Attachment 2. October 27,2003 REF: OPP Honorable Members of the City Council City of Los Angeles Room 395, City Hall Los Angeles, CA 90012

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1 Attachment 2 L.IZA M. L.OWE:flY CHIEF INFORMATION O~F'CE~ JAMES G. GASTON ASsiSTANT GENE.RAL MANAGERS THE,RA G. BRADSHAW CLIFFORO e:ng PENNIS E. F"...Oy KAMTON JOE MARY 1<. KOTl:MAN CITY OF Los ANGELES CALIFORNIA INFORMATION TECHNOL.OGY AGENCY ROOM 1400, CITY HALL. EAST 200 NORTH MAIN STREET L.OS ANGE;L.ES, CA (213) FAX (213) JAMES K. ~AHN MAYOR October 27,2003 REF: OPP City of Los Angeles Room 395, City Hall Los Angeles, CA Attention lnformation Technology and General Services Committee Subject: DIRECT BROADCAST SATELLITE TELEVISION SERVICES. Dear Councilmembers: This letter is in response to Motion Weiss/line (Council File No ) where the Information Technology Agency (ITA) was requested to report on the following items related to Direct Broadcast Satellite (DBS). 1 Review current federal and state law, as well as practices in other cities, to determine whether and how the City can implement local customer service standards for DBS television services, 2. Explore options for instituting policies. in Los Angeles to require setting aside channel capacity for public use in a manner similar to the Public, Educational ald Government (PEG) requirements instituted with cable franchises, including a requirement to broadcast CityView Channel 35. 3, Recommend methods for instituting revenue sharing requirements for DBS services similar to those being considered by the State of California, or th01e instituted locally for cable and telecommunications companies. The City's authority to enforce customer service standards is clear. The California Government Code authorizes the City to resolve disputes between a provider and.a subscriber concerning the state customer service standards and adopt, by ordinance, a schedule of penalties consistent with the Code for violations of those standards. The City has enacted customer service standards that are being followed by DBS providers. AN EQUAL EMPLQYMENT OPPORTUNITY - AFFIRMATIVE ACTION EMPLOYER

2 October 27, 2003 Page 2 While negotiated options may exist, requmnq a DBS provider to set aside channel capacity for public use in a manner similar to PEG requirements of the City's cable operators does not appear possible within today's regulatory structure. In the context of pursuing revenue sharing that parallels that reflected by cable or telecommunications services, the difference in delivery appears to be defining. Cable and telecommunications providers use the City's rights of way to transmit their service while DBS providers do not. Absent changes in the law, the current environment presents a challenge in pursuing this alternative.! Based on these findings, ITA recommends that: 1 ITA review the DBS Public Interest Obl.igation designation application, likelihood of being select~d as P~blic Interest O~lig.at~onchannel with DBS providers. anp the cost associated with such a designation and report back to Councilor findings. 2. Council direct DBS providers to register with the City's Director of Finance, per the City's Administrative Code and pay a reasonable fee associated with the processing of the registration application. i 3. The Council support any action by the State Legislature that collects a fair c.am.pensation from DBS pr.o.vider.s.and re.turn.s a substantial percentage f. collected revenue, from such legislation, to local government based on th number DBS subscribers within that municipality. Background Local Customer Service Standards for DBS.Television Services 1. Review current federal and state law, as weh as practices in other cities, to determine whether and how the City can implement local customer service standards for DBS television services. Since it uses the radio spectrum to deliver its signal, DBS services are licensed and regulated by the Federal Communications Commission (FCC). While the FCC requires DBS services to meet certain guidelines regarding radiation exposure limits and environm~ntal standards, and has requlations addressing the placement of DBr antenna, It has not established customer. service standards.. i Although regulated by the FCC, states, cities and other local governments are not precluded from regulating DBS in the area of customer service as the DBS provider is conducting business in these jurisdictions. Much like a cellular telephone provider, thf DBS provider is subject to the historic authority to enact laws to protect the consumer. i I

