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11. Consider Setting Official Public Hearing Date for Rate Regulation-Triax Cablevision
1 MEMORANDUM CITY OF 11' CHANHASSEN 690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317 (612) 937 -1900 • FAX (612) 937 -5739 1 TO: Mayor and City Council FROM: Don Ashworth, City Manager DATE: February 8 1994 ary , 1 SUBJ: Consider Setting Official Public Hearing Date for Rate Regulation, Triax Cablevision, March 28, 1994 i Note: Should the city council not have sufficient time to discuss this item Monday evening, I would suggest that, at a minimum, we set the < official public hearing date for March 28, 1 1994. Discussion on the item could reasonably occur as a part of the hearing itself. The necessity for taking action Monday evening recognizes that we must give Triax a 14 day 1 notice in advance of the hearing which would preclude March 14 and must give Triax an additional 30 days following adoption of the rate regulation ordinance before we would be allowed to certify for rate regulation. The current deadline for filing is May 15, but 1 major changes in the calculations for rate regulation continue to be considered and it is likely that further delays in filing may reasonably occur. Our actual filing date should correspond with the most. recent regulations which again, have probably not yet been 1 formulated. On the other side, if extensions are not granted, we need to be in a position of being able to certify prior to May 15. 1 BA K CKGROUND 1 The 1992 Federal Cable Act provided the intent of the federal government to establish regulations and to allow for local rate regulation. The responsibility for determining "benchmarks" was left to the FCC. Since passage of the Act, tt FCC has continued to disseminate the "new regulations" along with the "new" method to calculate benchmarks. Unfortunately, each set of "new regulations" is followed by another set of "new regulations." Each change has prompted the FCC to give local municipalities a new target date for completing its filing application 1 process under the "new rules." In November of 1993, the FCC moved the filing deadline out to May 15 in light of the fact of changes that had been made at that point in time. On February 22 the regulations were once again changed and it is very likely that the May 15 deadline may Mayor and City Council February 28, 1994 ' Page 2 once again be moved to July or August. However, until official notification is received that in fact the May 15 date has been moved, the City of Chanhassen should insure that it has completed all of the necessary steps to insure that we could file for rate regulation on or before May 15. The two primary steps in that process are the notification back to Triax of our intent to hold an ' official public hearing whereat 1) an ordinance would be adopted filing for rate regulation and 2) providing Triax with a 30 day period to complete their calculations which must be submitted with the application to the FCC. ANALYSIS Mayor Don Chmiel favors going through the rate regulation process. His experience with rate regulation leads him to believe that it is a good process. Secondarily, Don has seen Triax continue to fail to live up to various commitments that they have made and, I think it is fair to ' say, that he doubts that they will live up to those in the future. My primary reluctance is simple- - money. Triax is currently below the federal "benchmark" rates. The 15 south lake communities also have Triax and the rate structure between those communities and Chanhassen's is identical. ' The Lake Minnetonka group has previously filed for rate regulation and have found that, again, Triax is below the benchmarks as existed in September or October. They now need to modify their previous process to meet the new regulations. The initial filing cost for them was $10,000. ' We have spent approximately $2,500 to analyze the existing franchise agreement (copy previously submitted to the city council) and to complete background work necessary if rate regulation is pursued. The primary advantage of filing for rate regulation is that such would ' ensure that the benchmark rates for our community would be the rates that are basically in effect today as compared to the federal levels. If we did not file for rate regulation and Triax were to provide notice to us of a proposed increase, and we subsequently filed for rate regulation, the ' new rates would be the benchmark and we would not be in