02-25-2013 Council Work Session Minutes

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MINUTES OF THE ORONO CITY COUNCIL WORK SESSION Monday, February 25, 2013 5:30 p.m. Present: Mayor Lili McMillan, Council Members Kristi Anderson, Cynthia Bremer, Lizz Levang and Aaron Printup; representing Staff were City Administrator Jessica Loftus and Assistant City Administrator for Long Term Strategy Mike Gaffron. 1. Mediacom Presentation Bill Jensen, Regional Vice President of Mediacom, gave a presentation on the benefits of directly franchising cable with Mediacom. Jensen reported Mediacom was founded in 1996 and has been rated by the FCC as a top 5 internet provider. He stated that he primarily works with individual cities and the LMCC group of cities is rare in his field. Jensen presented that franchises encompass video only (no phone or internet) and the city can have more than one television operator. In Orono, cable passes 2,766 homes where 1,299 order cable/video, 1,397 order internet and 508 order phone. For video that is just below 5G% penetration which is high for LMCC cities. He noted 5% (maximum by law) of the video portion of our constituents bills are passed thru to LMCC as a franchise fee. The PEG fee also paid to the LMCC is set at$1.21 per month. Pass through fees are paid quarterly to the LMCC/cities. He stated Mound sends their PEG fees along to the LMCC while Chanhassen and Wayzata retain both their franchise and PEG fees. Jensen stated franchise agreements are typically tailored to the needs of a single community, such as build out in Orono; not to a group of communities who may not have the same goals. He noted the current LMCC contract provides service for areas with 30 homes per mile. Mr.Jensen explained cable complaints to the LMCC were less than 50 in 2012 and he encouraged the Council to contact other franchised cities of Chanhassen, Wayzata, Mound, Waconia and Howard Lake to inquire about the number of customer complaints they receive about Mediacom. Jensen estimated Orono would receive S complaints a year from residents who are not satisfied with the service or solution offered by Mediacom. Jensen noted the video franchise agreement with Mediacom could be 5, 10 or 15 years long. He stated the benefits to franchising directly with Mediacom is there is no middle man or agency, the buck stops with them,the city would receive the franchise and PEG fees directly (estimated at$100,000 per year), and Orono could receive accelerated build out. Jensen stated an incentive for Orono is that Mediacom would agree to 5 miles of build out per year for the next three years, starting in 2013. Thereafter, build out would be a 50:50 split of costs. Jensen estimated every mile of build out costs $24,000. He noted build out includes only 250 feet of line from the road to homes, so longer connections would be an extra cost to the resident. Mr.Jensen stated more recent contracts are providing service for areas with 20 homes per mile.