What You Need to Know About Comcast’s 15-Year Franchise Agreement That Just Advanced to City Council

Comcast negotiator Mark Reilly and Philadelphia’s Chief Innovation Officer Adel Ebeid face the City Council’s Public Property Committee. (Photo by Jared Shelly)

Philadelphia City Council has taken a big step toward inking a new 15-year franchise agreement for Comcast. On Thursday its Public Property Committee passed an agreement that expands services for low-income residents, promises that Comcast will pay prevailing wages and offers contingencies regarding Comcast’s historically unpopular customer service. The deal saves the city $50,000 per month on its technology bills while bringing new tech to more than 200 city-owned buildings like recreation and health centers.

The two sides have been negotiating for months on a new deal and rescheduled Thursday’s hearing twice while both sides deliberated throughout the day. In the end, they passed an amended version of the agreement on Thursday — meaning it can be passed before Council’s session ends for the year.

Councilman Bobby Henon (chair of the committee) said the negotiation process “tested, at every level, the relationship between Comcast and the city.” The deal in place “will prove that Comcast has put Philadelphia first,” he continued. “That’s what we demand and that’s what Philly deserves.”

Here are some highlights. The full term sheet appears at the end of the article:

Comcast will be held to specific customer-service standards. This is in regards to things like missed service appointments and service outages. They company can be forced to pay up to $500,000 per year if they fail to comply.

Comcast will pay a franchise fee of 5 percent of gross revenues from cable service. That’s the same fee the company pays the city today — and the maximum allowed under federal law.

More than 200 city locations like municipal buildings and recreation centers are getting new technology. Comcast is providing $10 million in network construction at no cost to the city.

The company will provide a prevailing wage and living wage. The cable giant is obligated to comply with the city’s living wage and the prevailing wage ordinances.

To join Internet Essentials, you no longer have to be without Comcast service for 90 days first. But the city is paying for it. The requirement will be waived for five years and is contingent upon the city’s offer to subsidize each Internet Essentials customer at a cost of $20 per customer per month — up to a maximum of $170,000 per year.

Philly will be added to the pilot program to extend Internet Essentials to low-income seniors. In fact, Philly will be added to any other pilot program associated with Internet Essentials in the future. 

Comcast is increasing funding for public, educational and governmental access programs. It’s going from $8.2 million to $21.3 million over the course of the 15-year deal. Expect plenty to go toward PhillyCAM, the city’s public-access TV channel.

The company will provide career and technical education to high school seniors — and will hire 50-100 of them each year. It’ll work with the School District of Philadelphia to develop the program.

Comcast spokesperson Jen Bilotta said the commitments Comcast has made to the city have a total value of $480 million.

“We are thrilled to have reached an agreement with the city and look forward to final passage next week. The commitments we have made reflect our dedication to our hometown,” she said. “We’ve created new programs that will change the lives of thousands of Philadelphians now and for many years to come.”

The Media Mobilizing Project has been a strong critic of Comcast during the negotiations but its Policy Director Hannah Sassaman released a statement that was largely positive regarding the agreement.

She said that the Nutter Administration and City Council “are fighting hard for Philadelphia’s people – to expand affordable internet to all communities here in the poorest big city in America, to protect Comcast consumers, to ensure a dignified life for Comcast workers, whether they are on staff or contracting or subcontracting with Comcast, and to ensure Comcast pays its fair share to our struggling Philadelphia public schools.” She went on to say “these are historic and welcome expansions of affordable internet, and one that every Philadelphian can cheer. That said, we live in a city with the third worst broadband penetration of any big city in the U.S. These are vital gains that we must build on in 2016 and beyond.”

Here’s the entire term sheet as it was presented to the media:

1.            Subject: Renewal of the cable television franchises granted by the City to Comcast in each of Franchise Areas I, II, III and IV within the City; principal terms to be set forth in the franchise renewal agreement between Comcast and the City (“Franchise Agreement” or “Agreement”).

2.            Term of renewal franchise: 15 years.

3.            Customer Service Standards:  The Franchise Agreement contains enhanced customer service standards above those required of Verizon and in the prior Comcast franchise.  It includes specific performance requirements, regular enhanced reporting with audit rights by the City, and liquidated damages up to $500,000 per year for failure to comply.  This is in addition to the $500,000 in liquidated damages for any other violation of the franchise and is twice the liquidated damages provided by the Verizon franchise.  There are specific commitments regarding missed service appointments and service outages.  The Franchise provides an escalations procedure for the City to convey customer complaints and receive a report on the resolution within three business days. 

4.            Franchise Fee:  The Franchise provides for the maximum lawful franchise fee of 5% of gross revenues from cable service, which currently exceeds $17 million per year.  At the City’s request, Comcast has agreed to expand the revenues to include all PEG fees and FCC fees collected from customers neither of which is included in the Verizon franchise. 

5.            Public, Educational and Governmental Access (PEG) Funding:  Comcast is providing a significant increase in PEG funding – rising from $8.2 million under the prior franchise to $21.3 million under the new franchise.  This is more than twice the funding provided in the Verizon franchise.  How much of the $21.3 million goes to support PCAM or the School District is entirely in the discretion of the City.  The franchise also continues Comcast’s provision of nearly $1 million per year in complimentary services to Philadelphia municipal locations, schools, and libraries, while the Verizon franchise provides for none.