a position to object to that rate increase. Alternatives to immediately filing for rate regulation include: ' - Modify Franchise Agreement As noted above, the primary reason to immediately file for rate regulation is to insure that we get ahead of a potential request from Triax for a ' rate increase. Therein also lies the solution. Triax would agree to an amendment to the existing franchise that would state that they would give us 90 days notice prior to attempting to put into effect any form of rate increase. Since all of the documentation is basically done to effectuate rate regulation, we could in effect complete that process within the 90 days and insure that the proposed rates were in comparison to the benchmarks in existence before that request had been filed; or - A "Me Too" Modification to the Franchise As the Lake Minnetonka group of cities has already gone through the rate regulation process and has determined that their current ' rates (our current rates) are under the benchmarks, we could ask Triax if they would agree to a franchise modification which would basically say that Triax rates for Chanhassen would not exceed the rates for the Lake Minnetonka cities. The modification could also Mayor and City Council February 28, 1994 Page 3 require that they submit all documentation required by the Lake Minnetonka group to verify that the then current rate structure or proposed increase did meet the federal regulations and benchmarks. Both this option and the option listed above does have the one primary benefit of not spending money in advance of the time jframe that it would absolutely be necessary to do such. I previously noted that we have 'spent approximately $2,500 to get us into a position of rate regulation. I would anticipate an additional $2,500 being spent if we go through the hearing process and make the filing to FCC including comparing the benchmarks given to us by Triax in comparison to the federal standards. If I felt that this would be one time expenditures, my reluctance to move ahead with rate regulation would not be as strong as it is. Specifically, with the continuing changes as to how to carry out rate regulation, what benchmarks will or won't be included, measurement of the various tier systems, etc., all means that we will simply keep spending $2,500 and $2,500 and $2,500. I know the Mayor is also very concerned about this aspect and unfortunately I don't know that either of us has a good solution to avoid those types of future costs. As stated earlier in this memorandum, resolving all of the issues presented in this memorandum this evening is probably not necessary. I do believe that it is necessary though to call for the official public hearing and March 28 is being recommended for such. I ' 1 Low OMCEs ,i MOSS & BARNETT A PR OVEUION4.Agg0CIA770N 4800 NORwzsr CE NTER 90 SOUTH SEVENTH STREET MMEAPOLIS MINNESOTA 55402 -4119 TELEPHONE )612) 347 -0300 TELECoPIER (612) 339 -6686 CONEVICATIOU UPD= TO: Moss & Barnett Rate Regulation Clients and Interested Persons FROM: Adrian E. Herbst ' Brian T. Grogan DATE: February 11, 1994 ' RE FEDERAL COMMUNICA77ONS COMMISSION M WSION OF RATE FREEZE On February 8, 1994, the Federal Communications Commission (FCC) extended its freeze of regulated cable service revenues from February 15, 1994 to May 15, 1994. The FCC emphasized the extension was necessary to give effected parties time to familiarize themselves with any modifications to the FCC's rules that the FCC may adopt later in February when it considers pending petitions for reconsideration of the cable rate regulations. The FCC also indicated that the freeze will facilitate and orderly implementation of any new rules that the FCC may adopt later in February. ' As of January 31, 1994, the FCC had received 4,896 applications for certification from local franchising authorities covering approximately 7,534 ' communities serviced by cable. The FCC considers the freeze extension to be the minimum time period necessary for franchising authorities and other affected parties to familiarize themselves with any new rules the FCC may ' adopt and to prepare to regulate cable operators before the effective date of any such new rules. Cable operators may petition the FCC for relief from the freeze if the operator can show that the freeze is causing "severe economic hardship" or "threatens the viability of continued provision of cable service. In a separate statement by FCC Commissioner Andrew C. Barrett, concern was expressed regarding "potential inequities for the industry, consumers and franchising authorities that may result from the cable rate regulation proceeding, especially to the extent . that the public's confusion may continue ' to increase." Commissioner Barrett went on to emphasize his concern that. the FCC has created a "fundamentally inequitable situation for cab er Rp,�r.