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City Council - 03/30/2000 APPROVED MINUTES EDEN PRAIRIE CITY COUNCIL THURSDAY, MARCH 30, 2000 7:00 P.M., CITY CENTER Prairie Rooms A&B 8080 Mitchell Road CITY COUNCIL: Acting Mayor Nancy Tyra-Lukens; Councilmembers Sherry Butcher,Ronald Case,Ross Thorfinnson, Jr. CITY STAFF: Council Recorder Carol Pelzel I. CALL MEETING TO ORDER—ACTING MAYOR TYRA-LUKENS Acting Mayor Tyra-Lukens called the meeting to order at 7:00 p.m. II. APPROVAL OF AGENDA MOTION: Case moved,Butcher seconded,to approve the Agenda as published. Motion carried 3-0. III. CONSENT CALENDAR A. SET JOINT CITY COUNCIL/SCHOOL BOARD MEETING, April 20, 2000, 7:00 p.m. to 9:00 p.m., City Center,Heritage Room H. MOTION: Case moved, Butcher seconded, to approve the consent calendar as presented. Motion carried 3-0. IV. PUBLIC HEARINGSIMMETINGS A. AOL TIME WARNER MERGER Transfer control of KBL Cablesystems of the Southwest, Inc., the cable television franchisee, resulting from the mergers of Subsidiaries of Time Warner, Inc., and America Online, Inc., into AOL Time Warner, Inc. Acting Mayor Tyra-Lukens opened the public hearing. Mr. Brian T. Grogan of the law firm Moss & Barnett explained that he was retained by the City of Eden Prairie to prepare a report for the City regarding the proposed transfer of control of the City's cable television franchisee to AOL Time Warner, Inc. Mr. Grogan further explained that the public hearing being held this evening is intended to allow the public or interested parties to make comments on the proposal by Time Warner to transfer control of the cable system to a higher level than the CITY COUNCIL MINUTES March 30, 2000 Page 2 current operator. The merger does not involve the sale or transfer of the cable system operated by KBL Cablesystems of the Southwest but is a transfer of control. Mr. Grogan stated that Time Warner proposes to merge with AOL to form a new company called AOL Time Warner, Inc. State law requires that any transfer of control requires approval by the City. The Southwest Suburban Cable Commission is charged with the oversight of customer service issues, however, transfers or sale of a franchise is the decision of the City Council. Mr. Grogan explained that he did review the legal, technical and financial qualifications of the company that will exist at post closing. The analysis was pretty straightforward and Mr. Grogan indicated that Time Warner essentially stays in tact. Mr. Grogan pointed out that the main issue of concern is what the merger will mean to the subscribers. With the merger of TWI and AOL, AOL Time Warner would gain its own Internet service provider affiliate in which to provide TWI subscribers high- speed Internet access, that being AOL. The proposed transfer of control poses the question of whether AOL Time Warner will allow open access to its cable modems for use of its system. Intending to provide more competition and choice for subscribers, some local franchising authorities have taken an aggressive approach by conditioning franchise renewals or transfers on open access requirements. Case asked why they should be concerned that Time Warner would offer open access when other media types such as the telephone are available. Mr. Grogan responded that this delivery mechanism is far superior to the regular telephone service. It is high-speed data over a cable modem that can provide a subscriber fifty times faster service. (Councilmember Thorfinnson arrived at 7:10 p.m. during discussion of this item.) Mr. Grogan explained the way in which they addressed the issue of open access in this agreement. They are currently not requiring that the Franchisee maintain open access, however, language has been added to the resolution which states that the City reserves the right to impose open access requirements. Mr. Grogan reported that based on the information made available to them at the time of this review, the Franchisee, as controlled by AOL Time Warner, will possess the necessary, legal, technical and financial qualifications based on the standards of review identified in applicable law and the Franchise as described in the report. Nothing in this transaction will affect the local operation and their technical ability. Mr. Grogan explained that the only issue outstanding is the issue of reimbursement of costs for the review of this merger. The parties involved are very near an agreement in determining the costs and how much AOL Time Warner will pay. Mr. Grogan recommended that after receiving public testimony the City Council close the public hearing and take no action on the transfer at this meeting but consider the resolution at the next City Council meeting. This would allow them time to resolve the reimbursement issue. There were no citizens present. CITY COUNCIL MINUTES March A 2000 Page 3 MOTION: Case moved, seconded by Butcher, to close the public hearing. Motion carried 4-0. Butcher said she was pleased to see that the Council is reserving the right for open access. Mr. Grogan said he has met with another company who is proposing to come into the City and build a second cable system to provide cable television and high speed data access. There has also been discussion about another company coming into the City and doing the exact same thing. These additional companies may eliminate the need for open access. In response to a question from Case, Mr. Grogan explained that under State law, each city would have to review the reports of both companies to determine whether or not they would be qualified to construct such a system in their city. Lance Leupold, representative from Time Warner Cable, explained that the hope of AOL Time Warner is that the market will ultimately decide how the different technologies will work together. The Internet service provider would be developed on the base of its merits and not on protection or regulation. They hope to advance better products and better sites. The technology would allow a subscriber to hook up to another Internet service provider and hopefully not slow things down too much. Basically, the marketplace will decide what type of Internet service will be provided. Mr. Leupold said they appreciate the City's willingness to wait and see what the marketplace does rather than requiring them to provide open access at this time. No formal action was taken on the proposed transfer of control of the cable television franchise. The City Council did agree that the resolution approving the transfer of control of KBL Cablesystems of the Southwest, Inc. should be considered at the Council's April 18 meeting. V. PAYMENT OF CLAIMS MOTION: Case moved, seconded by Thorfinnson, to approve Payment of Claims as submitted. Motion was approved on a roll call, with Acting Mayor Tyra-Lukens, Butcher, Case and Thorfmnson voting"aye". VI. ADJOURNMENT The meeting was adjourned by Acting-Mayor Tyra-Lukens at 7:35 p.m.