(-Richardson Nei.")112, Tltc parties met again on October 12.2000, 22 when the City offcrcd to grant the permit if Qwest agreed to pay all fees and charges applicable under 23 die new OrdiJiance and waived its right to challenge the Ordinance. Kamlarr.Decl.120;Skow Deal. 24 " 18-19. Qwcst did not agree to tGc waiver of its rights to challenge the new Otdinance. Instead,ager 25 further discussion with ilia City Inspector,Qwest made a final offer to the City. Skow Decl.122 and 26 Ex. H.This offer was based oa lifJut drawings and plans submitted to the-City inspector on December 27 61 2000,incorporating all suggestions and requirements the City lnspcetor had communicated to Qwest 28 up until that time. Mchardson Decl.914 and D.D. The City rejected Qwest's other,citing ineernpleta 25 0,31-0, HU4,jljr. Ll All 2:11PM SEP. 17. 2001 • 1 disclosures and non-responsive anSwcrs to inrarmation that was still requited. Skow Dtcl.,Ex. 1. 2 Qwest claims that it has provided the City Inspector all plans and drawings for cansttuction and 3 traffic-flow, a Certificate naming the City as an additional insured underQwest's liability insurance 4 policy,a map of the Pacific Bell conduit within the City's borders through which Qwest will be pulling S the ESNET line,and a raithful pi:rrorniancc bond, Richardson Decl.1 15. According to Qwest, this 6 infotmation completes the required disclosures to obtain general excavation and encroachment permits -7 under the Berkeley Municipsi Code. 8 The facts indicate that Qwest was not dilatory in seeking a permit from the City,and the City 9 did not arbitrarily delay review of Qwcst's application. Rather,the impasse arose from disagreement 10 over what inrortnatioti should be disclosed. I towcvcr, much of the inrorrtwtion the City sought was t, 11 justifiably refused by Qwest becauh it was not related to the City's management of its public rights-of- V •0 12 way. By comparison,none or this information is requcstcd to permit applications for general excavation 13 and encroachment of rights-of-way under other provisions of the Berkeley Municipal Code, pad ti d 14 Skow Dccl., Ex. E(Qwest's pennit application)bulli Berkeley Municipal Code 116.12(authorization 15 for excavations)and § 16.18 (authorization ror encroachment on public rights of way). R oo 16 The Court is not persuaded by the City's remaining argument that Qwest must obtain r 17 cerci f cation under the California Environmental Quality Act("CEQA"). Trenching of 4,300 feet of a Ci 18 public right-of-way probably does not qualify as a"project"to trigger CEQA. A=Cal.Publ.Res.Code 19 121065 (defining "project" as "an activity which may cause either a direet physical change in the 20 envimnnlant,or a reasonably foreseeable itldirm physical change in the environment.', Moreover, 21 the(hurt agrce3 with Qwcst that CC-QA docs not apply licre because approval ortho excavation project 22 under the City's general excavatinn permit process involves a ministerial acre Sm 8erkelcy Munitipal 23 Code § 16.12. CEQA ravlow docs not apply to projects approved by a ministerial let. Cal. Pub. Res. 24 Code § 21080(b); ),Miss v City of Js uJhY.Atg�dtrxa, 15 Cal. App.4th 85,89-90(1993). 25 It appears that Qwest has'filed applications ror excavation and ancroachment permits in 26 accordance with tete 8crkeicy Municipal Codc.Ste,iticlit►rtison Decl..1"6-7; Berkeley Municipal Cede 27 §§ 16.12 and IG.13. These provisions govern the LUN Laboratory project and thus present an existing 28 procedure for Qwest to obtain ilia neceosary permits to begirt laying its conduit. Although it appears ZG . l N0. 3UU4 LV SEP, 17. 2001 2.]1Pi 1 that Qwest has provided the City with all the information needed to grant permits under 1116.12 and 2 16,18, the Court does not feel that an ordcr compelling issuance:of the permits is appropriate. These 3 getheral permit procedures art not implicated by 11t3 order.and lige Court sees no reason to compai an 4 affirmative act from the City under these circumstances. The better choice is to presume that Qwest has 5 tact all obligations to receive the excavation and encu chmeol,permits under§§ 16.12 and 16.18,but 6 allow the City to show cause why permits should not be ordered. 7 8 CONCLUSION 9 For the foregoing reasons,tic Court DENIES derendant's motion to dismiss(Docket No. 13) 10 and GRANTS plaintiff's motion for preliminary injunction(Docket No.31, L t 1 IT IS HEREBY ORDEUD that the City of Berkeley is enjoined from enforcing the m 12 Telecommunications Carriers Ordinance, Berkcicy Municipal Code § 16.10 et seq., and its u 13 accompanying 17-t a Schedule,pending resolution of this lawsuit. w O 14 IT IS FURTHER ORDERED thar,wjthirJ-0.AaysAUhis-ulcr, the City of Berkeley SLOW 15 CAUSE Why the Court should not ordcr tlrc issuance of excavation and encroachment permits under the Ix 16 Berkeley Municipal Code§§ 10.12 and 16.1$ for Qwest's construction plans as laid out in the materials to ; s 17 sent to the City on December 6,2000. e: a 18 19 IT 1S SO ORDERED. 20 21 Dated; May 22,2001 r - 22 United States Dt abet Judge 23 24 zS 26 27 Z8 Z? N0. 3004 r cy SEP. 1 . 2041 UNITED STATEX Dl5tMCT COURT NORTPURN UISTRICr Ql=CAUrORNIA Quest Communications Corp., Plaintiff(s), Case Number:C•01-0663 SI vs. The City of Berkeley,et al.,. CERTIFICATE OF SERVICE Defcndant(s). t 1,the undersigned,hereby certify that I am an employee of the U.S.District Court,North= District of California. That on MAY 23,2401,I SERVI;,D a true and correct Copy/copies of tate attached,by placing said copy/copies in a postage paid envelope(s),addressed to the pen0n(S) hereiftaft listed, by depositing said envelope(s)in the U.S.Mail,orby placing said copy/copies into inierr-offs delivery inail box(es) located in the Clerk's Office. Peter Wald Bruce A.Soublet Latham&Watkins Office of City Attomey 505 Montgomery Street,Suite 1900 21$0 Milvia Street,4*floor Sari Francisco,CA 94111 Berkeley.CA 94704 Jeffrey Melching Rut=&Tucker 6t'l Anton Blvd.,Suite 1400 Central Bank Tower Costa Mesa,CA 92626 RICHARD W. WiEKING,Clerk by: L ► t a'C1 ,&� Manan L.Mon,Juditial Assistant to Honorable Susan Iliston for Tmcy Sutton,Court Clerk FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT CITY OF AUBURN; CITY OF BREMERTON; CITY OF DES MOINES; CITY OF FEDERAL WAY; A MUNICIPALITY; CITY OF LAKEWOOD; CITY OF MEDINA; CITY OF OLYMPIA; CITY OF PUYALLUP; CITY OF Nos. 99-36173 RENTON; CITY OF SEATAC; CITY OF 99-36219 TACOMA; CITY OF TUKWILA; D.C.No. CITY OF UNIVERSITY PLACE; CITY OF CV-98-05595-FDB VANCOUVER, Plaintiffs-Appellees= OPINION Cross-Appellants, V. QWEST CORPORATION, Defendant-Appellant- Cross-Appellee. Appeal from the United States District Court for the Western District of Washington Franklin D. Burgess, District Judge, Presiding Argued and Submitted February 6, 2001--Seattle, Washington Filed April 24, 2001 Before: Pamela Ann Rymer, Sidney R. Thomas, and M. Margaret McKeown, Circuit Judges. Opinion by Judge McKeown 5145 5146 5147 5148 5149 5150 COUNSEL Patrick Lynch,Emily Brubaker,O'Melveny&Myers LLP, Los Angeles, California; Judith A. Endejan, Williams, Kast- ner& Gibbs PLLC, Seattle, Washington; and Teresa Williams Gillespie, Qwest Corporation, Seattle, Washington, for the appellant/cross-appellee. Carol S. Arnold, Preston Gates & Ellis LLP, Seattle, Wash- ington, for the appellee/cross-appellants. OPINION McKEOWN, Circuit Judge: This case presents issues of first impression concerning the relationship between various Washington municipalities and a major telecommunications provider, Qwest Corporation. We are called upon to decide (1) whether an ambiguous tariff filed with the state utilities commission trumps the common law and statutory rule that the utility company, rather than the municipality, bears the expense for a facility relocation made necessary by right-of-way improvements, and (2) whether state law