�`t�ors by forcing critical business decisions based on benchmark stanviriit "'that are subject to revision, and without either the cost-of -service _Jprincip les or rules that the Commission ultimately will adopt." a !`y'4 �,iTY OF CHA1't MOSS & BARNETT A PROFESSIONAL AssOcIA=N The extension of the rate freeze from February 15, 1994 to May 15, 1994 will not impact cable operator's obligations to respond to franchising authorities who have requested rate information via FCC Form 393. However, given that the FCC is likely to adopt significant revisions to its rate regulations on February 22, 1994, it may be prudent for franchising authorities to delay action, if possible, until the FCC clarifies applicable regulations. Should you have any questions regarding these matters, please do not hesitate to contact us. BTG/ 825Z140 i t A ETRO CABLE NETWORK 105 5th Avenue South, Suite 485 • Minneapolis, MN (612) 339 -3221 /FAX (612) 339 -31 i November 3,1993 ' The Honorable Don Chmiel ' City of Chanhassen P.O. Box 147 Chanhassen, Minnesota 55317 ' i Dear Mayor Chmiel: ' Early last year, even prior to the passage of the new federal cable legislation, MCN /6 agreed with the request of both Triax and the Lake Minnetonka Cable ' Commission to temporarily discontinue our signal on channi 1 6.' For several years MCN /6, LMCC and Triax have been unab�e to determine how ' best to solve the reception problems associated with the microwave transmission of our signal to Mound. Enclosed, for your review, is copy of a report of options compiled on this subject. i We have heard from a number of Triax subscribers who express great interest in ' our community news and information channel; we're pleased with the increased interest in our programming. We certainly would welcome a� cost effective and workable solution. ' Many thanks for your October 26 letter and words of encouragement. We're ! i ' 4re, Cares . ocum Executive Director i ' enc. cic ' Jim Daniels, LMCC Rick Finch, Triax 1 i �1 M ETRO CABLE NETWORK 1 06 s tn Avenue South, s uit e 485 . Minneapolis, MN 55401 (612) 339 -3221 /FAX (612) 339 -3169 LAKE MINNETONKA CABLE: TRANSMISSION OF MCN/ CHANNEL 6 OPTION ISSUES ESTIMATED COST Standard Reception unacceptable because of line of Provided; value sight between Pillsbury and Mound head $6,500 /yr. end. 694 It may not work since signal is amplified $25K; technical quality Overpass too many times prior to reaching head end. not assured. ' American No Channel space available for IDS trans- Monthly Charge of $17.95 Wireless mission of new 22 Channel service to home plus new equipment costs. subscribers. New equipment costs in Mound ' undetermined. Direct competitor to cable operating companies. Bicycling Timing; cost of tapes; cost of added personnel $3K /mo. payroll; new of Tapes for MCN /6 Triax in Mound. Equipment Cost. equipment in Mound $50K. Satellite Technology exists but changing; MSC currently sends signal to area. Microwave Apply for special microwave license; transmission special arrangements with third party.i.e. Paragon. Paragon Paragon fiber is several miles from hook -up Triax /Lake Minnetonka hook -up. UNITE Channel space was not available for 24 U of M hours /day service to Mound. US West Fiber lines carry signal to IDS; then Fiber transmit to Mound head end. Estimated $100 K /Mo. with Teleport Minnesota. $60K one time cost; maintenance $5K annually plus add -ons. To be negotiated; fiber costs $50K /mile (est.) Value at least $500 /mo.; one time $60K charge. $1,800 mo. roof rental/ fiber cost; one time transponder/ receiver costs of $60 K. Presented to Lake Minnetonka Cable Commission 1/ 19/93 October 26, 1993 F CIT CHANH 690 COULTER DRIVE • P.O. BOX 147 • (612) 937 -1900 • FAX (612) Mr. Chuck Slocum Metro Cable Network 105 Fifth Avenue South, Suite 485 Minneapolis, MN 55401 Re: Chanhassen, Minnesota Our File No. 27981.1 Dear Mr. Slocum: On June 11, 1993, the City of Chanhassen received a letter from Ms. Jan for Triax Midwest Associates, L.P. ( "Triax ") indicating that Triax has supplied by regional Channel 6 from its cable television system becau provides fails to meet the new federal technical standards estab Communications Commission (a copy of Ms. Bremer's letter is attached: Bremer goes on to indicate that Triax intends to carry C -SPAN 11 in pl 6 until such time as the region Channel 6 signal meets federal technics On behalf of the City of Chanhassen. I would like to express programming provided by regional Channel. 