§ 15.2-2108.22. Regulation of fees, rates and services; penalties.
Upon receiving a notice requesting an ordinance cable franchise pursuant to §15.2-2108.21, a locality shall adopt or maintain one or more ordinances thatgovern a cable operator who provides cable service under an ordinance cablefranchise. The requirements of any specific provision in any such ordinanceshall not exceed the requirements imposed in the same provision, if any, inany existing cable franchise within the locality. Such ordinance orordinances, which shall be adopted after a public hearing, shall:
1. Require a cable operator to provide the locality with access to a numberof public, educational, and governmental access channels, equal to the lowestnumber of such channels provided by any other cable operator in the samefranchise area of the locality. If the existing cable operator provides lessthan three such public, educational, and governmental access channelspursuant to a franchise agreement, the locality may require each cableoperator to provide up to three such channels. Any additional channelsprovided subject to this provision shall be subject to the reclamationformula set forth below. In addition, a locality may, by ordinance adoptedafter a public hearing, require a cable operator to interconnect with anyother cable operator to ensure the carriage of required public, educational,and governmental access channels; if the new cable operator and all existingcable operators cannot agree to an interconnection agreement within 180 daysof a request to interconnect by the new cable operator, then the locality isauthorized to determine an interconnection point. The locality or itsdesignee shall assume responsibility for management, operation, andprogramming of such channels. A locality that substantially utilizes itsexisting public, educational, and governmental access channels may require areasonable number of additional public, educational, and governmental accesschannels by the enactment of an ordinance, after a public hearing, so long as(i) the ordinance applies equally to all providers of cable service within afranchise area, (ii) the total number of additional public, educational, andgovernmental access channels does not exceed three channels in the basicservice tier, and (iii) the total number of public, educational, andgovernmental access channels shall not exceed seven channels in theaggregate. Notwithstanding the foregoing, but consistent with federal law,the locality and a cable operator may enter into written agreements for thecarriage of additional public, educational, and governmental access channels,including other arrangements for the carriage of such programming. Anyadditional public, educational, and governmental access channel providedpursuant to this article that is not utilized by the locality for at leasteight hours a day shall no longer be made available to the locality, but maybe programmed at the cable operator's discretion. At such time as thelocality can certify to the cable operator a schedule for at least eighthours of daily programming for a period of three months, the cable operatorshall restore the previously re-allocated channel. For purposes of thissubdivision, a public, educational, and governmental access channel shall beconsidered to be substantially utilized when 12 hours are programmed on thatchannel each calendar day; in addition, at least 33% of the 12 hours ofprogramming for each business day on average over each calendar quarter mustbe nonrepeat programming. For purposes of this subdivision, nonrepeatprogramming shall include the first three videocastings of a program andshall include programming on other public, educational, and governmentalaccess channels in that locality. Programming for purposes of determiningsubstantial utilization shall not include an alphanumeric scroll, except thatfor purposes of requiring one or more additional public, educational, andgovernmental access channels, an alphanumeric scroll shall be included asprogramming on not more than one channel;
2. Require a cable operator to pay a franchise fee, remitted on the sameschedule as the least frequent schedule of an existing cable operator, but nomore frequently than quarterly, calculated by multiplying a franchise feepercentage rate by the cable operator's gross revenues in such franchise areafor the remittance period; however, the franchise fee rate shall (i) notexceed 5% of such gross revenues and (ii) not exceed the lowest franchise feerate paid or provided by an existing cable operator in the locality. Thelocality may further require that the cable operator make the franchise feepayments to the locality no later than 45 days following the end of theremittance period and require that the franchise fee payment be submittedwith a brief report prepared by a duly authorized representative of the cableoperator showing the basis for the computation. The locality shall have theright to reasonably require further supporting information that does notexceed the information required to be provided by existing cable operators inthe locality;
3. Require a cable operator to pay a recurring fee, hereafter referred to asthe PEG Capital Fee, to support the capital costs of public, educational, andgovernmental channel facilities, including institutional networks, providedthat the PEG Capital Fee is equal to the lowest recurring fee imposed on aper subscriber or a percentage of gross revenue basis and paid by anyexisting cable operator in the locality to support the capital costs of suchfacilities. The PEG Capital Fee shall only be imposed on a per subscriber ora percentage of gross revenue basis. If the existing cable operator has paida lump sum capital grant at award or renewal of its current franchise, or isproviding in-kind equipment in lieu of such a capital grant, to supportpublic, educational, and governmental channel facilities, includinginstitutional networks, the locality, by ordinance adopted after a publichearing, shall also impose an additional monthly recurring fee to be known asthe PEG Capital Grant Surcharge Fee on the new cable operator equal to thelower of (i) 1.5% of the new cable operator's gross revenues derived from theoperation of its cable system in that locality or (ii) the lowest amount ofcapital contribution paid or provided in-kind, as shown on the books of thecable operator, by an existing cable operator in the locality (a) when suchcapital contribution is amortized over the term of the existing cableoperator's franchise and (b) divided by the number of subscribers or annualgross revenue of the existing cable operator as shown on its most recentreport to the locality, depending on recovery methodology chosen by thelocality. Both the PEG Capital Fee and the PEG Capital Grant Surcharge Feemay only be collected by the locality for the remainder of the shortestremaining franchise term of any existing cable operator in the locality;however, at the end of such term the locality may negotiate with all cableoperators to set a new, recurring fee to support the reasonable and necessarycapital costs of public, educational, and governmental channel facilities,including institutional networks, that shall be imposed on all cableoperators such that the fee applies equally to all of the customers of allcable operators in the locality. At the end of such term, no cable operatorshall be required to provide any further in-kind public, educational, andgovernmental access channels, including institutional network, support. Ifthe cable operators and the locality cannot agree on such a recurring capitalcost fee, the locality, by ordinance adopted after a public hearing, mayimpose a recurring fee, calculated on a per subscriber or percentage of grossrevenue basis, to support the reasonable and necessary capital costs ofpublic, educational, and governmental channel facilities, includinginstitutional networks; however, such fee may not exceed the PEG Capital Feepreviously imposed on cable operators by the locality. Any and all feespermitted under this subdivision shall be paid by the cable operator to thelocality on the same schedule as franchise fees are paid. Nothing in thissubdivision shall be construed to permit a locality to require cableoperators to pay capital grants at the time of the grant or renewal of afranchise or otherwise except for the PEG Capital Grant Surcharge Feespecifically provided in this subdivision;