and the Federal Telecommunications Act of 1996 5151 preempt certain city ordinances that establish a franchise sys- tem to manage telecommunications facilities in rights-of-way. We conclude that the tariff does not require the municipalities to shoulder the relocation costs, and that the ordinances are preempted. In 1998, the cities of Auburn, Bellingham, Bremerton, Des Moines, Federal Way, Fife, Lakewood, Medina, Olympia, Puyallup, Renton, SeaTac, Shoreline, Spokane, Tacoma, Tuk- wila, University Place, and Vancouver("the Cities") brought suit against Qwest in state court. They argued that, as a condi- tion of Qwest's right to use the rights-of-way along city streets and roads, it was required by statutory and common law to relocate or pay for relocation of its facilities. Qwest removed the case to federal court, and filed a counterclaim against Auburn, Des Moines, Olympia, Tacoma, and Univer- sity Placel (the "Counterclaim Cities") seeking a declaratory judgment that state law and the Federal Telecommunications Act of 1996 preempt the municipal ordinances establishing franchise and fee systems. The district court granted summary judgment to the Cities on the relocation costs claim, and dismissed as unripe Qwest's counterclaim challenging the franchise ordinances. Both the Counterclaim Cities and Qwest appealed. These consolidated appeals involve two distinct issues -- relocation costs and the preemption of city ordinances -- which we discuss sepa- rately. DISCUSSION 1. RELOCATION COSTS Under Washington common and statutory law, when city street improvements require the displacement of telecommu- 1 The City of University Place has since revised its ordinances and was dismissed from the case. 5152 nications equipment located in the city's right-of-way, the utility company bears the expense of relocating the equipment.2 This has been the rule in Washington since before statehood. On February 21, 1996, Qwest(then U S West), notified cities and counties in western Washington that it would no longer • bear these relocation costs. In support of its announcement, Qwest took the position that its tariff of rates and services, filed with the Washington Utilities and Transportation Com- mission ("WUTC") in 1967 and adopted without objection in 1968, shifted the payment burden to the cities. That tariff, WN U-31, has been revised and amended over the years;the current version reads in relevant part: When relocation or aerial to underground conversion of existing facilities is requested or required by law, the cost of constructing the new and removing the old facilities will be borne by the customer or others requesting the relocation or conversion. WN U-31 para. 4.6.0 Relying on this language, Qwest refused to relocate or pay for relocation of its facilities to accommodate street improve- ment or relocation. This resulted, in at least one instance, in a Qwest-owned telephone,pole standing in the middle of a newly-widened road. Later, Qwest agreed to relocate its equipment, but notified the cities of its intent to seek reim- bursement for related costs. After this appeal was filed and partially briefed, the Wash- ington legislature passed major telecommunications legisla- tion, entitled, "An Act relating to the use of city or town rights of way by telecommunications and cable television provid- ers." Engrossed Substitute Senate Bill 6676 ("ESSB 6676"). 2 See RCW § 80.36.040; State of Washington v. Public Util. Dist. No. 1 of Clark County, 349 P.2d 426, 429-30 (Wash. 1960) (describing the com- mon law rule). 5153 The parties agree that ESSB 6676, codified at W ASH. REV. CODE ("RCW") § 35.99.010 et seq., supersedes Qwest's tariff and prospectively imposes the cost of relocating telecommu- nications facilities in city streets on the utility company.3 Therefore,the question before us is limited to who bears the costs of relocation prior to the effective date of the new stat- ute. We review de novo the district court's grant of summary judgment. Weiner v. San Diego County, 210 F.3d 1025, 1028 (9th Cir. 2000). A. STATUTORY AND COMMON LAW BACKGROUND • • We begin with the principle--with which both parties agree--that under Washington common law,the utility must pay the cost of relocation if required by public necessity. This stems from the conditional nature of a utility's right to have facilities in the public right-of-way. When the government allows a telecommunications company to place facilities in that right-of-way, the facilities' presence is contingent on the company's cooperation with maintenance and improvement of the street. 12 E. MCQUILLIN,MUNICIPAL CORPORATIONS § 34.74.10 (3d ed. 1970) ("it is generally held that the munici- pality may require a change in the location of pipes or other underground facilities of the grantee of a franchise,where public convenience or security require it"). This general rule is followed in virtually every jurisdiction, id. at n.6 (noting that only Arkansas is in conflict), and has been embodied in Washington common and statutory law since before statehood in 1889. 3 The Counterclaim Cities moved for partial summary judgment on Qwest's counterclaim, and sought an order declaring prospectively that they have authority to require undergrounding. The district court denied the motion when it dismissed the counterclaim for lack of ripeness. The Counterclaim Cities' appeal of this issue is rendered entirely moot by ESSB 6676, which makes clear that cities "may require service providers to relocate authorized facilities . . . ." RCW§ 35.99.060. By definition, this relocation includes undergrounding. 5154 The statutory rule can be traced to the old federal Post Roads Act, which required telegraph companies to maintain their lines so as "not to obstruct . . . or interfere with the ordi- nary travel on such military or post roads." U.S. REV. STATS § 5263, 14 Stat. 221 (1866). The territorial legislature simi- larly provided that the right to construct telegraph lines was subject to the requirement that such lines "not unnecessarily obstruct[]" rights-of-way. 1866 Wash. Laws, approved Janu- ary 18, 1866. This rule continued to apply after statehood. Although the Washington Constitution recognized the right of telecommu- nications companies to construct and maintain facilities, it specifically authorized the legislature to adopt"reasonable regulations" relating to those facilities. WASH. CONST. art. XII, § 19. Indeed, the state legislature in its first session adopted a statute allowing telecommunications companies to construct facilities in rights-of-way "in such manner and at such points as not to incommode the public use of the . . . highway[.]" 1889-90 Wash. Laws (now codified at RCW § 80.36.040). The "as not to incommode the public use" language of § 80.36.040 has been interpreted by the Washington Supreme Court to allow a city to require the utility company to pay for relocation costs when a public street is improved or altered. City of Seattle v. W. Union Tel. Co., 153 P.2d 859, 868-69 (Wash. 1944); City of Edmonds v. Gen. Tel. Co. , 584 P.2d 458, 463 (Wash. Ct. App. 1978). The Washington Supreme Court has continued to hold that any right accorded to a utility company to maintain structures in public streets is subject to the state's police power, and the company must bear the expense of changes required by public convenience and necessity unless otherwise agreed. See Wash. Natural Gas Co. v. City of Seattle, 373 P.2d 133, 135-36 (Wash. 1962); P.U.D. No. 1, 349 P.2d at 429. Today,the classic statement of the rule in Washington is that "public utility companies operating under a franchise 5155 must bear the cost of removing and of relocating their facili- ties, as it is made necessary by highway improvements." P.U.D. No. 1, 349 P.2d at 429-30. This rule"may be changed by contract between the utility and a municipality