3 October 27, 2003 Page 3 The California Government Code establishes customer service requirements for cable operators and video providers, which is defined to include DBS. "The requirements established include: p.rovi.der.ensu.r.e. s th8.t..s.ervice. reondering is reas.onab.l y efficient, completed promptly, and service is interrupted only as necessary; repall's Provider ensures that representatives have proper identification; Provider ensures written notice of the programming offered, the prices for that programming, the provider's installation and customer service policies, and the name,. address, and. telephone number of the local franchisinp authority, at the time of installation and annually; : II Provider ensures representatives are available to respond to customer telephone inquiries during normal business hours and a toll-free or local telephone number for installation, service, and complaint calls is availabl~ for customers; ~ Render accurate and understandable bills;.. Provi.de a minimum of 30 days written notice before increasing rates r deleting channels; and. Allowing every residential customer who pays his or her bill directly to th~ video provider at least 15 days to do so, Provider ensures that residential service may not be terminated for nonpayment of a delinquent account unless the Notice is provided at least 15 days prior to the proposed termination. The City's authority to enforce these requirements is clear. The California Government Gode authorizes the City to resolve disputes between a provider and a subscriber concerning the state customer service standards and adopt,' by ordinance, a schedule of penalties consistent with the State Code for violations of those standards. The City may enforce customer protection standards that are contained in a franchise or license granted to a cable television operator or video provider or that are otherwise authorize~ by law for other cable television operators or video providers....~,.~,j.,.,. In 1995, the City of Los Angeles enacted the Consolidated Consumer Service Standards ("CeSS") for consumers of multichannel video services. These standards were enacted to provide consistent consumer service standards for multichannel video providers so consumer rights and responsibilities do not vary throughout the City. These standards apply to providers of cable television, master antenna television, satellite master antenna television, direct broadcast satellite, multipoint distribution services, and other providers of video programming, whatever their delivery technology. While DBS providers assert that they are not legally obligated to comply with these standards, th.ey h.ave cooperat~d with ITA staff in the resolution of complaints ITf. receives, within the context of the cess, I i

4 October 27, 2003 Page 4 Channel Capacity for PEG 2. Explore options for instituting policies in Los Angeles to require setting aside channel capacity for public use in a manner similar to the PEG requirements instituted with cable franchises, including a requirement to broadcast Cityview Channel 35. The obligation of cable operators to provide support, both financial and channel capacity for PEG use is not required in the DBS environment. Federal law imposes a separate and distinct responsibility for DBS providers. The federally mandated DBS set aside, known as the Public Interest Obligation ("PIO"), requires DBS providers to reserve four percent of their channel capacity for non-commercial programming of an educational or informational- nature. Programmers wishing to qualify for DBS carriage as a PIO channel are required to submit applications to the DBS providers. The FCC has specified what criteria DBSproviders are entitled to consider when selecting eligible applicants.. DBS providers process PIO designation applications annually. Under the Feels implementation of the law, the DBS provider evaluates applications, selects, and th~n negotiates the details, including the cost of carriage for those selected proqrarnrners. ITA - is reviewing the PIO applications DIRECTV and Dish Network in addition to researching the likelihood of LA Cityview Channel 35 being selected as a PIO channel and the costs associated with such a designation. ITA will report back to Council with, these findings. The Satellite Home Viewer Improvement Act (~SHVIA") mandates that once a satellite carrier exercises its editorial discretion to provide the pro"gramming of any local television broadcast station within that station's local market. the satellite carrier must, upon request, carry without compensation the signals of every television" broadcast station located within that local market. Both OJRECTV and Dish Network are providing programming from local television broadcast stations in Los Angeles. Thus both are required to carry the signals of every television broadcast station located within the Los AngeIes market. However, Channel 35 is not considered a television broadcast station. Channel 35 is a "cablacast" station and therefore does not qualify as a "must carry" channel for DBS providers. In-order to become a television broadcast, Channel 35 would need to apply to the FCC to acquire a broadcast license and broadcast spectrum. The Feasibility of Acquiring Capacity for Over-the-Air Broadcast of LA Cityview Channel 35 Report (Feasibility Report), dated December 1999, outlines this possibility and suggests that it is expensive and that available broadcast spectrum is far from certain. The Feasibility Report is attached fqr your review. i

