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</o:shapelayout></xml><![endif]--></head><body lang=EN-US link=blue vlink=purple><div class=WordSection1><p class=MsoNormal>Jim –<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>As you are well aware I sent you multiple lengthy pieces of correspondence offline in regards to this subject and if my sentiments are to be included please do so in context (also I represent Ward 1 not 2). What I actually stated was below:<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal><span style='color:#1F497D'>“One item you did not attach to this email was a copy of your Comcast bill that reflects the accuracy of your comments. No one should be charged fees other than what is legally provided for. I was curious myself so I took a look at my latest bill from Verizon and they are charging exactly 5% based upon my math. That is not to say that Comcast’s math is as accurate but without an example it is impossible to speculate.<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>As I am sure you are aware, from electricity, to phone, to cable bills the breakdowns are complicated and I would like to at least have a high degree of confidence that this is an issue that is established by evidence rather than allegation.”<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal>This was written to you over three weeks ago prior to educating myself on the issue in regards to the existing federal law, existing case law, application to municipalities, and since having multiple lengthy email exchanges. My original comment indicated that you made an allegation but did not provide any backup evidence of it, not that I agreed that your allegations were in fact true. If I knew then what I know now, I would not have asked for it because Comcast is within their rights to charge fees in excess of the 5% cap. <o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>The argument being made, is that cable companies have a hard cap of 5% for all fees paid – they do not. You asked the town to look into this which the town did. Comcast defended their position which was vetted by the town’s attorney that there are pass-through and/or other fees that they are allowed to collect under existing federal law. The information was provided to you and you aren’t satisfied. I have asked you to provide contrary evidence that the fees in excess of the 5% cap, that existing case law stipulates is completely legal, have been overturned. To date you have not, the argument you keep puttting forward is that they can only charge 5% - a claim that has been throughly dismissed by the courts already. <o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>In reading your post, and reviewing the resolution you are asking Council to pass, it seems apparent that you continue to disagree with the law of the land. The town already has a resolution on the books that defines what contributes towards the 5%. I believe the disconnect here is that you do not believe legally they can exceed that – they can. There are fees that by federal case law and rulings CANNOT be included in the 5% cap. It seems that you continue to view the franchise fee as a singular component – it is not. It is made up of a franchise fee subject to the 5% and additional charges allowable that are not subject to the 5% (please see the end of the post for a detailed treatment of this). <o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>The link you sent in regards to the Comcast settlement was apples and oranges from this case. It had to do with whether franchise fees were applicable from the start of a billing cycle or if the fees only applied to the pro rata portion of a month in which the consumer was actually receiving service. I.e. if cable fees are 50/month for a billing cycle 1/1 – 1/31 and a customer started service on 1/15 should they be charged the full percentage or a pro rata portion (in this case 50%). The settlement did not find this practice illegal nor would it have not ever been adjudicated had Comcast included this in its communication to subscribers, an oversight that according to the articlehas since been ameliorated. The settlement in the case was for $50k to a charity of choice for the appelant; legal fees were also covered for $462k – i.e. the actual Comcast plantiffs received $0, but yes this did result in attorneys being paid. Keep in mind as well, this is a settlement, not a finding of fact; it is entirely likely that Comcast could have prevailed on the merits of the case but the cost-benefit stipulated it was cheaper to settle – unfortunately the achilles heal of our legal system.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>I have pled with you numerous times in our offline correspondences to read, in detail, the information you yourself provided me in the White Paper primer on franchise fees. It discusses at length how and why cable companies can charge fees in excess of the 5% cap. I was even more interested, so I pulled the actual case filings and and read the actual decisions but what you provided in the primer is a fair treatment. <o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>If anything, I thank you, since I now know in detail about franchise fee law, case law etc. I will provide to the public what I provided to you in an email that discusses in detail why the 5% discussion is more nuanced than you are presenting:<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal><span style='color:#1F497D'>Jim<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>Please re-read what I wrote. I agreed with you on the Gross Revenue/Franchise Agreement point. Comcast can only charge the 5% franchise fee for charges listed in the definition of Gross Revenue. I completely agree with this. <o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>The discussion of Gross Revenue ONLY applies to the 5% cap. By definition and backed up by case law, they are well within their rights and authority to charge fees that are NOT, nor can be, included in the definition of Gross Revenues – i.e. PEG Capital Costs and other incidental charges. These, as a matter of law, are NOT to be included with Gross Revenue, but in ADDITION to Gross Revenue.<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>Federal law as defined through the Pasadena Order and the 2003 Declaratory Letter allows for a cable operator to charge 5% of Gross Revenue AND PEG Capital Costs AND Other Incidental Charges. <o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>Comcast has not done itself any favors by only including a single line item. You are interpreting this line as Gross Revenue – it is not. The charge you see listed as a Franchise Fee can include:<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>(1)Franchise fee capped at 5% of Gross Revenue <o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>(2) PEG Capital Costs<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>(3) Other Incidental Costs<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>i.e. (1) + (2) + (3) = what you are seeing listed out as a Franchise Fee<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>If (2) or (3) are > 0 then by definition you will be charged greater than 5% since we know (1) is a constant 5%. In this case Comcast has already stated that they have additional fees. Those fees by definition are NOT to be included in the definition of Gross Revenue and NOT subject to a 5% cap. The franchise agreement per Resolution 99-R-1 with Comcast nee Jones Communication specifically required them to incur capital costs and specifically requires them to incur ongoing capital costs etc. <o:p></o:p></span></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>JWE<o:p></o:p></p></div></body></html>