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(a) This Chapter applies to a franchise agreement as if fully set forth in the franchise agreement. The express terms of this Chapter prevail over conflicting or inconsistent provisions in a franchise agreement.
(b) The provisions of a franchise agreement must be liberally construed in order to effectuate its objectives consistent with this Chapter and the public interest.
(c) A franchise agreement is governed by, and construed in accordance with, the laws of Maryland. (FY 1991 L.M.C., ch. 3, § 1.)
(a) A person seeking a franchise or a current franchisee must apply to the County for a new franchise, renewal of a franchise under the formal or informal procedures in Section 626 of the Cable Act, modification of a franchise agreement, transfer of a franchise, or a transfer of an interest in a franchisee if the transfer is subject to County approval. An applicant has the burden to demonstrate compliance with all application requirements of this Chapter.
(b) An applicant must:
(1) submit the number of copies of the application required by the County;
(2) pay the application filing fee specified in regulations;
(3) meet the requirements of any applicable request for proposals;
(4) identify in writing the name and address of any person authorized to act on behalf of the applicant with respect to the application; and
(5) certify to the County that the application includes all information required by this Chapter for the appropriate type of application.
(c) A person may apply for a new franchise in response to the County’s request for proposals or on an unsolicited basis. The County may issue a request for proposals when the County receives an unsolicited application or at any other time. If the County elects to issue a request for proposals after receiving an unsolicited application, the applicant may submit an amended application in response to the request for proposals, may inform the County that its unsolicited application should be considered as its response to the request for proposals, or may withdraw its unsolicited application. The County may reject an application that is unresponsive to a requirement of a request for proposals.
(d) An application for a new franchise must contain the following information:
(1) Identification of the persons who own or control the applicant, including:
(A) the names, addresses, and percentage interest of the 10 largest holders of an ownership interest in the applicant and all persons with an ownership interest of 5 percent or more;
(B) any other persons who control the applicant;
(C) all officers and directors of the applicant; and
(D) any other business affiliation and cable system ownership interest of each identified person.
(2) A statement addressing whether the applicant, or any other person controlling the applicant, or any officer or majority stockholder of the applicant;
(A) has been adjudged bankrupt;
(B) has had a cable franchise revoked; or
(C) has been found by any court or administrative agency to have violated a security or antitrust law or convicted of a felony or any crime involving moral turpitude.
Any statement under this paragraph must identify each person involved and explain the circumstances.
(3) A demonstration of the applicant's technical, legal, and financial ability, including financing sources and commitments, to construct and operate the proposed cable facility, identifying key personnel.
(4) A detailed description of the geographic area to be served by the cable system.
(5) If the applicant seeks a limited franchise under this Chapter, a description of how the proposal meets the requirements for a limited franchise, including the justification for any waiver of the minimum requirements.
(6) A detailed description of the physical facility proposed, including channel capacity, technical design, performance characteristics, headend, and access facilities and equipment.
(7) A description of the construction of the proposed system, including an estimate of above-ground and below-ground mileage and its location, the proposed construction schedule, a description, where appropriate, of how services will be converted from existing facilities to new facilities, and information on the availability of space on poles and conduits including an estimate of the cost of any necessary rearrangement of facilities.
(8) A demonstration of how the proposal will reasonably meet the future cable- related needs and interests of the community, including a description of how the proposal will meet the needs described in any recent community needs assessment conducted for the County.
(9) Pro forma financial projections for the first 10 years of the franchise term, including a statement of income, a balance sheet, sources and uses of funds, and schedule of capital additions, with all significant assumptions explained in notes or supporting schedules.
(10) An affidavit of the applicant or an authorized officer that:
(A) certifies the truth and accuracy of the information in the application;
(B) acknowledges the enforceability of application commitments; and
(C) certifies that the proposal meets all applicable federal and state requirements.
(11) If an applicant proposes to construct a cable system which would constitute an overbuild, the identification of the area where the overbuild would occur and the potential subscriber density in the area to be served by competing cable systems.
(12) A certification that the applicant has served a copy of its application on all existing franchisees.
(13) Any other information necessary to demonstrate compliance with this Chapter.