so that relo- cation expenses are borne by the municipality, or may be changed by statute so that relocation expenses in certain cases are borne by the state,.or the municipality." Gen. Tel. Co. v. City of Bothell, 716 P.2d 879, 882 (Wash. 1986) (quoting MCQUILLIN § 34.74(a)). B. EVOLUTION OF QWEST'S TARIFF Qwest argues that this rule was changed by tariff WN U- 31, originally filed by Qwest in 1967 and adopted by the WUTC in 1968. The original tariff read, in relevant part: [I]f the Company is requested to relocate its facilities underground, or if the Company is required by law to relocate its facilities underground, the cost of such relocating construction shall be borne by the owners of the real property served or by others requesting such relocation construction. Pacific Northwest Bell Telephone Co. Rules and Regulations No. 23 The current language, first adopted in 1989 --more than twenty years later-- reads: When relocation or aerial to underground conversion of existing facilities is requested or required bylaw, the cost of constructing the new and removing the old facilities will be borne by the customer or others requesting the relocation or conversion. WN U-31 para. 4.6.0 The difference between the two versions is significant; the original tariff is directed solely at undergrounding (that is, 5156 locating utility facilities underground), which has been encouraged in recent decades for aesthetic and safety reasons. Tariff WN U-31, however, has a different scope; it is not restricted to undergrounding, but purports to apply to all relo- cation. This broader language first appears in 1989; nothing in the record explains the purpose or intent of the change, and Qwest acknowledges that it first invoked the tariff to demand relocation costs in its 1996 letter to the Cities. C. ANALYSIS The question, then, is whether Qwest's current tariff altered its common law and statutory obligation to foot the bill for relocation costs. Qwest takes the position that the tariff lan- guage stating that relocation costs "will be borne by the cus- tomers or others requesting the relocation or conversion" includes the cities within the term "others." Qwest further argues that this tariff is equivalent to statutory law, and there- fore alters the prior rule. It is true that a tariff properly filed and authorized by law can alter the common law, at least between a utility and its customers. In Moore v. Pac. Northwest Bell ,the Washing- ton Court of Appeals noted that "[t]hese tariff schedules have the force of law and bind telephone customers." 662 P.2d 398, 403 (Wash. Ct. App. 1983). In Allen v. Gen. Tel. Co.,the Court of Appeals concluded that a tariff limiting the telephone company's liability for misprintinga directory"becomes a part of the law of this State." 578 P.2d 1333, 1337 (Wash. Ct. App. 1978). It is well settled, however,that tariffs are read to be consistent with preexisting statutory law, and cannot repeal or supersede a statute. See People's Ora. for Washington's Energy Res. v. Washington Util. and Transp. Comm'n, 679 P.2d 922, 927(Wash. 1984) (tariff may not set terms that con- flict with statute); Nat'l Union Ins. Co. v. Puget Sound Power &Light, 972 P.2d 481, 484-86 (Wash. Ct. App. 1999) (hold- 5157 ing that a tariff that purported to absolve utility from liability was ambiguous, and should not be interpreted in conflict with statutes). In this case, RCW § 80.36.040 authorized the city to require the utility to pay relocation costs. Qwest's tariff can- not, by itself, nullify that statute. This is especially true where, as here,the tariff is ambiguous. General Telephone Co. v. Bothell, the case that Qwest views as dispositive, does not hold otherwise. Bothell involved a city ordinance that purported to exempt a city from the provisions of a utility tariff relating to undergrounding. In 1971, the WUTC adopted WAC § 480-120-076, providing that "[e]ach telephone utility shall set forth in its tariff its con- ditions for providing underground facilities." In 1977, pursu- ant to that regulation, General Telephone filed a tariff passing the costs to "the owners of real property served along the route of the constructed facility or to others requesting such relocation construction." Bothell, 716 P.2d at 881. Bothell, in 1981 and 1982, enacted ordinances requiring the utility com- pany to pay for undergrounding of aerial wires--that is,pur- porting to supersede the statewide tariff authorized by the regulation. General Telephone challenged the validity of the ordinances and argued that the tariff required Bothell, not General Telephone, to pay for undergrounding. The Washing- ton Supreme Court first recognized that the tariff in that case was the law of the state before Bothell passed its ordinances. Bothell, 716 P.2d at 882-84. Stating that a city may not usurp the functions of the state public service commission, Bothell held that the city's ordinances were invalid where they con- flicted with the tariff. Id. Qwest argues that Bothell's statement that"[t]ariffs enacted pursuant to such WUTC regulation have the force of state law and are preemptive authority over subsequently enacted city ordinances," 716 P.2d at 882, requires us to hold that Qwest's tariff supersedes or preempts statutory law. Bothell does no such thing. First,the tariff in Bothell was adopted pursuant to a specific administrative code provision directing the utility to 5158 include undergrounding costs in its tariff. Unlike relocation costs,neither Washington common law nor RCW § 80.36.040 encompassed allocation of undergrounding costs. Bothell did not involve the tension between the unambiguous common law(later codified) and an ambiguous tariff. Second, the Bothell opinion makes perfect sense when viewed in context -- it would be absurd for a city to be able, by ordinance, to exempt itself from a prior tariff that was validly enacted and authorized by regulation. But that is not the case here, where the tariff at issue was not required by regulation, and where the Cities do not seek, by ordinance, to avoid compliance with a tariff. Because it is well settled that a tariff cannot repeal a statute, we need not reach the question whether Qwest's tariff has the force of law or whether the tariff does in fact purport to change the prior rule.4 We hold that Qwest's tariff did not alter the long-established and unbroken rule established at common law and in RCW § 80.36.040 that the utility com- pany must pay relocation costs. II. PREEMPTION OF THE CITIES ' ORDINANCES The next issue that confronts us is the question of state and federal preemption of local ordinances regulating telecommu- nications. We begin with the Telecommunications Act of 1996 (the "Act" or the "Telecom Act"), Pub. L. 104-104, 110 Stat. 56 (1996), which was passed to promote competition among and reduce regulation of telecommunications providers.5 To 4 In addition, we need not consider whether Pierce County v. U S West No. 97-2-08395-3 (Wash. Sup. Ct. March 13, 1998) (holding that "or oth- ers" language in the identical tariff does not include municipalities), col- laterally estops Qwest from challenging the tariff. 5 The full title of the Act is"An Act to promote competition and reduce regulation in order to secure lower prices and higher quality services for 5159 this end, the Act prohibits state and local governments from . • creating "barriers to entry," legal requirements that prohibit or have the effect of prohibiting a company from providing tele- communication service. 