MINUTES

SPECIAL CITY COUNCIL MEETING

LAKEDALE TELEPHONE OVS PUBLIC HEARING

MAY 10, 2005

The public hearing was opened at 6:00 p.m. by Mayor Jeff Thompson. Council members present were Jean Soine, Dennis Zimmerman, Jeff Bertram (6:03 p.m.), and Tom Lindquist. Also present was Steve Helget, City Administrator; Jennifer Welling, City Secretary; Bill Spooner, City Attorney; Alice Nyhlen, Cable Coordinator; Bonnie Jo Hanson, Paynesville Press; Bob Vose, Kennedy & Graven; Jan Peterson, Marv Niedan, Robert Meyer, Tom Bordwell, Mediacom; Betty Freilinger, Jim Freilinger, Maurice Dosdall, Kevin Koglin, Todd Hartman, RKMC; Gene South, Lakedale Telephone Co.; Derek Groth, Lakedale Telephone Co.; Al Roemeling, Lakedale Telephone Co.; Ron Rowell, and Vangie Rowell.

The Pledge of Allegiance was recited.

Thompson thanked all in attendance for coming and announced the purpose of the public hearing; to consider the Lakedale Telephone Company’s request for an Open Video System (OVS). He reviewed the format for the evening and confirmed that this hearing is only to consider the OVS and not to complain about a company’s services, etc. A decision may be made as early as tomorrow evening at the Regular City Council meeting.

Mr. Vose greeted the City Council and attendees. He gave a brief background of this legal work in regards to cable TV work. He continued by giving some brief history of the law. MN has a long State Statute governing cable companies. In one court case a phone company argued it did not need to follow MN cable laws; however, the phone company lost; stating that the phone company needed to get a cable franchise agreement and follow the State law.

Lakedale wants to be exempt from the State law; and the State law does offer an exemption in Chapter 238 outlining the following:

·  Lakedale wants to provide service over a system unique to Paynesville and not with other cities.

·  Lakedale wants to serve less than 1,000 customers.

·  The conditions would change if Lakedale wanted to serve more than Paynesville and with more than 1,000 customers.

In the City of Montrose, Lakedale provides the phone system for the city, but Montrose has elected not to grant the cable franchise exemption; based on arguments and facts. Vose noted the following:

·  Grant the exemption.

·  Grant the exemption and enter into an agreement with Lakedale with outlined terms (this document is being processed).

·  In a newspaper report, Mr. South was quoted “Lakedale will roll out video immediately with up to 49 customers.”

Vose thanked Bill Spooner for his input during this process.

Lindquist asked Vose what the date of the court case was where the phone company lost? Vose said the Osego case was a 2003 decision.

Mr. South greeted the Council. He explained that at the last meeting when he addressed the Council he reviewed what had happened over the past 7 month, he was not going to review that again. Lakedale, over the past 5 years has not built a cable network nor does it have any intentions to do so. The infrastructure they do have will support video, voice, and data. The question is can you exempt Lakedale, yes; should you; it would benefit the consumer and increase quality of service and products. Mediacom says that Lakedale is trying to abiade the law; that simply is not true. Lakedale is proud of it leadership in voicing its opinion at the legislature to modify Chapter 238. The law needs to catch up with our lives. The Osego court case provided service to approximately 1200 homes; however, Lakedale could not service the entire area and the City wanted Lakedale to reach them by putting in a $7 million dollar project; Lakedale as a business could not do that. In that City there was no choice for video due to that loss. Lakedale’s head end is located in Hutchinson and Lakedale has interest in the company in which it purchases the signal. Lakedale agrees to provide PEG, Right of Way, Franchise fees, and area served. Mr. South thanked the Council for their consideration. He concluded; can you exempt Lakedale, yes; should you, yes; on behalf of the residents.