(e) An application to modify a franchise agreement must include the following information:
(1) The specific modification requested.
(2) The justification for the requested modification, including the impact of the requested modification on subscribers and others, and the impact on the applicant if the modification is not approved.
(3) A statement whether the modification is sought pursuant to Section 625 of the Cable Act, and, if so, a demonstration that the requested modification meets the legal standards of the Cable Act.
(4) Any other information necessary for the County to decide whether the modification complies with County law.
(f) An application to renew a franchise must comply with Section 8A-22.
(g) An application to transfer a franchise or an interest in a franchisee must comply with Section 8A-23.
(h) An applicant must certify that the application contains all required information.
(i) Within 10 business days after receiving an application for a new franchise for an overbuild, the County Executive must determine whether the application is complete under subsection (d). If the application is complete, the Executive must accept it for filing. If the application is not complete, the Executive must specify the additional information required under subsection (d) before the application can be accepted for filing.
(1) If the Executive rejects the application for filing, the applicant may resubmit or supplement the application with the additional information, and the Executive must reconsider, within the 10-day deadline starting on the date of resubmission, whether the application is complete under subsection (d).
(2) When the Executive accepts the application for filing, the Executive must make the application available for public inspection and forward the application to the Telecommunications Advisory Committee for review and comment.
Acceptance of an application as complete for filing does not limit the Executive’s authority to request additional information related to the criteria in Section 8A-9(e), or to recommend, after full review of the application, that the Council deny the application based on those criteria. (FY 1991 L.M.C., ch. 3, § 1; 1998 L.M.C., ch. 18, § 2; 2005 L.M.C., ch. 24, § 1; 2006 L.M.C., ch. 34, § 1.)
(a) The County may grant a franchise for a period not to exceed 15 years to serve all or any specified geographic areas of the County.
(b) The County may grant a limited franchise for a period not to exceed 10 years to serve a geographic area that meets both of the following criteria:
(1) the geographic area involves no overbuild; and
(2) the geographic area is one where the cable will pass at the time the franchise is granted an average of fewer than 30 dwelling units per cable mile.
(c) The County may condition the grant of a franchise on the completion of construction within a specified time or the performance of other specific obligations and specify that the failure of the franchisee to comply with the condition will void the franchise without further action by the County.
(d) The Executive must conduct a public hearing on an application for a new franchise. The Executive must conduct the hearing on an application for a new franchise for an overbuild within 90 days after the Executive accepts the application for filing. The Executive must give public notice of the hearing at least 15 calendar days before the hearing. At the public hearing, the Executive may accept written and oral testimony and any other material relevant to the application. The Executive may consider multiple applications in a single proceeding.
(e) In evaluating an application for a new franchise, the County must consider:
(1) the applicant's character;
(2) the applicant's technical, financial, and legal qualifications to construct and operate the proposed system;
(3) the nature of the proposed facilities and equipment;
(4) the applicant's record of cable performance in other communities, if any; and
(5) whether the proposal will serve the public interest.
(f) Where an applicant proposes to overbuild an existing cable system, the County must consider the factors in subsection (e) and:
(1) the beneficial effects of competition, including any reduced rates to consumers, higher technical standards, or more varied programming offerings; and
(2) the effect of the overbuild on the public.
(g) The Executive must propose to grant or deny the franchise application and must notify the applicant of the proposed action. Before proposing action, the Executive must consider the application, the written and oral testimony and other material presented at the hearing, and any other information relevant to the application. For an application for a new overbuild franchise, the Executive must make the proposal within 120 days after accepting the application for filing.
(h) If the Executive proposes to grant a franchise application, the Executive and the applicant must agree on the terms of a franchise agreement within 60 days after the applicant receives the notice of the proposed grant. The Executive and the applicant may extend this period for up to 60 more days. If the two parties do not reach agreement by the end of the original or any extended period, the notice of proposed grant is void.
(i) As required by State law, the County must advertise the terms of a proposed franchise agreement, including the proposed compensation to the County, for three successive weeks in one or more newspapers of general circulation in the County to allow the public to comment on the proposed franchise agreement.