47 U.S.C. § 253 (Supp. IV 1999). Section 253 begins with a broad prohibition against state and local regulation, followed by certain narrow exceptions that leave a "safe harbor" for limited local regulation. One of these safe harbors, established by § 253(c), allows a local govern- ment to manage and collect fees for the use of public rights- of-way by telecommunication providers. After the passage of the Act,the Counterclaim Cities (Auburn, Olympia, Tacoma,Des Moines, and University Place)passed ordinances that govern the use of public rights- of-way by telecommunications companies by requiring com- panies to obtain a "franchise," or permit. These ordinances are not identical, but are substantially similar. Under each ordi- nance, any telecommunications service provider that wishes to operate in the city must apply to the city for a franchise. Only franchised telecommunications companies may obtain permits to install facilities in public rights-of-way. Franchised companies are subject to extensive cost reporting obligations and controls over such matters as changes of stock ownership. The ordinances also require the company to provide excess capacity, and to offer services to the city at best-available rates. Three of the Counterclaim Cities charge a fee of between$2500 and $5000 to apply for a franchise. Each city reserves the right to grant, deny, or revoke a franchise for unnamed criteria, and in the discretion of the city. Finally,the ordinances provide that a city may remove the facilities of a company operating without a franchise, and a company oper- American telecommunications consumers and encourage the rapid deploy- ment of new telecommunications technologies." The conference commit- tee report noted that the purpose of the statute is to provide for a "procompetitive, de-regulatory national policy framework." H. R. Rep. No. 104-458 (1996). 5160 ating without a franchise is subject to civil and criminal penal- ties. Qwest's counterclaim seeks a declaratory judgment that the Counterclaim Cities' ordinances are preempted by state law and by the Telecom Act. A. RIPENESS The district court dismissed Qwest's counterclaim as unripe, primarily on the grounds that "the analysis would be better conducted following specific attempts by the Counter- claim Cities to enforce their telecommunications ordinances." Auburn v. U S West, 79 F. Supp.2d 1214, 1218 (W.D. Wash. 1999). We review de novo the district court's dismissal of the counterclaim for lack of ripeness.Natural Res. Def. Council v. Houston, 146 F.3d 1118, 1131 (9th Cir. 1998). The "basic rationale" of the ripeness requirement is "[t]o prevent the courts,through avoidance of premature adju- dication, from entangling themselves in abstract disagree- ments[.]" Abbott Lab. v. Gardner, 387 U.S. 136, 148 (1967), abrogated on other grounds by Califano v. Sanders,430 U.S. 99 (1977). To determine whether Qwest's counterclaim is ripe for review, we evaluate (1) whether the issues are fit for judi- cial decision, and (2) whether the parties will suffer hardship if we decline to consider the issues. San Diego County Gun Rights Comm. v. Reno, 98 F.3d 1121, 1132 (9th Cir. 1996) (citing Abbott Lab., 387 U.S. at 149). The ripeness inquiry has a constitutional component rooted in the "case or controversy" requirement of Article III, and a prudential component that focuses on whether the record is adequate to ensure effective review. See Thomas v. Anchor- age Equal Rights Comm' 220 F.3d 1134, 1 l39 (9th Cir. 2000) (en banc). We address the constitutional component first, as it is jurisdictional, then proceed to the two-prong pru- dential inquiry required by Abbott Laboratories. 5161 1. Constitutional Component We may not hear a case unless"there exist[s] a consti- tutional 'case or controversy,' that the issues presented are 'definite and concrete, not hypothetical or abstract.' " Thomas, 220 F.3d at 1138.(quoting Railway Mail Ass'n v. Corsi, 326 U.S. 88, 9) (1945)). This tenet of ripeness requires us to consider whether the plaintiffs face "a realistic danger of sustaining a direct injury as a result of the statute's opera- tion or enforcement," or, by contrast, if the alleged injury is too "imaginary" or "speculative" to support jurisdiction. Bab- bitt v. United Farm Workers Nat'l Union, 442 U.S. 289, 298 (1979). We have little trouble concluding that this case satis- fies the "case or controversy" requirement, and therefore the constitutional component of ripeness. 0 The case before us is remarkably similar to Abbott Laboratories and its companion cases, decided the same day. There, the Supreme Court held, the very promulgation of a law may itself affect a party enough to satisfy the constitu- tional requirement: "[t]here is no question in the present case that petitioners have sufficient standing as plaintiffs: the regu- lation is directed at them in particular; it requires them to make significant changes in their everyday business practices; if they fail to observe the Commissioner's rule they are quite clearly exposed to the imposition of strong sanctions." Abbott Lab., 387 U.S. at 154. If"[p]romulgation of the challenged regulations present[s] plaintiffs with the immediate dilemma to choose between complying with newly imposed, disadvan- tageous restrictions and risking serious penalties for viola- tion," the controversy is ripe. Reno v. Catholic Soc. Servs., Inc., 509 U.S. 43, 57 (1993) (construing Abbott Lab.). This is particularly true when the regulations are burdensome and inunediate. Gardner v. Toilet Goods Ass'n, 387 U.S. 167, 170 (1967) (noting the "immediate severity of the regulations' impact upon the plaintiffs"); id. at 173 ("R]t is quite clear that if respondents, failing judicial review at this stage, elect to comply with the regulations and await ultimate judicial deter- 5162 mination of the validity of them in subsequent litigation, the amount of preliminary paper work, scientific testing, and recordkeeping will be substantial."). Qwest faces exactly this conundrum. As in Abbott Labora- tories, the ordinances have "a direct effect on the day-to-day business" of telecommunications companies. There can be no question that Qwest is violating the ordinances -- it owns and maintains facilities in the Cities' rights-of-way, and neither possesses nor has applied for a franchise. This is not a case like Thomas, where we held that a landlord's intent to violate a law was not enough. As we explained in Thomas , "[a]lthough we do not always require plaintiffs to await arrest or prosecution before entertaining a challenge to the constitu- tionality of a statute . . . the threat of enforcement must be at least 'credible,' not simply 'imaginary or speculative.' " Thomas, 220 F.3d at 1140 (citation omitted). See also San Diego, 98 F.3d at 1127 (distinguishing hypothetical violation from situation where party has "previously engaged in and would continue to engage in acts regulated under the chal- lenged legislation" and where prosecution is under agency's control). Only an about-face by the Counterclaim Cities would save Qwest from civil or criminal penalties. Nothing about this situation makes Qwest's dilemma any less severe than that faced by Abbott Laboratories. Nor is Qwest's dilemma speculative or conjectural. Abbott Laboratories does not require Damocles' sword to fall before we recognize the "realistic danger of sustaining a direct injury " that is the heart of the constitutional component of ripeness. Babbitt, 442 U.S. at 298. In sum,the enactment of these regulations "puts [Qwest] in a dilemma that it was the very purpose of the Declaratory Judgment Act to ameliorate." Abbott Lab., 387 U.S. at 152. The decision to comply will surely be costly, and "[t]he alternative to compliance . . . may be even more costly. That course would risk serious criminal and civil penalties. 