Mr. Bordwell introduced himself and Mediacom’s legal council Todd Hartman. Mr. Bordwell agreed with Lakedale that competition is a good thing and Mediacom has competitors in over 30 cities in MN. In those 30 cities all the competitors received a franchise agreement. Paynesville is the first city to consider an exemption. He wants the companies to be treated fair. Lakedale can get a franchise agreement and follow the standard provisions. Mediacom is not here to stop a competitor; however wants to be treated fair and equitable.

Mr. Hartman provided materials in regards to legal issues and outlining the “can you” exempt Lakedale under state law. Lakedale says they are not building a cable company. The only basis to argue the exemption is if they believe the system will only serve less than 1,000 customers and only in Paynesville. Mediacom believes that is not correct due to the fact the Lakedale interconnects to other cities now and that is considered a cable system. Paynesville’s legal council gave Montrose the opinion to exempt, but it is controversial.

Mr. Vose stated the issue is of exemption; “can you”, “should you”. The “can” is unique and not done on a regular basis. This council is acting as a court by factual conclusion. A resolution passed will include finding/facts, conclusion, and order of law. In Montrose they could have granted an exemption in his opinion. If new legal arguments are brought forward, he will not have that conclusion tonight.

Mr. South said Lakedale suggested offering the same type of agreement to Mediacom that would be offered to Lakedale and let the consumers decide who they want service with. Lakedale has agreed to indemnify the City and pick up all legal fees incurred if the City was to be sued. Lakedale wants to serve up to 1,000 customers in Paynesville.

Mr. Hartman reiterated the legal materials that he had distributed. This is a unique circumstance and a novel argument it is. Lakedale has offered to offer Mediacom the same agreement. Lakedale is the incumbent; a local exchange carrier, they can not be kicked out of the City. Mediacom on the other hand can be kicked out at any time. Mediacom wants a commitment from the City to protect its investment practices. For Lakedale to offer a similar agreement to Mediacom, it is not apples to apples.

Thompson asked for Council comments and/or questions.

Bertram wanted to hear the public’s comments and/or questions first.

Thompson asked for the public’s comments and/or questions.

Marv Niedan expressed although competition is healthy, he is concerned with service and where the weather service would be reporting from. The weather is currently coming from Morris.

South reported that he had provided the City of a map outlining the area to be served. This area reaches beyond the city limits and into the surrounding townships.

Thompson questioned the weather reporting. Mr. South explained that Lakedale is exploring a local weather channel from the internet that may come from St. Cloud, Willmar, or the twin cities.

Lindquist asked if the agreement with Mediacom is different for persons living outside the city limits? Thompson said that there is a separate agreement for the Township.

Lindquist asked if Lakedale already provides high speed digital services for computers? South said yes, in both the City and Township.

Lindquist asked if a phone’s prefix would affect their service? Mr. South said no.

Helget asked Mr. Vose to please expand on the head end that is located in Hutchinson and its relationship to MN law. Mr. Vose explained that Mediacom argues that according the MN State Law the definition of a cable system includes a head end. Lakedale is going to get a signal from the head end in Hutchinson. Lakedale is not an owner in Broad Ban Visions, but has an interest in it. Given those facts the head end is not a part of the system, as it serves many parts of the state and not an appropriate definition of State law. He did not know exactly how the signal gets from Hutchinson.

Bertram asked if the signals produce the same programming in all communities? Mr. Vose stated that in Hutchinson over 100 channels will be caught. Broad Ban Visions will make the choice to what is given out, noting the following:

·  Not the same channels.

·  Unique channels inserted on the line ups.

One may conclude that there are different channels in every community.

Bertram expressed his understanding that it would make it a unique system. Mr. Vose said, and that decides the question (discrete system). Mediacom disagrees; a company must have a head end to have a cable system. Bertram asked Vose what he believes decides it? Mr. Vose said:

·  A head end is not included in a given cable system.

·  Corporate formalities, Lakedale doesn’t own the head end in Hutchinson, but has an interest in it.