4. Require a cable operator to comply with the customer service requirementsimposed by the locality pursuant to 47 U.S.C. § 552(a) (1) and this articlethrough the adoption of an ordinance after a public hearing. Any customerservice requirements imposed by the locality that exceed the requirementsestablished by the Federal Communications Commission under 47 U.S.C. § 552(b)shall (i) not be designed so that the cable operator cannot also comply withany other customer service requirements under state or federal law orregulation applicable to the cable operator in its provision of otherservices over the same network used to provide cable service, (ii) be no morestringent than the customer service requirements applied to other cableoperators in the franchise area, and (iii) be reasonably tailored to achieveappropriate customer service goals based on the technology used by the cableoperator to provide cable service;
5. Adopt procedures by which it will enforce the provisions of this articleand the applicable mandatory requirements of 47 U.S.C. §§ 521-573 and theregulations promulgated thereunder. Such procedures shall require thelocality to: (i) informally discuss the matter with the cable operator in theevent that the locality believes that a cable operator has not complied withthis article or the applicable mandatory requirements of 47 U.S.C. §§ 521-573and (ii) notify the cable operator in writing of the exact nature of thealleged noncompliance if the discussions described in the foregoing clause(i) do not lead to resolution of the alleged noncompliance. The cableoperator shall have 15 days from receipt of this written notice to: (a)respond to the locality, if the cable operator contests, in whole or in part,the assertion of noncompliance; (b) cure such default; or (c) in the eventthat, by the nature of default, such default cannot be cured within the15-day period, initiate reasonable steps to remedy such default and notifythe locality of the steps being taken and the projected date that they willbe completed. The locality shall schedule a public hearing in the event thatthe cable operator fails to respond to the written notice pursuant to theseprocedures or in the event that the alleged default is not remedied within 30days of the date projected above if the locality intends to continue itsinvestigation into the default. The locality shall provide the cable operatorat least 30 business days prior written notice of such hearing, which willspecify the time, place, and purpose of such hearing, and provide the cableoperator the opportunity to be heard;
6. Adopt a schedule of uniform penalties or liquidated damages that it mayimpose upon any cable operator with an ordinance cable franchise when thelocality determines that the cable operator has failed to materially complywith (i) customer service standards; (ii) carriage of public, educational,and governmental channels; (iii) reporting requirements; or (iv) timely andfull payment of the franchise fee or the fee assessed for the provision ofpublic, educational, or governmental access channels, including institutionalnetworks. Any penalty or liquidated damage for any of the foregoingviolations shall be the same penalty or liquidated damage already establishedfor a cable operator in the same franchise area, if any. In addition, alocality shall not impose any penalty or liquidated damage adopted pursuantto this subdivision until the cable operator has been afforded a reasonablecure period between the time the cable operator is notified of the violationand the penalty or liquidated damage is imposed. A separate violation forpurposes of this article and the ordinances passed to implement this articleas it pertains to customer service standards shall be deemed to occurwhenever the locality reasonably determines that a separate customer servicestandard violation has occurred on one day; however, the cable operator shallnot be charged with multiple violations for a single act or event affectingone or more subscribers on the same day. The locality may charge interest atthe legal rate as set forth in § 6.1-330.53 for any amounts due the localityby the cable operator in clause (iv) of this subdivision that remain unpaidand undisputed;
7. Adopt procedures under which the locality may inspect and audit, upon 30days prior written notice, the books and records of the cable operator andrecompute any amounts determined to be payable under the ordinances adoptedpursuant to this article. The procedures adopted by the locality shall notexceed the following requirements: (i) the locality may require the cableoperator to make available to the locality all records reasonably necessaryto confirm the accurate payment of fees; (ii) the locality may require thecable operator to bear the locality's reasonable out-of-pocket audit expensesif the audit discloses an underpayment of more than 3% of any quarterlypayment, but not less than $5,000; (iii) the locality may require the cableoperator to pay any additional undisputed amounts due to the locality as aresult of the audit within 30 days following written notice by the localityto the cable operator; (iv) in the event the cable operator disputes anyunderpayment discovered as the result of an audit conducted by the locality,the locality shall work together with the cable operator in good faith topromptly resolve such dispute; (v) the locality shall provide that the cableoperator and the locality maintain all rights and remedies available at lawregarding any disputed amounts; (vi) the locality shall have no more thanthree years from the time the cable operator delivers a payment to provide awritten, detailed objection to or dispute of that payment, and if thelocality fails to object to or dispute the payment within that time period,the locality shall be barred from objecting to or disputing it after thattime period; and (vii) the locality shall not audit a cable operator morefrequently than every 24 months;
8. Adopt reasonable reporting requirements for annual financial informationand quarterly customer service information that must be provided by a cableoperator to the locality so long as such information does not exceed thereporting requirements for any existing cable operator in that locality;
9. Require cable operators to provide, without charge, within the areaactually served by the cable operator, one cable service outlet activated forbasic cable service to each fire station, public school, police station,public library, and any other local government building. The ordinance shallapply equally to all providers of cable services in the locality, but shallnot apply in cases where it is not technically feasible for a cable operatorto comply;