6.            PEG Channels:  The Franchise provides for 11 channels total – 4 public access channels (PhillyCAM); 2 governmental access channels (Channels 63 and 64); and 5 educational access channels (1 each for SDP, Community College of Philadelphia, Drexel University, Temple University, and LaSalle University).  Two channels are already available in High Definition and the Franchise provides a reasonable pathway for the activation of additional HD channels in the future which the City may allocate among public, educational and governmental access as it sees fit.  The Verizon franchise provides no HD channels.

7.            PEG Video on Demand (VOD) Capacity:  The Franchise increases PEG VOD capacity from 8 hours to 20 hours allocated in City’s discretion sufficient to meet channel needs.

8.            Institutional Network:  A managed services network provided by Comcast, as agreed by the City’s Chief Innovation Officer (CIO), on specific terms negotiated by the CIO with Comcast and to be attached as an appendix to the Franchise Agreement.  Comcast is providing $10 million in network construction at no cost to the City.  The Verizon franchise required a $2 million cash payment.  The network will provide data transport to more than 200 city locations at a significantly higher performance level than the current network and will provide significant financial savings to the City.  The City may use the network for governmental purposes and may include the provision of WiFi services at municipal locations. 

9.            Remediation of cable plant code violations:  Comcast is carrying out a comprehensive City-wide effort to inspect, identify and repair alleged violations of the National Electrical Safety Code and/or National Electrical Code in its cable plant city-wide (including poles, cables, cable drops, equipment in pedestals, etc.).  The project will be completed within 18 months and is guaranteed by up to $2 million in liquidated damages.  The City will receive monthly progress reports and will conduct quarterly compliance certifications.  Comcast has agreed to pay for the City’s costs of inspection and certification. 

10.          Prevailing Wage and Living Wage – Comcast’s franchise includes the obligation to comply with the Living Wage ordinance and the Prevailing Wage obligations associated with City-Work such as the construction of the City’s I-Net.

11.          Economic Opportunity Plan – Comcast and the City have signed an Economic Opportunity Plan that recognizes Comcast’s leadership in the area of supplier and employee diversity, and establishes goals for expansion of that effort.

Council should be aware that Comcast has announced several additional commitments separate from the cable television franchise renewal: 

1.            Senior Pilot of Internet Essentials – Comcast has announced that it is adding Philadelphia to its pilot program to extend Internet Essentials to low-income seniors who are not connected to the Internet.  This program not only brings the $9.95 price for service, but also the comprehensive approach to digital literacy and access to low cost equipment which are key components of bringing the disconnected onto the Internet.  Comcast also agreed that Philadelphia would be included in the first group of communities to receive any future pilot program for Internet Essentials.

2.            Subsidized Low-Income Internet Essentials Program – For five years, Comcast will be partnering with a local non-profit organization in cooperation with the City to provide low-income Philadelphians who don’t have school-aged children an opportunity to participate in the Internet Essentials program at a rate of $29.95, of which the customer pays only $9.95 and the organization pays $20.  Comcast is providing the non-profit with a grant of $250,000 per year to support administrative costs and to fund a $20 monthly subsidy for each customer referred by the organization.  After the first year, Comcast has committed to a 40% annual increase in the grant if the increase is matched by incremental funding procured by the non-profit organization or the City 

3.            Digital Inclusion Alliance Funding – In recognition that no one company can solve the digital divide problem on its own, the City will be forming a Digital Inclusion Alliance comprised of businesses, non-profit organizations, and governmental agencies with the goal of focusing on positive outcomes, including digital literacy.  Comcast has announced that it will be providing a grant of $500,000 to support the formation and mission of the alliance. 

4.            Senior Discount on Cable Service – Comcast has announced that will begin offering a 10% discount to low-income seniors on limited basic and digital starter cable service.

5.            Virtual Customer Care Agent Pilot Program – Comcast has announced that it is launching a Virtual Customer Care Agent program in Philadelphia that will result in the hiring of 150 to 200 Philadelphia residents to work as customer care employees from their homes.

6.            5-Year Amnesty Program for 90-Day Requirement in Internet Essentials – For a five year period in the City of Philadelphia, Comcast has agreed to waive the requirement that applicants for Internet Essentials (including the Senior Pilot and Low-Income Programs above) shall not have been Comcast Internet Service customers in the prior 90 days.  This amnesty program is contingent upon the City’s offer to subsidize each such Internet Essentials customer at a cost of $20 per customer per month, up to a maximum of $170,000 per year, which amount shall be deducted from the quarterly franchise fee otherwise due the City. 

7.            Career & Technical Education Program – Comcast’s future is only as strong as the employees that we can welcome into our workforce.  We have a long history of partnering with higher educational institutions to identify curricula that best prepares potential employees.  Comcast also appreciates that not all of our employees need training at the college level, but may find their educational needs met at the high school level.  We look forward to working with the Philadelphia School District to identify core curricula that we view as valuable in our workforce and will accept CTE trained students, even before graduation, in cooperative programs.  In projecting our anticipated need for new employees, Comcast has a goal to hire between 50 and 100 new employees through CTE and similar future programs on an annual basis.