6. We, very much programming which airs on the regional channel, in particular the cos proceedings and related matters. The City of Chanhassen will truly n programming which the regional channel has provided to the reside hopeful that regional Channel 6 can work with Triax and other area o a technology which will facilitate the provision of an adequate signal applicable federal technical standards. F SEX" -5739 MINNESOTA 55317 1 Bremer, legal counsel emoved programming the signal Channel 6 -hed by the Federal r your reference). Ms. e of regional Channel standards. appreciation for the )reciate the political ge of state legislative the variety of "local' of the city. We are operators to develop ich complies with all Once again, we wish to emphasize our support for the programming and other endeavors of regional Channel 6 and are hopeful that your signal can be carried on the Triax system in the very near future. If we can assist your cause by contacting our state representatives to encourage 1 October 26, 1993 Page 2 a new means of transmitting the regional Channel 6 signal, please do not hesitate to contact us. In the meantime, please keep us updated regarding the status of this issue and any feasible mechanisms which will bring about its resolution. Sincerely, Donald . hmiel Mayor DJC:k Attachment JAMES �. Li.4CN •• IS M'RT L HOFFMAJ ;WC F. my O. KNLtYH LNOOREN StRALD H. FMEDLLL ALLAN E- MULLIGAN JAMtf C. ERICKSON EtLWARD J. OMCOLL YIE N. PULLER JOHN 0. FULLMEF fMERT E. SDYLE SSANK 1. HARVEY CHARLES i. MOD'" OE�TOMER J. DIErm JOIN R. ftATTt ESIDA N. FISHER ?ND" P. fTOITMAN fSCMAEL C. JACKMAN JOHN E. OIEHL JON f. swax EWSKI THOMAS J. FLYNN JALN[{ P. OUNN ?0001. PFAVAAN RTER [. SECK JOIDME H. [ANKE 40t" L RCK JOIN t. LUND06VT SAVLE HOLM CLISERTO' THOMMI f. NLMMREY, JR. JOIN A. COTTER' KAMM A. ROTNwSLLIER June 11, 1993 L,nRmN, HO FFNtJe rt, DAL & LamGREN, LTD. ATTORNEYS AT LAW 1600 NORWEST FINANCIAL CENTER 7500 XERXES AVENUE SOUTH BLOOMINGTON, MINNESOTA 66431.1154 TELEPHONE 16121 836.3800 FAX (51215563333 Si OOuM4 SIlI)ELL R. AEON JSSEFN OBIS *AM ARIMM D N MrC01/N 1 The Honorable Don Chmiel City of Chanhassen P.O. Box 147 Chanhassen, MN 55317 Dear.Mayor Chmiel: This office serves as counsel to Triax Midwest Associat the cable television operator providing service in your purpose of this letter is to inform you that Triax is c matter of federal law to remove Regional Channel 6 from television system as the signal it is providing fails t federal technical standards established by the Federal Commission (FCC). As you may know, federal technical standards were amend December 30, 1992, significantly upgrading the signal q for cable television services. $gg 47 C.F.R. Part 76, § 76.601, = sea (1993). Recent proof of performance t pursuant to the abok ►e- referenced rules reveal that the Regional Channel 6 does not meet one or more technical by these new rules. As a result, the signal may not be cable system as a matter of federal law. s, L.P. ( Triax) community. The mpelled as a its cable meet the new ommunications d effective ality requirements ubpart K, ste conducted ignal provided by tandards required carried on the Triax intends to carry C -SPAN II in place of Regional Channel 6 until such time as the Regional Channel 6 signal meets federal technical standards. Subscribers will be notified of this change in this month's bills as well as on- screen announcements on Channels 8 and 19. Copies of the proof of performance tests are available for public inspection. . I j On behalf of Triax, I would be happy to respond to any comments or questions you may have. Although it is never our desire to make . I L FAUL S. owmr ? ' ALA! L KILDOW KATH M M. NEWMAN MICHAEL f. U= 4Nf00RY L. K-1 AD IIIARY A. VAN CUM* DA L [owes "MM. VLATKOVICH ' TMOTHY J. MIMANUS ?WTHY J. KtANE ALAN M. AHOIIMON 00WA L NOW MN:HAILL A oftw tiICwlJI A. RofEITTfoN USA A. CRAY ' SAM A. AI NEKE OW&JON [. Mcmax10GE CMRISTOFHO J. HANIKTHAL SILYAM C. ORIFFRH. JR. JOHN J. VfA1NA0@I W tLAINtL w. VOft SMA[ A. M7RIK , JOIN R. HILL JRMB K. YARTN THOMAS J. SEYMOUR MICHAEL J. SMITH ESAZIRRICK K. HAUOER IS WRY t. vO LARRY o. M AM I. Immp ' MNICY