10. Subject to § 15.2-2108.24, adopt requirements and procedures for (i) themanagement of the public rights-of-way that do not exceed the standards setforth in clauses (i) and (ii) of subsection C of § 56-462 and (ii) theconstruction of a cable system in the public rights-of-way;
11. Adopt the following allocation procedure if cable services subject to afranchise fee, or any other fee determined by a percentage of the cableoperator's gross revenues in a locality, are provided to subscribers inconjunction with other services: the fee shall be applied only to the valueof these cable services, as reflected on the books and records of the cableoperator in accordance with rules, regulations, standards, or orders of theFederal Communications Commission or the State Corporation Commission, orgenerally accepted accounting principles. Any discounts resulting frompurchasing the services as a bundle shall be reasonably allocated between therespective services that constitute the bundled transaction; and
12. Require cable operators to make cable service available to (i) up to allof the occupied residential dwelling units in the initial service areaselected by cable operator within no less than three years of the date of thegrant of the franchise and (ii) no more than 65% of the residential dwellingunits in the area in the locality in which the cable operator has itstelephone facilities, within no less than seven years of the date of thegrant of the franchise. Notwithstanding the foregoing provision, a cableoperator shall not be required to make cable service available: (a) forperiods of force majeure; (b) for periods of delay caused by the locality;(c) for periods of delay resulting from the cable operator's inability toobtain authority to access rights-of-way in the service area; (d) in areaswhere developments or buildings are subject to claimed exclusivearrangements; (e) in developments or buildings that the cable operator cannotaccess under industry standard terms and conditions after good faithnegotiation; (f) in developments or buildings that the cable operator isunable to provide cable service for technical reasons or that requirefacilities that are not available or cannot be deployed on a commerciallyreasonable basis; (g) in areas where it is not technically feasible toprovide cable service due to the technology used by the cable operator toprovide cable service; (h) in areas where the average occupied residentialhousehold density is less than 30 occupied residential dwelling units permile as measured in strand footage from the nearest technically feasiblepoint on the cable operator's active cable system (or such higher averagedensity number as may be contained in an existing cable operator's cablefranchise); and (i) when the cable operator's prior service, payment, ortheft of service history with a subscriber or potential subscriber has beenunfavorable. Should, through new construction, an area within the cableoperator's service area meet the density requirement, a cable operator shall,subject to the exclusions in this subdivision, provide cable service to sucharea within six months of receiving notice from the locality that the densityrequirements have been met. A locality may not require a cable operator usingits telephone facilities to provide cable service to provide any cableservice outside of the area in the locality in which the cable operator hasits telephone facilities. During the 12-month period commencing after theseventh-year anniversary date of the grant of the franchise, a locality may,by ordinance adopted after a public hearing in which the localityspecifically finds that such a requirement is necessary to promotecompetition in cable services within the locality, require the cable operatorto make service available to no more than 80% of the residential dwellingunits in the area in the locality in which the cable operator has itstelephone facilities within no less than 10 years of the date of the grant ofthe franchise, subject to the exclusions in clauses (a) through (i) of thissubdivision. If the cable operator notifies the locality that it is unwillingto accept this additional service availability requirement, the locality may,after notice and public hearing, terminate the cable operator's ordinancecable franchise. The cable operator shall file a certificate at its third andseventh, and if applicable, tenth, anniversary dates certifying itscompliance with the foregoing service requirements. For purposes of anordinance cable franchise, the date of the grant of the franchise shall bethe date the notice required by § 15.2-2108.21 is filed with the locality.For purposes of a negotiated cable franchise, the date of the grant of thefranchise shall be the date the respective locality has granted a negotiatedcable franchise pursuant to § 15.2-2108.20.
§ 15.2-2108.22. Regulation of fees, rates and services; penalties.
Upon receiving a notice requesting an ordinance cable franchise pursuant to §15.2-2108.21, a locality shall adopt or maintain one or more ordinances thatgovern a cable operator who provides cable service under an ordinance cablefranchise. The requirements of any specific provision in any such ordinanceshall not exceed the requirements imposed in the same provision, if any, inany existing cable franchise within the locality. Such ordinance orordinances, which shall be adopted after a public hearing, shall:
1. Require a cable operator to provide the locality with access to a numberof public, educational, and governmental access channels, equal to the lowestnumber of such channels provided by any other cable operator in the samefranchise area of the locality. If the existing cable operator provides lessthan three such public, educational, and governmental access channelspursuant to a franchise agreement, the locality may require each cableoperator to provide up to three such channels. Any additional channelsprovided subject to this provision shall be subject to the reclamationformula set forth below. In addition, a locality may, by ordinance adoptedafter a public hearing, require a cable operator to interconnect with anyother cable operator to ensure the carriage of required public, educational,and governmental access channels; if the new cable operator and all existingcable operators cannot agree to an interconnection agreement within 180 daysof a request to interconnect by the new cable operator, then the locality isauthorized to determine an interconnection point. The locality or itsdesignee shall assume responsibility for management, operation, andprogramming of such channels. A locality that substantially utilizes itsexisting public, educational, and governmental access channels may require areasonable number of additional public, educational, and governmental accesschannels by the enactment of an ordinance, after a public hearing, so long as(i) the ordinance applies equally to all providers of cable service within afranchise area, (ii) the total number of additional public, educational, andgovernmental access channels does not exceed three channels in the basicservice tier, and (iii) the total number of public, educational, andgovernmental access channels shall not exceed seven channels in theaggregate. Notwithstanding the foregoing, but consistent with federal law,the locality and a cable