5 I.' October 27,2003 Page 5 According to the Feasibility Report, it is possible for Gityview Channel 35 to negotiate ia separate carriage arrangement with DBS providers for a monthly fee. As such, it mjy be worthwhile to discuss and negotiate with DBS providers a pay-far-carriage arrangement opportunity with LA Cityview Channel 35. Overall, however, requiring a DBS provider to set aside channel capacity for public use in a manner similar to PEG requirements of the City's cable operators does not appear possible within todayls regulatory structure. ' Revenue Sharing 3. Recommend methods for instituting revenue sharing requirements for DBS services similar to those being considered by the State of California, or those instituted locally for cable and telecommunications companies. j... /-:::\: 1 : -: '.,.... /. L.:, ~. r r '.' ::-.:. The Telecommunications Act of 1996 states that a DBS provider shall be exempt froli" any fee imposed by any local taxing jurisdiction. However, a state is not prevented from imposing a tax on a DBS provider and sharing the revenue of the fee with any local jurisdiction. While such a tax has been discussed in the California legislature, the parameters of any such assessment as well as how its revenue will be distributed have not been defined. The varied competing interests, DBS providers, cable operators, the State government, and local governments all have a stake in such legislation. Due to the restrictions imposed by federal taw, the California legislature holds the authority to enact legislation imposing an assessment on the DBS and in determining how the revenue collected would be shared with local governments.,.' :.. ' In the context of pursuing revenue sharing that parallels that reflected by cable or telecommunications services. the difference in delivery appears to be defining. Cable and telecommunications providers use the City's rights of way to transmit their service while DBS providers do not Absent changes in the law, the current environment presents a challenge in pursuing this alternative. However, under the City's Admi.nistrative Code, businesses operating within the City are obligated to register with the City's Director of Finance for the privilege of conducting business within the City. This registration should include a description of service being provided, the name of the company, its address, its officers, and telephone numbers. ITA staff can find no evidence that the DBS providers have formally registered with the City in this capacity. Other municipalities with similar provisions within their administrative code have charged DBS providers operating withiri the municipality a fee to cover the reasonable cost of administering this registration process..council should direct DBS providers to register' with the City's Director of Finance, per the City~s Administrative Code, and pay a reasonable fee associated with the processing of th:e registration application.

6 October 27,2003 Page 6 Recommendations 1. ITA review the DBS Public Interest Obligation designation application, likelihood of being selected as Public Interest Obligation channel with DBS providers and the cost associated with such a designation and report back to Council on findings. ' 2. Council direct DBS providers to register with the City's Director of Finance, per the City's Administrative Code and pay a reasonable fee associated with the processing of the registration application.. 3. The Council support any action by the State Legislature that collects a fair compensation from DBS providers and returns a substantial percentage of collected revenue, from such legislation. to local government based on the number DBS subscribers within that municipality. Please contact me or Assistant General Manager Thera Bradshaw at (213) a2 for questions or additional information. i Respectfully submitted, t5~~ t;:",~ LC:>VvC--<-r. Liza M. Lowery. Chief Information Officer Attachment cc: Honorable James K. Hahn, Mayor Honorable Rockard Delgadillo, City Attorney Board of Information Technology Commissioners Doane Liu, Deputy Mayor Office of the Chief Legislatlve Analyst Office of the City Administrative Officer Phil Lam, Office of the City Attorney Thera G. Bradshaw, ITA Dennis, Frady, ITA

