COMMITTEE SUBSTITUTE FOR ORDINANCE NO. 040566

Repealing the cable television franchise granted to Everest Midwest Licensee, LLC; recognizing its limited presence in the City as an open video system provider; requiring carriage of the government access channel, KCCG-2; requiring continued payment of a 5% fee; and establishing a maximum number of subscribers at which time it must execute a new open video system franchise agreement.

WHEREAS, Everest Midwest Licensee, then known as Everest Connections Corporation, was granted permission to construct, maintain and operate a cable television system by Ordinance No. 000499 and as amended by Ordinance No. 011417; and

WHEREAS, Everest prepaid $50,000.00 toward support for KCCG-2, and prepaid $50,000.00 for future franchise fees; and

WHEREAS, Everest began its system construction within Kansas City and secured approximately 1,000 subscribers for its system; and

WHEREAS, Everest ceased construction of its cable television system within Kansas City, concentrating on its first areas of construction outside of the City; and

WHEREAS, Everest is unable to continue construction within the City because of economic conditions; and

WHEREAS, Everest sought permission from the Federal Communications Commission to become an open video system provider; and

WHEREAS, the FCC granted Everest that authority by an order dated March 13, 2003; and

WHEREAS, an open video system provider is obligated to share a portion of its system with independent video programming providers when requested in exchange for relaxed regulation of the open video system provider's operations; and

WHEREAS, the Communications Act of 1934, as amended by the Telecommunications Act of 1996, authorizes cities to require carriage of access channels; and

WHEREAS, the Communications Act of 1934, as amended by the Telecommunications Act of 1996, authorizes cities to require payment of a 5% fee, just as they may charge cable television operators; and

WHEREAS, establishment of a franchise agreement for an open video system provider that is not engaged in significant construction can result in rules and regulations inapplicable to minor additions to a system; NOW, THEREFORE,

BE IT ORDAINED BY THE COUNCIL OF KANSAS CITY:

Section 1. Repeal of cable television franchise. That Ordinance No. 000499 and Ordinance No. 011417 are repealed.

Section 2. Acceptance of prepaid PEG support. That the $50,000.00 prepaid to the City by Everest Connections Corporation for support of the government access channel, KCCG-2, is recognized as full payment for PEG support under the cable television franchise repealed by this ordinance.

Section 3. Acceptance of prepaid franchise fees. That the $50,000.00 prepaid to the City by Everest Connections Corporation for advance franchise fees is recognized as full payment for franchise fees due and payable under the cable television franchise repealed by this ordinance.

Section 4. Limitation on franchise requirement. That so long as Everest Midwest Licensee, LLC,serves fewer than 7,500 subscribers within Kansas City, no franchise agreement will be required. When Everest Midwest Licensee, LLC,serves 5,000 subscribers within Kansas City it will notify the City and request to commence franchise negotiations. This limitation on the requirement that a franchise need not be obtained is contingent on a majority of new subscribers being the result of additions to the current system, and not the result of new construction. On April 1 of each year, Everest will certify to the City the following four items: (1) the number of subscribers within the City; (2) the number of subscribers one year prior; (3) the number of new subscribers added as a result of new construction; and (4) the number of new subscribers added to the then currently built system.

Section 5. Construction rules applicable. That Everest Midwest Licensee, LLC,will observe all laws, ordinances, rules and regulations applicable to construction of any addition to its current system located in the City, including obtaining permits, and specifically the provisions applicable to cable television systems found in Section 19-31, Sections 19-33 through 19-35, and Sections 19-40 through 19-58, Code of Ordinances, as they now exist or may be amended from time to time.

Section 6. Government access channel carriage. That Everest Midwest Licensee, LLC,will, at its cost, promptly interconnect its system with the KCCG-2, the government access channel now provided through the cable television franchise between the City and Time Warner Cable.

Section 7. Fee. That Everest Midwest Licensee, LLC,will pay to the City a 5% fee on its gross revenues as defined by Section 19-3, Code of Ordinances, and as required by Section 19-82, Code of Ordinances, as these provisions now exist, and as they may be amended from time to time.

Section 8. PEG support. That Everest Midwest Licensee, LLC,will pay to the City the sum of five cents per subscriber per month for support of the City's government access channel. Such sum will be due on April 1 of each year, with the first payment due April 1, 2005.

Section 9. Insurance. That Everest Midwest Licensee, LLC,will maintain insurance as required by Section 19-84, Code of Ordinances.

Section 10. Indemnification. That Everest Midwest Licensee, LLC,will indemnify the City, its officials and employees as provided by Section 19-86, Code of Ordinances.

Section 11. Everest acceptance required. That Everest Midwest Licensee, LLC,will execute a written acceptance of the terms of this ordinance at which time the ordinance will become effective, except that the ordinance will become effective no sooner than 10 days after passage.

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Approved as to form and legality:

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William Geary

Assistant City Attorney