operator may enter into written agreements for thecarriage of additional public, educational, and governmental access channels,including other arrangements for the carriage of such programming. Anyadditional public, educational, and governmental access channel providedpursuant to this article that is not utilized by the locality for at leasteight hours a day shall no longer be made available to the locality, but maybe programmed at the cable operator's discretion. At such time as thelocality can certify to the cable operator a schedule for at least eighthours of daily programming for a period of three months, the cable operatorshall restore the previously re-allocated channel. For purposes of thissubdivision, a public, educational, and governmental access channel shall beconsidered to be substantially utilized when 12 hours are programmed on thatchannel each calendar day; in addition, at least 33% of the 12 hours ofprogramming for each business day on average over each calendar quarter mustbe nonrepeat programming. For purposes of this subdivision, nonrepeatprogramming shall include the first three videocastings of a program andshall include programming on other public, educational, and governmentalaccess channels in that locality. Programming for purposes of determiningsubstantial utilization shall not include an alphanumeric scroll, except thatfor purposes of requiring one or more additional public, educational, andgovernmental access channels, an alphanumeric scroll shall be included asprogramming on not more than one channel;
2. Require a cable operator to pay a franchise fee, remitted on the sameschedule as the least frequent schedule of an existing cable operator, but nomore frequently than quarterly, calculated by multiplying a franchise feepercentage rate by the cable operator's gross revenues in such franchise areafor the remittance period; however, the franchise fee rate shall (i) notexceed 5% of such gross revenues and (ii) not exceed the lowest franchise feerate paid or provided by an existing cable operator in the locality. Thelocality may further require that the cable operator make the franchise feepayments to the locality no later than 45 days following the end of theremittance period and require that the franchise fee payment be submittedwith a brief report prepared by a duly authorized representative of the cableoperator showing the basis for the computation. The locality shall have theright to reasonably require further supporting information that does notexceed the information required to be provided by existing cable operators inthe locality;
3. Require a cable operator to pay a recurring fee, hereafter referred to asthe PEG Capital Fee, to support the capital costs of public, educational, andgovernmental channel facilities, including institutional networks, providedthat the PEG Capital Fee is equal to the lowest recurring fee imposed on aper subscriber or a percentage of gross revenue basis and paid by anyexisting cable operator in the locality to support the capital costs of suchfacilities. The PEG Capital Fee shall only be imposed on a per subscriber ora percentage of gross revenue basis. If the existing cable operator has paida lump sum capital grant at award or renewal of its current franchise, or isproviding in-kind equipment in lieu of such a capital grant, to supportpublic, educational, and governmental channel facilities, includinginstitutional networks, the locality, by ordinance adopted after a publichearing, shall also impose an additional monthly recurring fee to be known asthe PEG Capital Grant Surcharge Fee on the new cable operator equal to thelower of (i) 1.5% of the new cable operator's gross revenues derived from theoperation of its cable system in that locality or (ii) the lowest amount ofcapital contribution paid or provided in-kind, as shown on the books of thecable operator, by an existing cable operator in the locality (a) when suchcapital contribution is amortized over the term of the existing cableoperator's franchise and (b) divided by the number of subscribers or annualgross revenue of the existing cable operator as shown on its most recentreport to the locality, depending on recovery methodology chosen by thelocality. Both the PEG Capital Fee and the PEG Capital Grant Surcharge Feemay only be collected by the locality for the remainder of the shortestremaining franchise term of any existing cable operator in the locality;however, at the end of such term the locality may negotiate with all cableoperators to set a new, recurring fee to support the reasonable and necessarycapital costs of public, educational, and governmental channel facilities,including institutional networks, that shall be imposed on all cableoperators such that the fee applies equally to all of the customers of allcable operators in the locality. At the end of such term, no cable operatorshall be required to provide any further in-kind public, educational, andgovernmental access channels, including institutional network, support. Ifthe cable operators and the locality cannot agree on such a recurring capitalcost fee, the locality, by ordinance adopted after a public hearing, mayimpose a recurring fee, calculated on a per subscriber or percentage of grossrevenue basis, to support the reasonable and necessary capital costs ofpublic, educational, and governmental channel facilities, includinginstitutional networks; however, such fee may not exceed the PEG Capital Feepreviously imposed on cable operators by the locality. Any and all feespermitted under this subdivision shall be paid by the cable operator to thelocality on the same schedule as franchise fees are paid. Nothing in thissubdivision shall be construed to permit a locality to require cableoperators to pay capital grants at the time of the grant or renewal of afranchise or otherwise except for the PEG Capital Grant Surcharge Feespecifically provided in this subdivision;
4. Require a cable operator to comply with the customer service requirementsimposed by the locality pursuant to 47 U.S.C. § 552(a) (1) and this articlethrough the adoption of an ordinance after a public hearing. Any customerservice requirements imposed by the locality that exceed the requirementsestablished by the Federal Communications Commission under 47 U.S.C. § 552(b)shall (i) not be designed so that the cable operator cannot also comply withany other customer service requirements under state or federal law orregulation applicable to the cable operator in its provision of otherservices over the same network used to provide cable service, (ii) be no morestringent than the customer service requirements applied to other cableoperators in the franchise area, and (iii) be reasonably tailored to achieveappropriate customer service goals based on the technology used by the cableoperator to provide cable service;