Thompson wanted clarification on definitions in Chapter 238. The exemption would exclude Lakedale from a being a cable company? Vose said yes, that is the position Lakedale has brought for the Council to decide.

Thompson’s concern was also the technical side, being the signal and cable phone line. These also must be taken into consideration.

Mr. Vose explained that the issue is what is the proper definition of a cable communication system. This system includes:

·  A head end in Hutchinson.

·  Over 1,000 customers – Lakedale claims they are not going to serve over 1,000 customers. Will they in the future, they may. The State Statute says if a company does not service over 1,000 customers they can be exempt.

Bertram claimed that Lakedale is not building anything. Vose explained that Lakedale may not be building, but they had to make some investment to get this cable equipment in place to get this system.

Mr. Vose stated that the State Statute dictates a process for a cable system.

Zimmerman asked how Mediacom felt about the current laws; it seems that the laws are far behind what is going on today.

Mr. Vose reported that MACTA and the LMC have taken a view that the laws are outdated. During the last legislative session upgrades to Chapter 238 were adopted. This year legislation with support from the phone companies, want into the video business which resulted in controversial changes.

Mr. Hartmann agreed with Mr. Vose in that there is a need to change State law. Mr. Vose had stated that Lakedale is performing a discrete video system. A system is not defined by boundaries. Mediacom argues that the head end out of Hutchinson is part of the system. Both companies can debate the definition of a cable system, but both are doing the same thing. So if they are doing the same they should be treated the same. Mediacom had to follow Chapter 238, Lakedale should.

Bertram asked if the infrastructures are the same? Mr. Hartman reported that Mediacom has a head end with a tree and branch type system. Both companies use fiber optics.

Bertram asked Hartman if he sees problems with the state and federal laws? Mr. Hartman said yes, the 1996 Telecommunication Act has had a lot of critics over the years and it also needs changing.

Bertram questioned Mediacom fighting the dish networks. Hartman said yes, Mediacom is required to carry every local channel; therefore, dishes should also.

Mr. South explained that when Mediacom built a system it would provide cable, data and high speed internet. I question when they roll out phone service, will they build a separate system? Lakedale must build out to every new home, whether they utilize our service or not. According to the 1996 Telecommunication Act it is easier for cable companies to provide phone service than and a phone company to provide cable service.

Soine asked if there are other communities that Lakedale has worked out a Cable Franchise Agreement with?

Mr. South said yes, with the City of Annandale; where the agreement is approximately 3 1/2 pages in length. They also provide service in South Haven with no written agreement, Maple Lake; where there is competition, and no written agreement; the City of Willmar where they went through the painful Chapter 238 process.

Zimmerman confirmed that Mediacom has alluded to the fact that they are willing to level the playing field and adjust an agreement.

Hartmann stated that Mediacom has accepted a 15 year term in the Franchise Agreement and paying fees for PEG. Most of the language in the Franchise Agreement protects the City and were determined by the City so to delete them is not an issue for Mediacom or Lakedale.

Zimmerman commented that this is making sense and we are not all as far apart as we thought we were in coming to a conclusion on an agreement.

Vose encouraged a compromise approach.

There was some discussion on what provisions each company could give up in the agreement and which provisions they want to keep.

Hartman stated that the term is important to Mediacom. Some language can’t be deleted due to State law and provisions that Mediacom has already performed and addressed.

Spooner suggested that section 1, 2, and 13 from the Mediacom Franchise Agreement be left in an agreement.

Vose noted that this is a 3-way negation and Mediacom would not achieve anything by stalling the negotiation; however would gain by being relieved of some of the burdens in there existing franchise agreement.

Mr. South agreed that an agreement is important to Lakedale and Mediacom and agreed to provide public service, share PEG, and supports the elimination of unnecessary pages in the agreement. He asked the Council to not delay their decision when two companies have agreed to come to an agreement.