5163 . . ." Id. at 153. This Hobson's Choice suggests the ripeness of the issue for review.6 2. Fitness of the Issues for Judicial Decision Under the test laid out in Abbott Laboratories, we must examine the fitness of the issues for review. If a contro- versy is "essentially legal in nature," W. Oil & Gas Ass'n v. Sonoma County, 905 F.2d 1287, 1291 (9th Cir. 1990), it is fit for judicial decision. This is the case when no"further factual amplification is necessary." Id.;see also Abbott Lab., 387 U.S. at 149 (issue was ripe where parties agreed that it was purely legal). Qwest's counterclaim presents a pure question of law: Are the Counterclaim Cities' ordinances preempted by state or federal law? See Int'l Truck Ass'n v. Henry-, 125 F.3d 1305, 1309 (9th Cir. 1997) (stating that preemption is a matter of law). No further factual record would narrow or clarify that issue. As in Abbott Laboratories, there is no factual dispute about the activity conducted by Qwest, nor the applicability of the ordinances to its activity. Therefore, the controversy is essentially legal in nature. Although we ordinarily "do[] not consider an issue not passed upon below," the decision to resolve a question "for the first time on appeal is one left primarily to the discretion of the courts of appeals." Singleton v. Wulff,428 U.S. 106, 120-21 (1976). "[I]t is sometimes appropriate for an appellate court to pass on issues of law that the trial court did not con- 6 The Counterclaim Cities also argue that Qwest does not have standing to challenge the ordinances. Standing, of course, overlaps substantially with ripeness. Thomas, 220 F.3d at 1138-39 (discussing similarity between standing and ripeness). In this case,the Counterclaim Cities' standing argument is inextricably linked with their ripeness challenge. Because we conclude that this case is ripe, we necessarily determine that Qwest--to whom the ordinances are directed--has standing to challenge the ordi- nances. 5164 Sider." Bibeau v. Pacific Northwest Research Foundation Inc., 188 F.3d 1105, 1111 n.5 (9th Cir. 1999). In this case, we are faced with pure issues of law that were briefed extensively before the district court and again before the court of appeals. As such, there is a solid basis on which to consider the merits of the counterclaim. 3. Hardship to the Parties For the second, or "hardship, " prong of Abbott Labo- ratories to favor the party seeking relief,"[p]ostponing review must impose a hardship on the complaining party that is immediate." Anchorage v. United States, 980 F.2d 1320, 1326 (9th Cir. 1992). Qwest contends that the hardship in this case is the costly and cumbersome requirement to apply for and comply with a franchise, as the failure to do so exposes it to civil and criminal penalties. We agree that the franchise ordinances impose multiple obligations upon Qwest. For example, Qwest is required to pay an application fee of up to $5000; file an application containing detailed information unrelated to the rights-of-way; negotiate certain terms of the franchise with the cities; undergo extensive reporting and approval processes for transfers of ownership, including stock; provide excess capacity; and offer the cities favorable rates. Were we to decline to hear the case on grounds of ripe- ness, Qwest would be forced to obtain a franchise and then return to court to argue that state and federal laws preempt the city ordinances--exactly the same argument that it makes here. This was precisely the situation in Abbott Laboratories, which the Supreme Court found ripe for review: "Where the legal issue presented is fit for judicial resolution, and where a regulation requires an immediate and significant change in the plaintiffs' conduct of their affairs with serious penalties attached to noncompliance," the case is justiciable. 387 U.S. at 153. Having determined that this case is ripe, we proceed to consider the preemption claims on the merits. 5165 B.PREEMPTION BY STATE LAW Qwest argues that the local ordinances are preempted by state law, and further contends that it is exempted from any municipal franchise requirement by virtue of its statewide constitutional franchise.7 The Counterclaim Cities counter that Washington's public utility laws do not preempt their man- agement of municipal rights-of-way. WASH. CONST. art. XI, § 11 requires that a local law yield to a state statute on the same subject matter if that stat- ute "preempts the field, leaving no room for concurrent juris- diction," or "if a conflict exists such that the two cannot be harmonized." Brown v. City of Yakima, 807 P.2d 353, 354 (Wash. 1991). See also Employco Personnel Servs.. Inc. v. City of Seattle, 817 P.2d 1373 (Wash. 1991) (invalidating ordinance conflicting with state law). Four days after Qwest filed its opening brief in this case, the Washington legislature enacted ESSB 6676, codified at RCW § 35.99.010 et seq. That law significantly altered the ability of municipalities to regulate telecommunications utili- ties, especially wireline facilities of those who hold statewide grants or franchises. The new law establishes a system by which cities may grant "master permits," or franchises, to telecommunications companies. The scope of the master permits is described in some detail, and limited in several ways. Importantly, ESSB 6676 excludes from its scope "a service provider asserting an existing state-wide grant based on a predecessor telephone or telegraph company's existence at the time of the adoption of 7 Qwest claims that its corporate predecessor possessed a grant dating to territorial times, giving it the right to be present in the right of way. That grant, Qwest explains, was preserved in the territorial laws and was guar- anteed into statehood by the Washington Constitution, and therefore exists independent of and immune from additional restrictions. 5166 the Washington Constitution to occupy the right of way." RCW § 35.99.010(3) (defining "master permit") (emphasis added); see also RCW § 35.99.030 ("[a] city or town may request, but not require,that a service provider with an exist- ing state-wide grant to occupy the right of way obtain a mas- ter permit [i.e., franchise] for wireline facilities"). In addition, ESSB 6676 bars municipalities from adopting franchise sys- tems that "regulate the services or business operations of the service provider, except where otherwise authorized in state or federal law." RCW § 35.99.040(1)(a). Each of these provi- sions affects the present case. First, as noted above, ESSB 6676 specifically exempts companies asserting a state-wide grant from any requirement to obtain a municipal franchise for wireline facilities. At oral argument, both parties agreed that Qwest asserts such a state- wide grant. Because ESSB 6676 exempts a company asserting a statewide constitutional grant from municipal franchises,the relief sought in Qwest's counterclaim--so far as it deals with wireline facilities--has been granted by statute. The ordinances' regulation of Qwest's wireline facili- ties clearly conflicts with RCW §§ 35.99.010(3) and 35.99.030. We therefore hold that ESSB 6676 preempts the franchise ordinances insofar as they purport to require a tele- communications company asserting a statewide constitutional grant to obtain a franchise for its wireline facilities.8 Having addressed wireline facilities, we are still faced with the issue of preemption with respect to wireless facilities. The remainder of the state and municipal franchise scheme is not 8 Because ESSB 6676 grants Qwest a portion of the relief it seeks in its counterclaim, that portion of the counterclaim might also be considered moot. See Kremens v. Bartley, 431 U.S. 119, 129 (1977) (holding that a new statute resolving the dispute moots a claim). Whether characterized as preemption or mootness,the result is the same. The new law supersedes Qwest's claim. 