5. Adopt procedures by which it will enforce the provisions of this articleand the applicable mandatory requirements of 47 U.S.C. §§ 521-573 and theregulations promulgated thereunder. Such procedures shall require thelocality to: (i) informally discuss the matter with the cable operator in theevent that the locality believes that a cable operator has not complied withthis article or the applicable mandatory requirements of 47 U.S.C. §§ 521-573and (ii) notify the cable operator in writing of the exact nature of thealleged noncompliance if the discussions described in the foregoing clause(i) do not lead to resolution of the alleged noncompliance. The cableoperator shall have 15 days from receipt of this written notice to: (a)respond to the locality, if the cable operator contests, in whole or in part,the assertion of noncompliance; (b) cure such default; or (c) in the eventthat, by the nature of default, such default cannot be cured within the15-day period, initiate reasonable steps to remedy such default and notifythe locality of the steps being taken and the projected date that they willbe completed. The locality shall schedule a public hearing in the event thatthe cable operator fails to respond to the written notice pursuant to theseprocedures or in the event that the alleged default is not remedied within 30days of the date projected above if the locality intends to continue itsinvestigation into the default. The locality shall provide the cable operatorat least 30 business days prior written notice of such hearing, which willspecify the time, place, and purpose of such hearing, and provide the cableoperator the opportunity to be heard;
6. Adopt a schedule of uniform penalties or liquidated damages that it mayimpose upon any cable operator with an ordinance cable franchise when thelocality determines that the cable operator has failed to materially complywith (i) customer service standards; (ii) carriage of public, educational,and governmental channels; (iii) reporting requirements; or (iv) timely andfull payment of the franchise fee or the fee assessed for the provision ofpublic, educational, or governmental access channels, including institutionalnetworks. Any penalty or liquidated damage for any of the foregoingviolations shall be the same penalty or liquidated damage already establishedfor a cable operator in the same franchise area, if any. In addition, alocality shall not impose any penalty or liquidated damage adopted pursuantto this subdivision until the cable operator has been afforded a reasonablecure period between the time the cable operator is notified of the violationand the penalty or liquidated damage is imposed. A separate violation forpurposes of this article and the ordinances passed to implement this articleas it pertains to customer service standards shall be deemed to occurwhenever the locality reasonably determines that a separate customer servicestandard violation has occurred on one day; however, the cable operator shallnot be charged with multiple violations for a single act or event affectingone or more subscribers on the same day. The locality may charge interest atthe legal rate as set forth in § 6.1-330.53 for any amounts due the localityby the cable operator in clause (iv) of this subdivision that remain unpaidand undisputed;
7. Adopt procedures under which the locality may inspect and audit, upon 30days prior written notice, the books and records of the cable operator andrecompute any amounts determined to be payable under the ordinances adoptedpursuant to this article. The procedures adopted by the locality shall notexceed the following requirements: (i) the locality may require the cableoperator to make available to the locality all records reasonably necessaryto confirm the accurate payment of fees; (ii) the locality may require thecable operator to bear the locality's reasonable out-of-pocket audit expensesif the audit discloses an underpayment of more than 3% of any quarterlypayment, but not less than $5,000; (iii) the locality may require the cableoperator to pay any additional undisputed amounts due to the locality as aresult of the audit within 30 days following written notice by the localityto the cable operator; (iv) in the event the cable operator disputes anyunderpayment discovered as the result of an audit conducted by the locality,the locality shall work together with the cable operator in good faith topromptly resolve such dispute; (v) the locality shall provide that the cableoperator and the locality maintain all rights and remedies available at lawregarding any disputed amounts; (vi) the locality shall have no more thanthree years from the time the cable operator delivers a payment to provide awritten, detailed objection to or dispute of that payment, and if thelocality fails to object to or dispute the payment within that time period,the locality shall be barred from objecting to or disputing it after thattime period; and (vii) the locality shall not audit a cable operator morefrequently than every 24 months;
8. Adopt reasonable reporting requirements for annual financial informationand quarterly customer service information that must be provided by a cableoperator to the locality so long as such information does not exceed thereporting requirements for any existing cable operator in that locality;
9. Require cable operators to provide, without charge, within the areaactually served by the cable operator, one cable service outlet activated forbasic cable service to each fire station, public school, police station,public library, and any other local government building. The ordinance shallapply equally to all providers of cable services in the locality, but shallnot apply in cases where it is not technically feasible for a cable operatorto comply;
10. Subject to § 15.2-2108.24, adopt requirements and procedures for (i) themanagement of the public rights-of-way that do not exceed the standards setforth in clauses (i) and (ii) of subsection C of § 56-462 and (ii) theconstruction of a cable system in the public rights-of-way;
11. Adopt the following allocation procedure if cable services subject to afranchise fee, or any other fee determined by a percentage of the cableoperator's gross revenues in a locality, are provided to subscribers inconjunction with other services: the fee shall be applied only to the valueof these cable services, as reflected on the books and records of the cableoperator in accordance with rules, regulations, standards, or orders of theFederal Communications Commission or the State Corporation Commission, orgenerally accepted accounting principles. Any discounts resulting frompurchasing the services as a bundle shall be reasonably allocated between therespective services that constitute the bundled transaction; and
12. Require cable operators to make cable service available to (i) up to allof the occupied residential dwelling units in the initial service areaselected by cable operator within no less than three years of the date of thegrant of the franchise and (ii) no more than 65% of the residential dwellingunits in the area in the locality in which the cable operator has itstelephone facilities, within no less than seven years of the date of thegrant of the franchise. Notwithstanding the foregoing provision, a cableoperator shall not be required to make cable service available: (a) forperiods of force majeure; (b) for periods of delay caused by the locality;(c) for periods of delay resulting from the cable operator's inability toobtain authority to access rights-of-way in the service area; (d) in areaswhere developments or buildings are subject to claimed exclusivearrangements; (e) in developments or buildings that the cable operator cannotaccess under industry standard terms and conditions after good faithnegotiation; (f) in developments or buildings that the cable operator isunable to provide cable service for technical reasons or that requirefacilities that are not available or cannot be deployed on a commerciallyreasonable basis; (g) in areas where it is not technically feasible toprovide cable service due to the