7 JI:S$iI!. M. JUARROS cu:ner"'''' M~"-"'I;ICIII FRANI( T. MARTIN!!!:% II[KIic:lf"'YKO"U:II:,. CITY OF Los ANGELES CALIFORNIA INFORMA.TlON TECHNOLOGY AGENCY ROO CITY HALL ~ST 2.00 NORTH MAIN STRE~ LO~ ANCiEL.1!5, CA!iOOIl2. ( FAX l <!!ita/(ct ul!:"h!jr..l M"'N...G.. R5 JA...ES "'C cratl<l DENNtS E. FR...CY MARY K. KOn""Ar'<I ROBEAT B. LITTLEFlflLO RICHARD J. RIORDAN MAYOR December 8,1999 REF: PPE Honorable Richard J. Riordan Mayor, City of Los Angeles Room 800, City Hall East Los Angles, California Dear Mayor Riordan: FEASmILITY OF ACOUIRING CAP ACITY FOR OVER-THE-AIR BROADCAsT OF LA CITYVIEW CHANNEL 35. In 1987 the City of Los Angeles acquired access to channel capacity on all cable television systems operating in Los Angeles, through the cable television franchising process. City Council dedicated a revenue stream from cable franchise fees in order to guarantee that the City could establish, operate and provide quality programming using this capacity. In 1989 the City began providing programming over the local cable systems on cable channel 35 ("cablecasting") throughout the city. Branded as ttl.a. CityView 35," the City's cable channel provides live cablecast of City Council meetings, as well as important live and taped programs concerning local government, public utility, public safety) and public health issues. ' The quality and relevance of L.A. CityView's non-commercial, public interest programming have developed to the point that distribution oftbis important programming beyond Los Angeles cable television subscribers is desirable. Currently, the signal for Channel 35 is distributed by cable. television providers throughout the city as part of the basic cable subscription. Based on information submitted by the City's cable operators, as of December of 1998, there are over 1,349,000 dwelling units in Los Angeles that have access to cable television. However, of that number, only 601,397, or 44.6% subscribe to basic cable television service. ' At the direction of City Council, the Information Technology Agency (ITA or the "Agency") investigated the feasibility of LA Cityview 35 transmission via over-the-air broadcast. In consultation with Council District IS, several options were identified and investigated. In addition, several policy issues were raised which need to be addressed by the City, I AN EQUAL EMPLOYMENT OPPORTUNITY - AFFIRMATIVE; ACTION EMPLOYER

8 Honorable Page 2 Richard J." Riordan Option One: Purchase Airtime on Existing Broadcast Television Stations The City could purchase airtime on one or more non-commercial broadcast "stations. In the Los Angeles market, at least two non-commercial" stations operate on the UHF band: KCET. the Los Angeles PBS station, and KLCS. the Los Angeles Unified School District Channel. The Agency contacted KCET regarding policies for obtaining airtime. KCET informed the Agency that the station does not "sell II airtime. and reserves exclusive discretion as to what programming will air. Accordingly. it is not likely that an arrangement could be made to dedicate daily airtime slots to L.A. CityView. It may be possible to submit specific programs for carriage. but the actual decision to carry any program would be up to KeET, The Agency also contacted KLCS to inquire about the availability and cost of airing the City Council meetings. The Agency was informed that the only time slots currently available are Mondays. Thursdays, Saturdays and Sundays from 12 midnight to 5:00 a.rn. The cost for this time slot would be $100 per hour. The rate for slots outside this schedule, assuming it was available, was quoted at $400 perhour, It is recommended that the City submit a formal request to KLCS to determine the best time slots and rates to air the City Council meetings and to further determine if KLeS can provide a more flexible schedule. Option Two: Purchase Airtime for Audio-only Broadcast Over Television Spectrum The Agency contacted Cable Radio Network (CRN) to inquire about the feasibility of providing simulcast of the audio portion of City Council meetings to broadcast stations. CRN informed the Agency that carriage of City Council audio feed is feasible through KPXN. a local television station on the UHF band. The audio feed would be incorporated and broadcast as SAP (Second Audio Programming). The cost is $ per hour with a one-time set-up charge of approximately $750 to reconfigure the audio feed. ern also has proposed the following related concepts for the City's consideration: Make the City Council meetings available to non-english-speaking residents through partnerships with foreign language radio stations. ern proposes working with the City to avoid out -of-pocket costs by obtaining funding through sponsorships and deferred payments. Live broadcasts of Council meetings on CRN cable radio stations. Reported charges are $500 per hour, which includes bonus spots to promote City events. Tape-delayed broadcasts ofcouocil meetings on CRN cable radio stations. Reported charges are $400 per hour.