5167 so simple to resolve, in part because of the recent nature of ESSB 6676. The new law's prohibition on ordinances that "regulate the services or business operations of the service provider," RCW § 35.99.030(1)(a), could be interpreted to preempt ordinances that, for instance, require excess capacity or control stock transfers. In addition, some provisions of the ordinances might be preempted by state statutes regulating in the same subject area.9 Further, the new law incorporates cer- tain requirements of the Telecom Act by limiting the authority of cities and towns to regulate the placement of facilities if the regulation "[v]iolate[s] section 253 of the Telecommunica- tions Act of 1996." RCW § 35.99.040(2)(c). Any analysis of state preemption, then, requires us to look to federal law. For these reasons, we decline to interpret as a matter of first impression the interplay between prior state laws and ESSB 6676, as applied to the Counterclaim Cities' ordinances regu- lating Qwest's wireless facilities. No Washington court has published an opinion involving any aspect of the new law; neither the WUTC nor the Washington State Attorney Gen- eral has published any guidance as to its meaning or scope. Because we believe that a state court is better equipped to first interpret ESSB 6676 and its relationship with other state laws, and because the federal preemption issue is placed squarely before us by the new state law, we choose not to resolve the issue of whether other aspects of Washington state law pre- empts the ordinances' regulation of wireless facilities. C. PREEMPTION BY FEDERAL LAW Qwest also argues that the Telecom Act preempts the ordi- nances, a claim that the district court dismissed as unripe. The question before the district court and on appeal is whether, on the facts alleged, Qwest is entitled to judgment as a matter of 9 For example, the state regulates issuance of stock and securities at RCW § 80.08.030; rates, fees, and capacity at § 80.36.080; rates and ser- vice § 80.36.130; and franchise fees and charges at § 35.21.860. 5168 law. See Enron Oil Trading &Transp. Co. v. Walbrook Ins. Co., Ltd., 132 F.3d 526, 529 (9th Cir. 1997). We conclude that it is. The Supremacy Clause, U.S. CONST. art. VI, cl. 2, invalidates state laws that "interfere with, or are contrary to," federal law. Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 211 (1824). Within constitutional limits, Congress is empowered to preempt state law in several ways, including by expressly stating its intention to do so. Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977). In this case, there can be no doubt that • the Act preempts expressly; it states that "[n]o State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommuni- cations service." 47 U.S.C. § 253(a). The question for the court,then, is whether the ordinances "interfere with, or are contrary to" the Act. Hillsborough County v. Automated Med. Labs., Inc., 471 U.S. 707, 712 (1985). 1. Section 253(a) --Regulations Prohibiting or Having the Effect of Prohibiting Service Section 253(a) bars all state and local regulations that "prohibit or have the effect of prohibiting" any company's ability to provide telecommunications services unless the reg- ulations fall within the statute's "safe harbor " provisions (of which only § 253(c), related to local regulation of rights-of- way, is relevant here). The preemption is virtually absolute and its purpose is clear--certain aspects of telecommunica- tions regulation are uniquely the province of the federal gov- ernment and Congress has narrowly circumscribed the role of state and local governments in this arena. "Municipalities therefore have a very limited and proscribed role in the regu- lation of telecommunications." AT&T Communications v. City of Dallas, 8 F. Supp. 2d 582, 591 (N.D. Tex. 1998). Section 253(a) preempts "regulations that not only prohibit' outright the ability of any entity to provide telecom- 5169 munications services, but also those that 'may . . . have the effect of prohibiting' the provision of such services." Bell Atl. v. Prince George's County, 49 F. Supp. 2d 805, 814 (D. Md. 1999), vacated and remanded on other grounds, 212 F.3d 863 (4th Cir. 2000). A number of courts have held that various requirements imposed by local ordinances constitute a prohi- bition within the meaning of§ 253(a). For example, an oner- ous application process, Bell Atl., 49 F. Supp. 2d at 814 ("[A]ny 'process for entry' that imposes burdensome require- ments on telecommunications companies and vests significant discretion in local governmental decisionmakers to grant or deny permission to use the public rights-of-way'may . . . have the effect of prohibiting' the provision of telecommuni- cations services in violation of the [Act]."); a requirement to obtain a franchise, see AT&T Communications v. City of Dal- las, 52 F. Supp. 2d 763, 770 (N.D. Tex. 1999) (a representa- tion by the city that "without a new franchise . . . AT&T may not offer [services]" is "sufficient proof of the requisite pro- hibitive effect that triggers the preemptive force of § 253(a)."), vacated and remanded on other grounds, F.3d 2001 WL 197926 (5th Cir. Mar. 15, 2001); threat of pen- alties for failure to obtain a franchise, AT&T Communications v. City of Austin, 975 F.Supp. 928, 939 (W.D. Tex. 1997) ("The threat of criminal sanctions and fines for the failure of an entity to obtain municipal consent can indubitably only be described as a prohibition."); or a combination of these fac- tors, TCG New York,Inc. v. City of White Plains , 125 F. Supp. 2d 81 (S.D.N.Y. 2000) (regulations coupled with long approval process are a prohibition), may constitute a prohibi- tive effect. Taken together, these cases persuasively indicate that a regulatory structure that allows a city to bar a telecom- munications provider from operating in the city"prohibit[s] or ha[s] the effect of prohibiting" the company's ability to pro- vide telecommunications services under 47 U.S.C.§ 253(a). The ordinances at issue in the present case include several features that have the effect of prohibiting the provision of telecommunications services. In order to obtain a franchise, 5170 telecommunications companies must submit a lengthy and detailed application form, including maps, corporate policies, documentation of licenses, certain specified items, and "[sluch other and further information as may be requested by the City." AUBURN MUN. CODE § 20.06.0200. The Counter- claim Cities require application fees ranging from an undeter- mined amount(in Olympia)10 to $2,500 (in Auburn) and $5,000 (in Des Moines and Tacoma). After application, two of the cities (Auburn and Olympia)require a public hearing before granting or revoking a franchise. Each of the franchise systems authorizes the Cities to consider discretionary factors that have nothing to do with the management or use of the right-of-way. The ordinances all regulate transferability of ownership, even requiring franchises to report to stock sales. Some non-tax fees charged under the franchise agreements are not based on the costs of maintaining the right of way, as required under the Telecom Act.11 And, the ultimate cudgel is that each city reserves discretion to grant, deny, or revoke the franchises and the Cities may revoke the franchise if the terms in the ordinance are not followed, even allowing the Cities to remove the company's facilities. Civil and criminal penalties are authorized as well. Each of these requirements individually "ha[s]the effect of prohibiting" Qwest and other companies from pro- viding telecommunications services. See City of Dallas, 52 F. Supp. 2d at 770. Taken together, they create a substantial and unlawful barrier to entry into and participation in the Counterclaim Cities' telecommunications markets.Nearly identical city or county franchise structures have been found to constitute prohibitions under § 253(a). See, e.g., Bell Atl., 49 F. Supp. 2d at 816; City of Dallas, 52 F. Supp. 2d at 770; 10 See OLYMPIA MUN. CODE § 11.04.020 (K) (authorizing City Council to set application fee). 