technology used by the cable operator toprovide cable service; (h) in areas where the average occupied residentialhousehold density is less than 30 occupied residential dwelling units permile as measured in strand footage from the nearest technically feasiblepoint on the cable operator's active cable system (or such higher averagedensity number as may be contained in an existing cable operator's cablefranchise); and (i) when the cable operator's prior service, payment, ortheft of service history with a subscriber or potential subscriber has beenunfavorable. Should, through new construction, an area within the cableoperator's service area meet the density requirement, a cable operator shall,subject to the exclusions in this subdivision, provide cable service to sucharea within six months of receiving notice from the locality that the densityrequirements have been met. A locality may not require a cable operator usingits telephone facilities to provide cable service to provide any cableservice outside of the area in the locality in which the cable operator hasits telephone facilities. During the 12-month period commencing after theseventh-year anniversary date of the grant of the franchise, a locality may,by ordinance adopted after a public hearing in which the localityspecifically finds that such a requirement is necessary to promotecompetition in cable services within the locality, require the cable operatorto make service available to no more than 80% of the residential dwellingunits in the area in the locality in which the cable operator has itstelephone facilities within no less than 10 years of the date of the grant ofthe franchise, subject to the exclusions in clauses (a) through (i) of thissubdivision. If the cable operator notifies the locality that it is unwillingto accept this additional service availability requirement, the locality may,after notice and public hearing, terminate the cable operator's ordinancecable franchise. The cable operator shall file a certificate at its third andseventh, and if applicable, tenth, anniversary dates certifying itscompliance with the foregoing service requirements. For purposes of anordinance cable franchise, the date of the grant of the franchise shall bethe date the notice required by § 15.2-2108.21 is filed with the locality.For purposes of a negotiated cable franchise, the date of the grant of thefranchise shall be the date the respective locality has granted a negotiatedcable franchise pursuant to § 15.2-2108.20.
§ 15.2-2108.22. Regulation of fees, rates and services; penalties.
Upon receiving a notice requesting an ordinance cable franchise pursuant to §15.2-2108.21, a locality shall adopt or maintain one or more ordinances thatgovern a cable operator who provides cable service under an ordinance cablefranchise. The requirements of any specific provision in any such ordinanceshall not exceed the requirements imposed in the same provision, if any, inany existing cable franchise within the locality. Such ordinance orordinances, which shall be adopted after a public hearing, shall:
1. Require a cable operator to provide the locality with access to a numberof public, educational, and governmental access channels, equal to the lowestnumber of such channels provided by any other cable operator in the samefranchise area of the locality. If the existing cable operator provides lessthan three such public, educational, and governmental access channelspursuant to a franchise agreement, the locality may require each cableoperator to provide up to three such channels. Any additional channelsprovided subject to this provision shall be subject to the reclamationformula set forth below. In addition, a locality may, by ordinance adoptedafter a public hearing, require a cable operator to interconnect with anyother cable operator to ensure the carriage of required public, educational,and governmental access channels; if the new cable operator and all existingcable operators cannot agree to an interconnection agreement within 180 daysof a request to interconnect by the new cable operator, then the locality isauthorized to determine an interconnection point. The locality or itsdesignee shall assume responsibility for management, operation, andprogramming of such channels. A locality that substantially utilizes itsexisting public, educational, and governmental access channels may require areasonable number of additional public, educational, and governmental accesschannels by the enactment of an ordinance, after a public hearing, so long as(i) the ordinance applies equally to all providers of cable service within afranchise area, (ii) the total number of additional public, educational, andgovernmental access channels does not exceed three channels in the basicservice tier, and (iii) the total number of public, educational, andgovernmental access channels shall not exceed seven channels in theaggregate. Notwithstanding the foregoing, but consistent with federal law,the locality and a cable operator may enter into written agreements for thecarriage of additional public, educational, and governmental access channels,including other arrangements for the carriage of such programming. Anyadditional public, educational, and governmental access channel providedpursuant to this article that is not utilized by the locality for at leasteight hours a day shall no longer be made available to the locality, but maybe programmed at the cable operator's discretion. At such time as thelocality can certify to the cable operator a schedule for at least eighthours of daily programming for a period of three months, the cable operatorshall restore the previously re-allocated channel. For purposes of thissubdivision, a public, educational, and governmental access channel shall beconsidered to be substantially utilized when 12 hours are programmed on thatchannel each calendar day; in addition, at least 33% of the 12 hours ofprogramming for each business day on average over each calendar quarter mustbe nonrepeat programming. For purposes of this subdivision, nonrepeatprogramming shall include the first three videocastings of a program andshall include programming on other public, educational, and governmentalaccess channels in that locality. Programming for purposes of determiningsubstantial utilization shall not include an alphanumeric scroll, except thatfor purposes of requiring one or more additional public, educational, andgovernmental access channels, an alphanumeric scroll shall be included asprogramming on not more than one channel;
2. Require a cable operator to pay a franchise fee, remitted on the sameschedule as the least frequent schedule of an existing cable operator, but nomore frequently than quarterly, calculated by multiplying a franchise feepercentage rate by the cable operator's gross revenues in such franchise areafor the remittance period; however, the franchise fee rate shall (i) notexceed 5% of such gross revenues and (ii) not exceed the lowest franchise feerate paid or provided by an existing cable operator in the locality. Thelocality may further require that the cable operator make the franchise feepayments to the locality no later than 45 days following the end of theremittance period and require that the franchise fee payment be submittedwith a brief report prepared by a duly authorized representative of the cableoperator showing the basis for the computation. The locality shall have theright to reasonably require further supporting information that does notexceed the information required to be provided by existing cable operators inthe locality;
