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Comcast, Philly Agree to 15-Year Franchise Deal

After hammering away for months, Comcast and its home town of Philadelphia have agreed to terms on a new 15-year franchise agreement that includes a bulking up of the operator’s public, educational and government) commitments to the city, and expanded access to the MSO's low-cost Internet service program.

The agreement was voted out of committee yesterday (December 3), and is slated for a formal vote by the city council and Philadelphia Mayor Michael Nutter next Thursday (December 10).

Before the deal, Comcast has been tightening its ties with the city. Comcast, headquartered in Philadelphia, is in the process of erecting an “Innovation and Technology Center” that, at 59 stories, will be taller than  the Comcast Center.

“This is an unprecedented renewal and a strong indication of our commitment to our hometown,” Comcast spokesman Jeff Alexander said, in a statement. “It will benefit the City and all Philadelphians now and for years to come, broadening access to broadband through Internet Essentials, creating good-paying jobs and careers and much more.”

According to the terms of the new franchise agreement, it includes “enhanced customer service standards” greater than those required of Comcast rival Verizon and what was in the prior Comcast franchise deal. Comcast must adhere to 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.” That’s in addition to $500,000 in liquidated damages for any other violation of the franchise and is twice the liquidated damages provided by the Verizon franchise, per an executive summary of the terms.

The new franchise fee 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 fees and FCC fees collected from customers --elements that aren’t in the Verizon franchise.

Other details include:

-PEG funding: Will rise from $8.2 million under the prior franchise, to $21.3 million under the new one – more than double the funding provided in the Verizon franchise. 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.

-PEG Channels:  The agreement 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 currently available in HD, though the franchise calls for a “reasonable pathway” for the activation of more HD channels.

-PEG VOD capacity:  The new deal increases PEG VOD capacity from 8 hours to 20 hour.

- Institutional Network:  Comcast is providing $10 million in network construction (to more than 200 city locations) at no cost to the city, compared to Verizon’s required $2 million cash payment.  Philadelphia could include he provision of WiFi services at municipal locations. 

-Remediation of cable plant code violations:  Comcast will carry out a 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.

-Comcast will has added Philadelphia to a pilot program to extend its $9.95/month Internet Essentials offering to low-income seniors, and to include the city in in the first group of communities to be part of any future program around the low-cost program.

- Comcast, for five years, will partner with a local city non-profit to provide low-income citizens who don’t have school-aged children a chance to participate in the Internet Essentials program at a rate of $29.95, of which the customer pays $9.95 and the organization pays $20.

-Comcast will provide a grant of $500,000 in support of a Digital Inclusion Alliance formed by the city comprised of businesses, non-profit organizations, and governmental agencies.

-Comcast has agreed to begin offering a 10% discount to low-income seniors on limited basic and digital starter cable service.

-The MSO will also launch 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.

- 5-Year Amnesty Program for 90-Day Requirement in Internet Essentials:  For a five year period in the city, 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.