11 The parties agree that Washington law allows for a six percent gross receipts tax. 5171 Bellsouth Communications v. City of Coral Springs , 42 F. Supp. 2d 1304 (S.D. Fla. 1999). 2. Section 253(c) --Management of Public Rights- of-Way Because the ordinances "prohibit or have the effect of prohibiting" the provision of telecommunications services, they can survive only if they fall within the safe harbor provi- sions of§ 253(c). We conclude that they do not. As noted above, § 253(c)permits local regulations that"manage the public rights-of-way" and "require fair and reasonable com- pensation" for the "use" thereof. The Counterclaim Cities argue that each of the contested ordinances has a specific pur- pose that is related to the cities' ability to evaluate, permit, and manage telecommunications facilities in the rights-of- way. The Telecom Act does not define "manage[ment of] the public rights-of-way," but we are not completely without guidance. A number of federal courts have relied upon the Federal Communications Commission("FCC"), the agency charged with interpreting and enforcing the Act, for interpre- tive assistance. See e.g., TCG New York , 125 F. Supp. 2d at 90; PECO v. Township of Haverford, 1999 WL 1240941 (E.D. Pa. Dec. 20, 1999); Bellsouth Communications v. Town of Palm Beach, 127 F. Supp. 2d 1348, 1352-53 (S.D. Fla. 1999); City of Coral Springs, 42 F. Supp. 2d at 1308; Bell Atl., 49 F. Supp. 2d at 815; City of Dallas , 8 F. Supp. 2d at 591-92. As the FCC has explained, right-of-way management means control over the right-of-way itself, not control over companies with facilities in the right-of-way: [S]ection 253(c) preserves the authority of state and local governments to manage public rights-of-way. Local governments must be allowed to perform the range of vital tasks necessary to preserve the physi- cal integrity of streets and highways, to control the 5172 orderly flow of vehicles and pedestrians,to manage gas, water, cable (both electric and cable television), and telephone facilities that crisscross the streets and public rights-of-way . . . . [T]he types of activities that fall within the sphere of appropriate rights-of- way management . . . include coordination of con- struction schedules, determination of insurance, bonding and indemnity requirements, establishment and enforcement of building codes, and keeping track of the various systems using the rights-of-way to prevent interference between them. In re TCI Cablevision of Oakland County, Inc. , 12 F.C.C.R. 21396 (F.C.C. 1997), ¶ 103. The FCC, in turn,has looked to the legislative history for additional examples of right-of-way management. Senator Dianne Feinstein, during the floor debate on § 253(c), offered examples of the types of restric- tions that Congress intended to permit under section 253(c), including requirements that: (1) "regulate the time or location of excavation to preserve effective traffic flow, prevent hazardous road conditions, or minimize notice impacts;" (2) "require a company to place its facilities under- ground, rather than overhead, consistent with the requirements imposed on other utility companies;" (3) "require a company to pay fees to recover an appropriate share of the increased street repair and paving costs that result from repeated excavation;" (4) "enforce local zoning regulations;" and (5) "re- quire a company to indemnify the City against any claims of injury arising from the company's excava- tion." In re Classic Telephone, Inc., 11 F.C.C.R. 13082 (F.C.C. 1996),.¶39 (quoting 141 Cong. Rec. S8172 (daily ed. June a • 12, 1995) (statement of Sen. Feinstein,quoting letter from the Office of City Attorney, City and County of San Francisco)). 5173 Applying these guidelines,,coupled with common sense, it is apparent that the ordinances regulate the telecom- munications companies themselves,not merely the rights-of- way. We focus on four significant features of the ordinances that violate § 253(c). First, the ordinances require Qwest to undergo an extensive application process that is not directly related to management of the public rights-of-way. As described above, companies must submit a lengthy and detailed application form. AUBURN MUN. CODE § 20.06.0200. This application includes data gathered by the cities in order to determine the financial soundness, technical qualifications, and legal ability to provide telecommunications services;12 a description of all services provided currently or in the future;13 and unnamed discretionary factors that may have nothing to do with the management or use of the right-of-way.14 Regulations requiring "the applicant [to] submit proof of its financial,technical, and legal qualifications" do not regulate the public rights-of-way. City of Palm Beach 127 F. Supp. 2d at 1355. See also City of Dallas, 8 F. Supp. 2d at 593 ("Dallas also does not have the power to require a comprehensive application and consider such factors as the company's tech- nical and organizational qualifications to offer telecommuni- cations services."); City of Coral Springs , 42 F. Supp. 2d at 1310 ("financial, technical and legal qualifications"); TCG New York, 125 F. Supp. 2d at 91. In addition, a description of 12 AUBURN MUN. CODE § 20.06.020 (C), (D),(G); DES MOINES MUN CODE § 20.02.012(8); OLYMPIA MUN. CODE§ 11.04.020(I); TACOMA MUN CODE § 16.04.4.2.5.2, 16.04.4.2.9. 13 AUBURN MUN. CODE § 20.06.020 (C); DES MOINES MUN. CODE § 20.02.012(4); OLYMPIA MUN. CODE § 11.04.020(B); TACOMA MUN. CODE § 16.04.4.2.4. 14 AUBURN MUN. CODE § 20.06.020 0; DES MOINES MUN. CODE § 20.02.012(9); OLYMPIA MUN. CODE § 11.06.020(G);TACOMA MUN. CODE § 16.04.4.3.4. 5174 telecommunications services to be provided does not directly relate to management of the rights-of-way. See id.;Cily of Coral Springs, 42 F. Supp. 2d at 1309 ("[T]he City does not have the authority to request information regarding systems, plans, or purposes of the telecommunications facilities."). The upshot of the application process is to regulate the provision of telecommunications services rather than to regulate the right-of-way. Second,the ordinances impose reporting requirements or other controls over matters not directly related to manage- ment of the rights-of-way. For example,the ordinances regu- late ownership and certain transfers of shares of ownership of telecommunications companies, regardless of whether owner- ship affects the right-of-way.15 Although the Counterclaim Cities may wish to "have a right to know" who owns shares in the telecommunications companies that use the public rights-of-way, the municipal regulation of stock transfers extends far beyond management of the rights-of-way. Because these regulations are more than necessary to"man- age the rights-of-way," they do not fall within the safe harbor of section 253(c). Third, the ordinances require, either through the appli- cation process or by other means, that franchise agreements contain certain conditions unrelated to management of the rights-of-way. For example, three of the cities require that franchisees offer "most-favored-community" status--that is, the best available rates and terms.16 These ordinances bear no relation to management of the rights-of-way, but focus solely on rates, terms and conditions of service. See e.g., TCG New York, 125 F. Supp. 2d at 93 (holding that a most-favored 15 AUBURN MUN. CODE § 20.10.290 (50%control); DES MOINES MUN CODE § 20.06.70 (5%control); OLYMPIA MUN. CODE § 11.10.290 (50% control); TACOMA MUN. CODE § 16.01.8.3.3 (transfer of franchise). 16 AUBURN MUN. CODE § 20.06.180(N); DES MOINES MUN. C ODE § 20.01.10; OLYMPIA MUN. CODE § 11.10.370. 