3. Require a cable operator to pay a recurring fee, hereafter referred to asthe PEG Capital Fee, to support the capital costs of public, educational, andgovernmental channel facilities, including institutional networks, providedthat the PEG Capital Fee is equal to the lowest recurring fee imposed on aper subscriber or a percentage of gross revenue basis and paid by anyexisting cable operator in the locality to support the capital costs of suchfacilities. The PEG Capital Fee shall only be imposed on a per subscriber ora percentage of gross revenue basis. If the existing cable operator has paida lump sum capital grant at award or renewal of its current franchise, or isproviding in-kind equipment in lieu of such a capital grant, to supportpublic, educational, and governmental channel facilities, includinginstitutional networks, the locality, by ordinance adopted after a publichearing, shall also impose an additional monthly recurring fee to be known asthe PEG Capital Grant Surcharge Fee on the new cable operator equal to thelower of (i) 1.5% of the new cable operator's gross revenues derived from theoperation of its cable system in that locality or (ii) the lowest amount ofcapital contribution paid or provided in-kind, as shown on the books of thecable operator, by an existing cable operator in the locality (a) when suchcapital contribution is amortized over the term of the existing cableoperator's franchise and (b) divided by the number of subscribers or annualgross revenue of the existing cable operator as shown on its most recentreport to the locality, depending on recovery methodology chosen by thelocality. Both the PEG Capital Fee and the PEG Capital Grant Surcharge Feemay only be collected by the locality for the remainder of the shortestremaining franchise term of any existing cable operator in the locality;however, at the end of such term the locality may negotiate with all cableoperators to set a new, recurring fee to support the reasonable and necessarycapital costs of public, educational, and governmental channel facilities,including institutional networks, that shall be imposed on all cableoperators such that the fee applies equally to all of the customers of allcable operators in the locality. At the end of such term, no cable operatorshall be required to provide any further in-kind public, educational, andgovernmental access channels, including institutional network, support. Ifthe cable operators and the locality cannot agree on such a recurring capitalcost fee, the locality, by ordinance adopted after a public hearing, mayimpose a recurring fee, calculated on a per subscriber or percentage of grossrevenue basis, to support the reasonable and necessary capital costs ofpublic, educational, and governmental channel facilities, includinginstitutional networks; however, such fee may not exceed the PEG Capital Feepreviously imposed on cable operators by the locality. Any and all feespermitted under this subdivision shall be paid by the cable operator to thelocality on the same schedule as franchise fees are paid. Nothing in thissubdivision shall be construed to permit a locality to require cableoperators to pay capital grants at the time of the grant or renewal of afranchise or otherwise except for the PEG Capital Grant Surcharge Feespecifically provided in this subdivision;
4. Require a cable operator to comply with the customer service requirementsimposed by the locality pursuant to 47 U.S.C. § 552(a) (1) and this articlethrough the adoption of an ordinance after a public hearing. Any customerservice requirements imposed by the locality that exceed the requirementsestablished by the Federal Communications Commission under 47 U.S.C. § 552(b)shall (i) not be designed so that the cable operator cannot also comply withany other customer service requirements under state or federal law orregulation applicable to the cable operator in its provision of otherservices over the same network used to provide cable service, (ii) be no morestringent than the customer service requirements applied to other cableoperators in the franchise area, and (iii) be reasonably tailored to achieveappropriate customer service goals based on the technology used by the cableoperator to provide cable service;
5. Adopt procedures by which it will enforce the provisions of this articleand the applicable mandatory requirements of 47 U.S.C. §§ 521-573 and theregulations promulgated thereunder. Such procedures shall require thelocality to: (i) informally discuss the matter with the cable operator in theevent that the locality believes that a cable operator has not complied withthis article or the applicable mandatory requirements of 47 U.S.C. §§ 521-573and (ii) notify the cable operator in writing of the exact nature of thealleged noncompliance if the discussions described in the foregoing clause(i) do not lead to resolution of the alleged noncompliance. The cableoperator shall have 15 days from receipt of this written notice to: (a)respond to the locality, if the cable operator contests, in whole or in part,the assertion of noncompliance; (b) cure such default; or (c) in the eventthat, by the nature of default, such default cannot be cured within the15-day period, initiate reasonable steps to remedy such default and notifythe locality of the steps being taken and the projected date that they willbe completed. The locality shall schedule a public hearing in the event thatthe cable operator fails to respond to the written notice pursuant to theseprocedures or in the event that the alleged default is not remedied within 30days of the date projected above if the locality intends to continue itsinvestigation into the default. The locality shall provide the cable operatorat least 30 business days prior written notice of such hearing, which willspecify the time, place, and purpose of such hearing, and provide the cableoperator the opportunity to be heard;
6. Adopt a schedule of uniform penalties or liquidated damages that it mayimpose upon any cable operator with an ordinance cable franchise when thelocality determines that the cable operator has failed to materially complywith (i) customer service standards; (ii) carriage of public, educational,and governmental channels; (iii) reporting requirements; or (iv) timely andfull payment of the franchise fee or the fee assessed for the provision ofpublic, educational, or governmental access channels, including institutionalnetworks. Any penalty or liquidated damage for any of the foregoingviolations shall be the same penalty or liquidated damage already establishedfor a cable operator in the same franchise area, if any. In addition, alocality shall not impose any penalty or liquidated damage adopted pursuantto this subdivision until the cable operator has been afforded a reasonablecure period between the time the cable operator is notified of the violationand the penalty or liquidated damage is imposed. A separate violation forpurposes of this article and the ordinances passed to implement this articleas it pertains to customer service standards shall be deemed to occurwhenever the locality reasonably determines that a separate customer servicestandard violation has occurred on one day; however, the cable operator shallnot be charged with multiple violations for a single act or event affectingone or more subscribers on the same day. The locality may charge interest atthe legal rate as set forth in § 6.1-330.53 for any amounts due the localityby the cable operator in clause (iv) of this subdivision that remain unpaidand undisputed;