R. KNNNNAN MARS E. FNLOLA Si OOuM4 SIlI)ELL R. AEON JSSEFN OBIS *AM ARIMM D N MrC01/N 1 The Honorable Don Chmiel City of Chanhassen P.O. Box 147 Chanhassen, MN 55317 Dear.Mayor Chmiel: This office serves as counsel to Triax Midwest Associat the cable television operator providing service in your purpose of this letter is to inform you that Triax is c matter of federal law to remove Regional Channel 6 from television system as the signal it is providing fails t federal technical standards established by the Federal Commission (FCC). As you may know, federal technical standards were amend December 30, 1992, significantly upgrading the signal q for cable television services. $gg 47 C.F.R. Part 76, § 76.601, = sea (1993). Recent proof of performance t pursuant to the abok ►e- referenced rules reveal that the Regional Channel 6 does not meet one or more technical by these new rules. As a result, the signal may not be cable system as a matter of federal law. s, L.P. ( Triax) community. The mpelled as a its cable meet the new ommunications d effective ality requirements ubpart K, ste conducted ignal provided by tandards required carried on the Triax intends to carry C -SPAN II in place of Regional Channel 6 until such time as the Regional Channel 6 signal meets federal technical standards. Subscribers will be notified of this change in this month's bills as well as on- screen announcements on Channels 8 and 19. Copies of the proof of performance tests are available for public inspection. . I j On behalf of Triax, I would be happy to respond to any comments or questions you may have. Although it is never our desire to make . I L ' LAREN. HuFmAN, DALY & j. MMEN, L TD. The Honorable Don Chmiel June 11, 1993 Pao 2 ' unanticipated changes, we are obligated to comply with federal law in this regard. If you have any comments or questions, please do not hesitate to contact ' me. Thank you for your consideration. Sincerely, ' J E. Bremer, for LARKIN, HOFFM:LL, DALY & LINDGREN, Ltd. ' cc: Ric Hanson Robert Langley � I � I � I 9 I I I I l I JEB:gev:IO2s RECEIVED , N O V I 1993 CITY OF CHANhASSEI LAW OFFICES i MOSS & BARNETT A PROFESSIONAL ASSOCIATION HERMAN J RATELLE EDWARD J BLOMME PATRICK F. FLAHERTY ANN K NEWHALL 4800 NORWEST CENTER LAURA J. MCKNIGHT SUSAN C. R�IODE BRIAN T. GROGAN CORY LARSEN BETTENGA DONALD E WIESE MICHAEL J. AHERN (� 90 SOUTH SEVENTH STREET THOMAS MJHUGHES DANIEL P. DAMOND PAUL VAN VALKENBURG PHILLIP GAINSLEY MICHAEL L. FLANAGAN JEFFREY L. WATSON J. MICHABL'COLLOTON MINNEAPOLIS, MINNESOTA 55402 -4129 NICK HAY SCOTT A. ABDALLAH W. SCOTT HERZOG THOMAS J. SHROYER WAYNE A. HERGOTT DALE M. WAGNER JEANNE K. STRETCH TELEPHONE (612) 347 -0300 REESE E. CIEZICK OF COUNSEL MILDA K. HEDBLOM JAMES E. O'BRIEN BARBARA G. STUART PAUL G. NEIMANN DAVID P. JENDRZEJEK M CECILIABAY TEL£COPIER (612) 339 -6686 PAUL T. EIONESS EDWARD L. WINER DANIEL GOLDBERG ADRIAN E. HERBST CURTIS D. SMITH JOSEPH R. KLEIN TIMOTHY E) WUBSTENHAGEN RETIRED J. BRAINERD CLARKSON , WILLIAM N. KOSTER DAVE F. SENGER ANN M. MOER FREMONT C. PLETCHER WILLIAM A. HAUG LOUIS J. SPELTZ VINCENT J. FAHNLANDER VERNE W. MOSS CHARLES A. PARSONS. JR. MITCHELL H. COX RICHARD] JOHNSON MICHAEL J. BRADLEY NANCY M. 61SKIS HEIDI A. SCHNEIDER JAMBS H. HENNESSY STANLEY R. STASEL ROBERT LUXES PETER A. KOLLER 347-0340 CHARLES E.IJONES HOWARD S. COX J. MICHAEL HIRSCH RICHARD KELBER WRITER'S DIRECT DIAL NUMBER November 18, 1993 I Mr. Don Ashworth i City Manager City of Chanhassen 690 Coulter Drive P.O. Box 147 ' Chanhassen, Minnesota 55317 RE: Cable Television Commitee ' Our File No. 27981.1 Dear Don: ' Enclosed herewith please find the Agenda for the Noveer 22, 1993 Cable Television Committee Meeting. Please call me if you ave any questions regarding the items on the Agenda. I look forward to seeing you on the 22nd. I Very truly yours, MOSS & BARNETT ' A Professional Association Brian T. Grogan , BTG /slo 85ZBTG Enclosure cc: Mr. Bob Langley, Triax Cablevision (w /enclosure) Ms. Jane Bremer (w /enclosure) Adrian F. Herbst, Esq. (w /o enclosure) RECEIVED , N O V I 1993 CITY OF CHANhASSEI 772Z140 AGENDA CITY OF CHANHASSEN, MINNESOTA CABLE TELEVISION C0MMUTEE MEETING MONDAY, NOVEMBER 22, 1993 9.00 A.M. I. CALL TO ORDER II. ROLL CALL III. RATE REGULATION • DISCUSSION OF TRIAX'S 393 INFORMATION • EXTENSION OF RATE FREEZE • SHOULD THE CITY REGULATE IV. LINE EXTENSION • REVIEW LETTER OF AGREEMENT V. CUSTOMER SERVICE VI. METRO CABLE NETWORK /CHANNEL 6 • UPDATE ON CORRESPONDENCE WITH CHANNEL 6 VII. REFERENCE