(j) If the Executive and the applicant agree on a proposed franchise agreement, the Executive must submit the proposed agreement to the Council for approval. For an application for a new overbuild franchise, the Executive must submit the proposed franchise agreement to the Council within 10 days after the end of the advertising period.
(k) (1) When the Executive submits a proposed franchise agreement to the Council for approval, the Council may, within the applicable time provided in Section 8A- 28(d):
(A) grant the franchise;
(B) grant the franchise with conditions that the Council finds are necessary to assure that the franchise complies with County law;
(C) remand the franchise agreement to the Executive with specific recommendations to renegotiate any provision of the proposed franchise agreement and submit a revised agreement to the Council for approval; or
(D) deny the application for a franchise.
(2) If the Executive proposes to deny the franchise application or cannot reach agreement with the applicant on a proposed franchise agreement within the time specified in subsection (h), the Executive immediately must recommend to the Council that the Council deny the application and explain the reasons for the recommendation. The Council may, within the applicable time provided in Section 8A-28(d):
(A) deny the application;
(B) remand the franchise application to the Executive with recommendations or instructions for further action; or
(C) grant the franchise with any conditions that the Council determines are necessary to assure that the franchise complies with County law.
(l) Every franchise grant is subject to a franchise acceptance fee in an amount not to exceed the County's costs to consider the application, less the amount of the filing fee. The County’s costs include time spent by County employees and officials to review, negotiate, and approve the franchise agreement, and fees paid to attorneys, experts, and other consultants. Within 30 days after the Council grants a franchise under this Chapter, the County must notify the approved applicant of the amount of the franchise acceptance fee and how the County calculated the amount. If the approved applicant does not pay the franchise acceptance fee within 30 days after the County notifies the applicant, the grant is void. The franchisee must not act under the franchise until the franchisee complies with the bond, insurance, and other prerequisites of the franchise agreement. (FY 1991 L.M.C., ch. 3, § 1; 1993 L.M.C., ch. 15, § 1; 1998 L.M.C., ch. 18, § 2; 2001 L.M.C., ch. 28, §§ 3, 15 and 16; 2006 L.M.C., ch. 34, § 1.)
Editor’s noteThe effective date of the amendment made to this section by 2001 L.M.C., ch. 28, § 3, is the same effective date as 1998 L.M.C., ch. 18, § 2.
(a) A franchisee must have the following insurance coverage in force at all times during the franchise period:
(1) workmen's compensation insurance to meet all state requirements;
(2) general comprehensive liability insurance;
(3) automobile liability insurance covering all vehicles as specified in the franchise but not less than $250,000 per person, $500,000 per occurrence, and $100,000 for property damage; and
(4) any additional types of insurance and coverage amounts as the County may require.
All insurance policies must be with sureties qualified to do business in Maryland and in a form approved as to legality by the County Attorney. The County may accept a self- insurance plan that assures comparable protection in lieu of these insurance policies.
(b) To ensure the franchisee's performance of franchise obligations, a franchisee must have in force at all times during the franchise period a bond in a form approved by the County Attorney, consisting of cash, an irrevocable letter of credit, or a performance bond. A performance bond must be provided by a surety qualified to do business in Maryland. The bond must be to the benefit of the County or to other parties named in a franchise agreement. The bond must be of a type and in a sum specified in the franchise agreement as necessary to ensure the faithful performance and discharge of obligations imposed by law and the franchise agreement. Except for a limited franchise, the minimum bond amount must not be less than $250,000.
(c) A franchisee must, at its sole cost and expense, indemnify, hold harmless, and defend the County, its officials, boards, commissions, agents, and employees, against any claims, suits, causes of action, proceedings and judgments for damages or equitable relief arising out of the construction, maintenance, or operation of its cable system regardless of whether the act or omission complained of is authorized, allowed or prohibited by the franchise. This requirement includes claims arising out of copyright infringement or a failure by the franchisee to secure consent from the owner, authorized distributor, or licensee of a program to be delivered by the cable system.
(d) In an overbuild situation the County may require franchisees to indemnify each other for any damage to facilities and services caused by construction or maintenance of their respective cable systems. (FY 1991 L.M.C., ch. 3, § 1; 2006 L.M.C., ch. 34, § 1.)
