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Mast `2 1979 T M t��9e Two ANALYSIS: The City of Santa Ana, unlike other cities and areas where cable television now exists, has quite adequate antenna reception in all parts of the City, including several specialty UHF stations and two "pay television" channels using the scrambler technique. While television itself might be considered a necessity in the American life - style, cable television services can still be viewed as a luxury item in an area of such wide -scale airwave channel reception as Santa Ana. Santa Ana can therefore afford to take its time in deciding whether to grant a franchise and, if so, in obtaining the best possible franchisee. Six -Star and the other potential franchise applicants believe that industrial advances (primarily satellite transmission) now enable cable companies to offer such a wide diversity of channels and premium pay television programming as to make cable television competitively successful even in areas of adequate and diverse antenna reception. Applicants are willing to take the risk of incurring substantial initial cabling expen- ditures in the expectation of long -term financial success. Cable television can also offer supplemental services such as local access cablecasting and alarm systems. It should also be noted that the annual franchise fee could be a moderate source of revenue for the City if the business is in fact successful. Six -Star and the other interested companies desire a City -wide franchise, and, indeed, there seems to be no reason to grant more than one franchise or to parcel the City up into regional franchises. Staff therefore recommends that the cable television franchise question be addressed through a competitive "request for proposals" format, and that a professional telecommunications consultant be retained, to be paid for solely out of application fees. This is the approach now being taken by the City of Orange. This approach will require some modification of current code provisions. It also calls for the denial at the present time of Six - Star's application. Six -Star may, of course, renew its application at such time as the Council calls for proposals. POLICY QUESTION: The Director of Public Works is disinclined to recommend allowing additional overhead wiring in the City. He thus recommends against any franchise grant, except under requirements for undergrounding which Six -Star says are financially infeasible. It is probably safe to say that no cable televisions operation can be obtained in Santa Ana unless the franchisee is allowed to use existing utility poles for overhead wiring and is required to go underground only in districts or developments where the other utility lines are undergrounded. The weighing and balancing of the aesthetic effect of additional overhead wiring and the benefits of cable television are value judgments which the City Council must ultimately make. While no decision is necessary at this point, expressions of preliminary opinions by individual councilmen would be helpful to staff. There is not much point in requesting proposals if a majority of the Council is opposed to the cabling of the City. Alter- natively, council members may wish to proceed full speed ahead, or to wait a few years to see how cable television progresses in neighboring cities. (In any event, staff would still recommend amendment of the municipal code now to establish the competitive format.) ALTERNATIVE ACTION: If the Council is disposed to proceed with a franchise grant to Six -Star without requesting proposals from other cable television companies, staff should be instructed to proceed with the preparation of a franchise grant ordinance. A draft ordinance has been prepared by this office but needs some refinement. No further public hearings are required, but they can of course be held if the Council so desires.