5175 clause "is more akin to a regulation of. . . rates, terms, and conditions of service unrelated to . . . use of the public rights- of-way");In re TCI Cablevision, 12 F.C.C.R. 21396 at 1 105 (noting that "most favored nation" clauses are"difficult to justify under§ 253(c) on the grounds that they are within the scope of permissible local rights-of-way management authori- ty."). In addition, ordinance requirements that companies pro- vide free or excess capacity 17 for the use of the cities or other users go beyond management of the rights-of-way. See Ci of Dallas, 8 F. Supp. 2d at 593 (such requirements are "totally unrelated to use of the city's rights-of-way, and are thus beyond the scope of the City's authority"). Fourth, and perhaps most problematic, the ordinances grant the Counterclaim Cities unfettered discretion to insist on unspecified franchise terms and to grant, deny, or revoke a franchise based on unnamed factors.18 This grant goes far beyond the limits of§ 253(c), encompassing anything a city deems to be in the public interest. Like the other courts that have faced this question, we conclude that such ordinances are too vague and too broad to comply with § 253(c). See, e.g., TCG New York, 125 F. Supp. 2d at 92; City of Coral Springs, 42 F. Supp. 2d at 1306; Bell Atl. , 49 F. Supp. 2d at 816 ("most objectionable is the fact that the ordinance vests the county with complete discretion to grant or deny a fran- chise application based on a wide-ranging set of factors that include 'whether the proposal will serve and protect the pub- lic interest.' "); City of Dallas, 8 F. Supp. 2d 582, 592-93 17 AUBURN MUN. CODE § 20.10.470;DES MOINES MUN. C ODE § 20.08.108; OLYMPIA MUN. CODE § 11.10.050(D);TACOMA MUN. CODE § 16.01.6.2.5. 18 AUBURN MUN. CODE § 20.06.040(M) ("such other factors as may dem- onstrate that the Franchise to use the public ways will serve the commu- nity interest."); DES MOINES MUN. CODE§ 20.03.18 (same); OLYMPIA M UN. CODE § 11.04.030(.1) (same); TACOMA MUN. CODE § 16.01.8.2.7 ("The City Council may, in its sole discretion which is hereby reserved, (1) approve or disapprove a License; and (2)require such terms and conditions in the License Agreement as deemed in the best interest of the City."). 5176 ("The City does not, however, have the authority to grant or deny that franchise based on its own discretion. Rather, grant- 0 • ing a franchise may only be conditioned on a company's agreement to comply with the city's reasonable regulations of its rights-of-way and the fees for use of those rights-of- way. We have specifically discussed only those aspects of the ordinances that most seriously violate § 253(c), but others are objectionable as well.19 It is not enough to argue, as the Coun- terclaim Cities do, that the ordinances regulate aspects.of tele- communications companies that are related to their fitness to provide services, and therefore use the rights-of-way. For example,they say stock ownership is linked to a company's financial well-being, which may affect its continued exis- tence, or its ability to pay fees or other necessary costs, which may ultimately affect its use of the right-of-way. This argu- ment has the flavor of the old children's ditty,"Oh, your ankle bone connected to your leg bone,your leg bone con- nected to your thigh bone,your thigh bone connected to your hip bone . . . ."20 This is simply too tenuous a connection to the "manage[ment] of rights of way." Under this semantic two-step, § 253(c) would have no limiting principle. The safe harbor provisions would swallow whole the broad congressio- nal preemption. Municipalities could regulate nearly any aspect of the telecommunications business. Indeed, these reg- ulations come perilously close to this reductio ad absurdum 19 For example,two cities' requirement for a public hearing before granting a franchise, see AUBURN MUN. CODE § 20.06.030, OLYMPIA MUN. CODE § 11.10.320; three cities' requirements for negotiation and accep- tance of a franchise, see AUBURN MUN. CODE § 20.06.050, DES MOINES MUM CODE § 20.02.19; OLYMPIA MUN. CODE § 11.04.050; and non-cost- based fees, see AUBURN MUN. CODE § 20.04.020, DES MOINES MUN. CODE § 20.09.112; OLYMPIA MUN. CODE § 11.04.020 (K) (authorizing council to set fee);TACOMA MUN. C ODE § 16.01.5.3.1. 20 DRY BONES.(American spiritual derived from Ezekiel 37:1-14), avail- able at http://www.hope.edu/bandstra/RTOT/CHI2BONES.HTM. 5177 Under/the Supremacy Clause, a local law "is nullified to the extent that it actually conflicts with federal law" by "stand[ing] as an obstacle to the accomplishment and execu- tion of the full purposes and objectives of Congress." Hillbo- Egg& 471 U.S. at 713 (citation omitted). Because these elements of the ordinances are contrary to § 253 of the Tele- com Act,they are preempted. i s D. SEVERABILITY To determine whether invalid portions of the ordinances are severable, we look to state law. Leavitt v. Jane L. 518 U.S. 137, 139 (1996) ("Severability is of course a mater of state law."). Under Washington law, the test for severability is whether the invalid provisions are unseverable and it cannot reasonably be believed that the legislature would have passed the one without the other . . . or, alterna- tively,whether the elimination of the unconstitu-. tional portion so destroys the act as to render it incapable of accomplishing the legislative purposes. State v. Anderson, 501 P.2d 184, 186 (Wash. 1972) (citation omitted). As the Counterclaim Cities note, a severability clause "offers to the courts the necessary assurance that the remaining provisions would have been enacted without the portions which are contrary to the constitution. " Id. However, the existence of such a clause is not dispositive. Even with a severability clause, an ordinance must fall in its entirety when "the elimination of the [invalid] portion so destroys the act as to render it incapable of accomplishing the legislative pur- pose." Guimont v. Clarke, 854 P.2d 1, 16 (Wash. 1993) (quot- ing Anderson, 501 P.2d at 186). The Counterclaim Cities' ordinances contain a com- plex mix of application procedures, approval requirements, required franchise terms, financial and operations disclosure, 5178 and discretionary "catchall" clauses whose preempted provi- sions are so pervasive that it is not practicable to conduct a line-by-line severability analysis of each city's municipal code. Were we to do so, the elimination of preempted sections of the codes would result in regulation requiring a disjointed franchise application, a lack of standards for approval, disap- proval, or revocation by the cities, and cross-references lead- ing the reader to non-existent provisions. As the district court held in Bell Atlantic, "given the number and variety of provi- sions of the [cities'] telecommunications franchise law[s] that are preempted by the [Act], . . . attempting to sever the invalid from the valid provisions would [not] be appropriate." Bell Atl., 49 F. Supp. 2d. at 820-21 (applying Maryland Law). This is not to say that the Counterclaim Cities cannot enact ordinances to manage the rights-of-way under § 253(c). But we cannot say that the objectionable portions of the present ordinances may be excised without rendering the end product a Swiss cheese regulation that would not be capable of"ac- complishing the ordinances' legislative purposes. " Anderson 501 P.2d at 186. CONCLUSION We affirm the district court's order granting summary judg- ment for the Cities on their claim regarding relocation costs. We reverse the district court's order dismissing Qwest's coun- terclaim for lack of ripeness; we remand Qwest's counter- claim with regard to wireline facilities as preempted with instructions to grant judgment to Qwest because state law pre- empts the municipalities' ordinances with regard to wireline facilities. We remand Qwest's counterclaim with regard to wireless facilities with instructions to grant judgment to Qwest consistent with this opinion. Affirmed in part and reversed in part and remanded with instructions. 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