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Committee reviews AT&T franchise renewal; asks staff to analyze FCC rules on revenue base
Summary
Staff presented an AT&T franchise renewal that mainly updates corporate identity; committee asked staff to research whether FCC rules that prevent "double dipping" require the fee be applied to telephone revenues only or whether the city can negotiate to apply fees to Internet revenues, and to return the item in July.
City staff presented a draft renewal of the AT&T franchise agreement, describing corporate succession and a handful of amended provisions. The agreement largely carries forward existing franchise terms with company-proposed edits (red) and city edits (blue/highlighted).
"The text that is in red is from the company. The text that is in blue ... is from the city," Brian said, and flagged language on page 11 that reflects FCC rules excluding Internet service revenue from the franchise-fee base.
Committee members asked for clarification of the 7% gross-revenue benchmark and whether the city could apply the fee to Internet revenue rather than legacy telephone revenue. "Since we can't double dip, should we instead charge for or take the revenue derived from Internet services as opposed to phone?" one member asked. Staff said they would research the applicable FCC rulings and court interpretations and bring a recommendation back.
Members also asked about a proposed self-insurance clause limited to the company’s property damage; staff said the language appears to allow self-insurance for company property but not for broader third-party liability.
Next steps: staff will analyze whether negotiation can direct the fee toward Internet revenues or whether FCC precedent requires fees be applied only to telephone revenues, and will return the franchise item for the July meeting with recommendations.