(a) The following minimum requirements for facilities and services apply to all franchises:
(1) A cable system must have a minimum capacity of 54 video channels available for immediate or potential use.
(2) A cable system must provide at least 6 access channels, which must be individually designated by the County for public, educational or governmental access. The County may require the franchisee to contribute to capital costs for access studios and related equipment and facilities, as permitted by federal law.
(3) A cable system must provide leased access channels as required by federal law. The franchisee must provide information on all leased access channels in its annual report under Section 8A-13(a). This information must include a description of any applications to lease access channels that are pending consideration or which have been denied by the franchisee.
(4) Service to all public buildings without charge may be negotiated in the franchise agreement.
(5) Upon the directive of the County, a franchisee must interconnect the cable system access channels with those of other cable systems in the Washington and Baltimore metropolitan areas and Frederick County or as otherwise provided in the franchise agreement.
(6) A franchisee must design its system to allow the County to interrupt cable service in an emergency to deliver necessary information to subscribers.
(b) The County may negotiate franchise terms exceeding the minimum requirements in subsection (a).
(c) The County may waive minimum requirements set forth in subsection (a) for limited franchises where the applicant demonstrates that a waiver is in the public interest. (FY 1991 L.M.C., ch. 3, § 1; 2006 L.M.C., ch. 34, § 1.)
(a) A franchisee, in consideration of the privilege granted under a franchise for the use of public rights-of-way to construct and operate a cable system, must pay the County 5 percent of the franchisee's gross revenues from the operation of its cable system to provide cable service in its franchise area during the period of its franchise. A franchisee must pay the franchise fee due to the County for the preceding quarter within 30 days after the end of that quarter.
(b) Any payment of franchise fees to adjust for a shortfall in the quarterly payments for the preceding year must be made no later than the filing date for the audited annual financial statements as specified in subsection (d) of this section. An adjustment for any overpayment will be credited in one or more subsequent quarterly payments.
(c) Unless a franchise agreement provides otherwise, a franchisee must file with the County within 30 days of the end of each quarter a financial statement showing the gross revenues received by the franchisee during the preceding quarter and the number of subscribers in each participating municipality.
(d) A franchisee must file within 3 months after the end of its fiscal year the franchisee's annual financial statements for the preceding year certified by an authorized officer of the franchisee or an affiliate and audited by a certified public accountant. The franchisee must bear the cost of the preparation of all financial statements.
(e) The County may inspect and audit any books and records, and recompute any amounts determined to be payable under the franchise. However, any audit to recompute franchise fees must take place within 36 months after the end of the franchisee's fiscal year. The franchisee must bear the cost of the audit if the annual payment to the County for the preceding year is increased by more than 5 percent as a result of the audit.
(f) In the event that a franchise payment is not received by the County on or before the due date, interest will be charged from the due date at the annual interest rate then charged for unpaid federal income taxes. In addition, the franchisee will pay a late charge of 5 percent of the amount of the payment. Interest and late charges will not be imposed for any payment necessary as a result of the yearly adjustment provided for in subsection (b) of this section, if the payment to correct for a shortfall does not exceed 10 percent of the total payments made during the year. In the event such payment exceeds 10 percent of the total payments made during the year, the franchisee will be liable for interest and late charges for the entire amount due.
(g) When a franchise terminates for any reason, the franchisee must file with the County within 90 days of the date the franchise operations stop an audited financial statement showing the gross revenues received by the franchisee since the end of the previous fiscal year. Adjustments must be made at that time for franchise fees due to the date that the franchisee's operations ceased. (FY 1991 L.M.C., ch. 3, § 1; 2006 L.M.C., ch. 34, § 1.)
(a) Within 3 months of the close of its fiscal year, a franchisee must file with the County and each participating municipality an annual report that includes the information required in the franchise agreement.
(b) A franchisee must maintain a complete set of books and records available for inspection by the County during normal business hours.
(c) Upon written request of the franchisee and approval by the County Attorney, information of a proprietary nature submitted to the County under this Chapter or a franchise agreement must not be made available for public inspection. (FY 1991 L.M.C., ch. 3, § 1.)
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