OCEAN CITY – After holding Comcast’s feet to the fire somewhat over its brick-and-mortar store in the resort, the Mayor and Council this week approved a renewed franchise agreement with the cable television provider.
During Tuesday’s work session, City Manager Terry McGean presented a proposed franchise agreement with Comcast for approval. He explained the town’s franchise agreement with Comcast expired in 2017 and he and staff have been working on a new franchise agreement in the years since.
The proposed agreement presented on Tuesday represents the fruits of years of negotiations. Under the proposed agreement, the town would receive 5% of the gross revenues, or about $1.1 million annually for the life of the agreement.
The franchise agreement covers the provision of cable television service only. It is not an exclusive agreement as other providers can enter into a similar agreement with the town to offer cable television service. The Federal Communications Commission (FCC) has determined services such as Dish Network or DirecTV, for example, constitute effective competition.
McGean said there were a handful of sticking points during the negotiations, including the length of the franchise agreement.
“This contract expired in 2017,” he said. “It has been the subject of ongoing negotiations. Their initial proposal was for a 15-year term. The city preferred a five-year term, which this renewal represents.”
In another sticking point in the negotiations, Comcast for years has expressed a desire to close its brick-and-mortar store within town limits where customers can pick up and drop off cable boxes and other equipment, but the town has been adamant that the store remain open for its resident, non-residents and seasonal property owners.
During the negotiations, Comcast promised to keep a “conveniently located” store for its customers in the resort, meaning they could seek a site off the island. However, the town insisted the Comcast store remained within town limits for the convenience of its residents and property owners to drop off and pick up boxes and other equipment, and to sign up for and purchase services, for example.
Through the negotiations, Comcast agreed to keep its brick-and-mortar store in Ocean City open for the length of the franchise agreement, or five years. Under the proposed agreement, Comcast would operate the store year-round for the first four years of the agreement. In the fifth year, Comcast would operate the brick-and-mortar store on a seasonal basis from April 1 to September 30.
McGean said those dates for the seasonal operation in the fifth year of the agreement represented a compromise of sorts.
“They didn’t want to commit to a brick-and-mortar store within town limits,” he said. “Their original concept was from Memorial Day to Labor Day. That isn’t our season anymore and hasn’t been for a long time.”
Councilman Peter Buas agreed.
“The season doesn’t go from April to September,” he said. “People want to be able to turn in their boxes and equipment in October and even November.”
Comcast Government Regulatory Affairs Director Chris Comer said with the company’s equipment delivery practices, fewer people were using the brick-and-mortar store. He said there were many convenient options for Comcast customers.
“There are options,” he said. “You can turn a box in without even having to pack it up. We also ship equipment overnight.”
Councilman Frank Knight said the lack of the brick-and-mortar store on the island would inconvenience residents, non-resident property owners and renters.
“I agree with the seasonality issue,” he said. “Our season goes through October now. People would have to go to UPS or FedEx.”
Buas made a motion to amend the proposed franchise agreement with Comcast and have staff negotiate for a year-round brick-and-mortar store in the fifth year. Comer said he wasn’t authorized to make that change without consulting Comcast’s own negotiation team.
“I have to take that back to our operations people,” he said. “I wish I could make that decision. I can make a call and see what I can do.”
The Mayor and Council directed Comer to go out of council chambers and make the necessary call or calls to affect the change in the agreement. Comer agreed and the council tabled that agenda item and moved on to the next scheduled one.
“I’d be okay with going to October 31,” Buas said. “That’s really when our season ends. We need to give him some clear direction on how we want to stretch it out. I’d like to see March 1 to October 31. Let’s table this and let him make the calls.”
The council then proceeded with the rest of the agenda after Comer left the room. Comer returned at the end of the work session with answers from the Comcast people that satisfied the Mayor and Council.
“I have approval for closing it on October 31,” he said. “They’d like to ask for a compromise on the opening date in that fifth year for March 15.”
The council voted to approve the franchise agreement with Comcast with the expanded dates for the fifth year of the brick-and-mortar store in town, and to move the proposed agreement to the public hearing phase.
There were other issues in the proposed franchise agreement with Comcast discussed on Tuesday. For example, in the agreement, Comcast has agreed to fully cover their cost to underground their utility system during the redevelopment of the Baltimore Avenue corridor. Comcast also agreed to cover other undergrounding costs at $100,000 per year, or $400,000 for the life of the agreement.