9 Honorable Richard J. Riordan Page 3 Qption Three: Radio Broadcast In addition to the above. there are a number of non-commercial radio stations that may be interested in cooperating with the City to broadcast City Council meetings. For example, radio station KCRW a National Public Radio affiliate, currently provides live coverage of Santa Monica City Council meetings. Radio station KPFK has previously indicated some interest in discussing the broadcast of City Council meetings in exchange for cross-promotional opportunities such as on-air broadcast credits, and on-air recognition by the President of'the Council. Option Four: Direct Acquisition of TelevisIon Broadcast License and Facilities City acquisition of its OlNIl broadcasting license and facilities would clearly be the most costly of all options. The Agency believes between three to five million dollars. at a minimum, would be required for purchase and construction of broadcast equipment, antennatower, support structure, and licensing costs. There is no guarantee that television broadcast spectrum would be available at the time the City applies for a Federal license. The City would require the expertise of a consultant experienced inbroadcast facilities acquisition to further investigate this option. The Agency believes that retentionof a consultant for performance of a feasibility study is appropriate only after clear direction from City Council to proceed. Qption Five: EJ:pand Cablecast of L.A. City View to Cable Systems Beyond Los An2eles Proper It is technically feasible to provide the Channel 35 signal to cable systems in adj acent communities. It is not likely that cable operators in those communities would willingly permit Channel 35 to utilize cable system channel capacity at less than market rates. even assuming such spectrum was available; However, there are two avenues which may be pursued. First, the City may purchase cable "leased access" capacity. Under this scenario, the City may purchase cable channel capacity on cable systems in neighboring cities for rates which are determined by a formula set forth in Federal regulations. There is no guarantee that leased access capacity would be available on the dates or at the times preferred by the City. Further, it is almost. certain that the leased access programming would not appear on channel 35 in the neighboring cities where the City leases access. The City's programming would appear on whatever channel the cable operator has reserved for leased access programmers. Secondly, the City may enter into agreements under which the city-owned goverrunent access channels in neighboring communities may agree to carry programming created by L.A. CityView. Editorial control over these channels rests with the communities themselves, and the decision to air L.A. CityView programming would rest with them. There is no guarantee that time slots or dates preferred by the City would be available, even if a neighboring community agreed to carry L.A. CityView programming. However, many (but not all) government access channels are positioned at channel 35, which would permit subscribers to more readily locate the City's programs. There is prior precedent for the government access channels of neighboring cities to share programming.

10 Honorable Richard 1. Riordan Page 4 The City of Beverly Hills has ~ the past requested to cablecast Los Angeles City Council meetings, based on the relevance of specific agenda items. Option Six: Satellite Uplink It is feasible for the City to provide the Channel 35 signal to a satellite uplink provider in order to permit individuals with satellite receivers the ability to receive L.A. CityView. The uplink capability. if the City were to purchase such a service, would not automatically permit subscribers of direct service satellite services such as Echostar, USSB, or DirecTV to receive L.A. CityView. A separate contract of carriage with one or more of these video providers would be required, and such a contract may be cost-prohibitive, Without a carriage contract, the L.A. CityView signal would be viewable only by owners ofc-band satellite receivers who subscribe to a service allowing them to downlink from the satellite carrying the City's signal. The cost of satellite time is approximately $850 per hour. However, a long-term contract may yield a 10% to 20% reduction in the hourly rate. An additional cost involved would be the satellite uplink facility. The uplink facility is required to receive the City's signal and transmit it to the satellite in orbit. PSSI, a local satellite vendor, quoted the Agency $1,500 per uplink which includes a discount of$l,ooo peruphnk if the.city awards an annual contract. Option Seven: Internet Streaminl: Video The City can consider streaming video and/or audio on Internet Currently, the City does not have all the necessary components required in order to have full-motion, 24-hour video and audio stream capability on the Internet. However, streaming can be achieved through a number independent Internet providers until such time that the City acquires the necessary components. The cost depends on number of hours programming is displayed on the Internet, and length of contract with the Internet provider. The City, however, may opt to pursue the option of establishing its owninternet capabilities if funding is available. This possibility is the subj ect of a separate report to Council. ITA is ready to further pursue any options approved by the City Council and to report back with its findings. Respectfully yours, JeSse ~Juarr~' ~ General Manager cc: Honorable Alex Padilla, Chair, Information Technology & General Services Committee Honorable Laura Chick, Committee Vice Chair Honorable Rudy Svorinich, Jr., Committee Member Janice Wood, President. Board of'inforrnation Technology Commissioners Ana Cubas, Seventh Council District Edward J.,Perez, Assistant City Attorney Roy Morales, Office of the City Legislative Analyst

11 bee: Paul Janis. Acting Assistant General Manager Tony Ighani, L.A. City View Station Manager u:airl!ro"'","ll~,...,.j