7. Adopt procedures under which the locality may inspect and audit, upon 30days prior written notice, the books and records of the cable operator andrecompute any amounts determined to be payable under the ordinances adoptedpursuant to this article. The procedures adopted by the locality shall notexceed the following requirements: (i) the locality may require the cableoperator to make available to the locality all records reasonably necessaryto confirm the accurate payment of fees; (ii) the locality may require thecable operator to bear the locality's reasonable out-of-pocket audit expensesif the audit discloses an underpayment of more than 3% of any quarterlypayment, but not less than $5,000; (iii) the locality may require the cableoperator to pay any additional undisputed amounts due to the locality as aresult of the audit within 30 days following written notice by the localityto the cable operator; (iv) in the event the cable operator disputes anyunderpayment discovered as the result of an audit conducted by the locality,the locality shall work together with the cable operator in good faith topromptly resolve such dispute; (v) the locality shall provide that the cableoperator and the locality maintain all rights and remedies available at lawregarding any disputed amounts; (vi) the locality shall have no more thanthree years from the time the cable operator delivers a payment to provide awritten, detailed objection to or dispute of that payment, and if thelocality fails to object to or dispute the payment within that time period,the locality shall be barred from objecting to or disputing it after thattime period; and (vii) the locality shall not audit a cable operator morefrequently than every 24 months;
8. Adopt reasonable reporting requirements for annual financial informationand quarterly customer service information that must be provided by a cableoperator to the locality so long as such information does not exceed thereporting requirements for any existing cable operator in that locality;
9. Require cable operators to provide, without charge, within the areaactually served by the cable operator, one cable service outlet activated forbasic cable service to each fire station, public school, police station,public library, and any other local government building. The ordinance shallapply equally to all providers of cable services in the locality, but shallnot apply in cases where it is not technically feasible for a cable operatorto comply;
10. Subject to § 15.2-2108.24, adopt requirements and procedures for (i) themanagement of the public rights-of-way that do not exceed the standards setforth in clauses (i) and (ii) of subsection C of § 56-462 and (ii) theconstruction of a cable system in the public rights-of-way;
11. Adopt the following allocation procedure if cable services subject to afranchise fee, or any other fee determined by a percentage of the cableoperator's gross revenues in a locality, are provided to subscribers inconjunction with other services: the fee shall be applied only to the valueof these cable services, as reflected on the books and records of the cableoperator in accordance with rules, regulations, standards, or orders of theFederal Communications Commission or the State Corporation Commission, orgenerally accepted accounting principles. Any discounts resulting frompurchasing the services as a bundle shall be reasonably allocated between therespective services that constitute the bundled transaction; and
12. Require cable operators to make cable service available to (i) up to allof the occupied residential dwelling units in the initial service areaselected by cable operator within no less than three years of the date of thegrant of the franchise and (ii) no more than 65% of the residential dwellingunits in the area in the locality in which the cable operator has itstelephone facilities, within no less than seven years of the date of thegrant of the franchise. Notwithstanding the foregoing provision, a cableoperator shall not be required to make cable service available: (a) forperiods of force majeure; (b) for periods of delay caused by the locality;(c) for periods of delay resulting from the cable operator's inability toobtain authority to access rights-of-way in the service area; (d) in areaswhere developments or buildings are subject to claimed exclusivearrangements; (e) in developments or buildings that the cable operator cannotaccess under industry standard terms and conditions after good faithnegotiation; (f) in developments or buildings that the cable operator isunable to provide cable service for technical reasons or that requirefacilities that are not available or cannot be deployed on a commerciallyreasonable basis; (g) in areas where it is not technically feasible toprovide cable service due to the technology used by the cable operator toprovide cable service; (h) in areas where the average occupied residentialhousehold density is less than 30 occupied residential dwelling units permile as measured in strand footage from the nearest technically feasiblepoint on the cable operator's active cable system (or such higher averagedensity number as may be contained in an existing cable operator's cablefranchise); and (i) when the cable operator's prior service, payment, ortheft of service history with a subscriber or potential subscriber has beenunfavorable. Should, through new construction, an area within the cableoperator's service area meet the density requirement, a cable operator shall,subject to the exclusions in this subdivision, provide cable service to sucharea within six months of receiving notice from the locality that the densityrequirements have been met. A locality may not require a cable operator usingits telephone facilities to provide cable service to provide any cableservice outside of the area in the locality in which the cable operator hasits telephone facilities. During the 12-month period commencing after theseventh-year anniversary date of the grant of the franchise, a locality may,by ordinance adopted after a public hearing in which the localityspecifically finds that such a requirement is necessary to promotecompetition in cable services within the locality, require the cable operatorto make service available to no more than 80% of the residential dwellingunits in the area in the locality in which the cable operator has itstelephone facilities within no less than 10 years of the date of the grant ofthe franchise, subject to the exclusions in clauses (a) through (i) of thissubdivision. If the cable operator notifies the locality that it is unwillingto accept this additional service availability requirement, the locality may,after notice and public hearing, terminate the cable operator's ordinancecable franchise. The cable operator shall file a certificate at its third andseventh, and if applicable, tenth, anniversary dates certifying itscompliance with the foregoing service requirements. For purposes of anordinance cable franchise, the date of the grant of the franchise shall bethe date the notice required by § 15.2-2108.21 is filed with the locality.For purposes of a negotiated cable franchise, the date of the grant of thefranchise shall be the date the respective locality has granted a negotiatedcable franchise pursuant to § 15.2-2108.20.