GUIDE • TRANSFER OF OWNERSHIP • IMMUNITY VIII. OTHER IX. ADJOURN 772Z140 CHANHASSEN, MINNESOTA CABLE TELEVISION COMITTEE I AGENDA ITEM NO. III ITEM RATE REGULATION DATE 22, 1993 , We have conducted a preliminary rev: completed FCC Form 393. Based on our initial r the maximum initial permitted rate per channel Triax is $0.503. Thus the maximum permitted ra service tier is $10.56. Given that Triax's c the basic service tier, excluding franchise they are presently below the FCC's benchmark it is important to note that to the extent certified to regulate rates, Triax retains t unilaterally increase its basic service rates a chooses following expiration of the FCC February 15, 1993. We are in the process,of analyzing Triax' charge by attempting to compare industry avera review of numerous Form 393's completed by multiple system operators. In our initial re` 393 it is impossible to analyze the accurac; service charge as we are forced to approximations made by Triax in completing the would be necessary for us to conduct an on sit to verify the accuracy of their numbers. Hoo believe this step is necessary at this time City should concentrate on the initial questic certify to regulate the basic service ties equipment charges. ew of Triax's .view it appears :o be charged by :e for the basic zrrent rate for `ees, is $10.45 evel. However, he City is not ie authority to any time it so ate freeze on c hourly service es based on our several large, Lew of FCC Form of the hourly accept various documents. It audit in order :ver, we do not and believe the a of whether to and ancillary Triax has indicated that the monthly charge for additional outlets will be eliminated on or about December 31, t 1993. The other rates and charges for equipment as specified within the Form 393 appear to be consistent with FCC guidelines. We have included herein a copy of an prepared for our clients regarding the extensi Rate Freeze Order. Thi:� provides the Citl additional time to revi.:w this matter an certified prior to expiration of the rate free appears to be in line with FCC benchmark rates bringing the remainder of its charges into com regulations, we stand by our initial recommer City become certified to regulate the rates ction Alert we in of the 'FCC's of Chanhassen still become a. While Triax nd will soon be liance with FCC lation that the for the basic u ii -2- { 772Z140 service tier. We stand by this recommendation for the following reasons:.,. 1. The City need not expend significant time, energy or revenue regulating the rates for basic service to the extent Triaz remains at or below the FCC established benchmark levels. 2. Once certified, the City, should it so desire, need take no action and its inaction will be deemed acceptance of any rate increases Triaz may impose. 3. Should Triax choose to increase rates above FCC benchmark levels the City, if certified, will have an opportunity to review such increases and act to prevent increases above the FCC benchmark levels to the extent appropriate. -3- i On November 10, 1993, the Federal Communications Commission ( "FCC ") adopted and released an Order extending the expirations date of the cable television rate freeze from November 15, 1993 until February 15, 1994. In ' particular, the FCC's Order reads as follows: (a) The average monthly subscriber bill fo' services , provided by cable operators subject to regulation LAW OFFICES shall not increase above the average monthly subscriber MOSS & BARNETT ,. ' 5, 1993, A PROFESSIONAL ASSOCIATION ! 4800 NORWEST CENTER (c) The freeze imposed by paragraph (a) of this section 90 SOUTH SEVENTH STREET MINNEAPOLIS, MINNESOTA 55402 -4119 ' BRIAN T. GROGAN TELEPHONE (612( 347 -0300 TELECOPIER (612( 339.6686 authority or the Commission. (612( 347.0340 The FCC extended the rate freeze in order to provide ' local franchising authorities and consumers a continued opportunity to exercise their rights under the 1992 Cable Act and FCC regulations in light of the September 1, 1993 I � 3, 1993, the FCC had , received 3,425 applications for certification from ACTION ALERT authorities covering approximately 5,050 communities served by cable, and no more than approximately 836 properly completed subscribe complaints. These To: Moss and Barnett Clients and Interested Parties i that are potentially eligible to regulate the basic service From: Communications Practice Group ' Re: Extension of CATV Rate Freeze Date: November 12, 1993 i On November 10, 1993, the Federal Communications Commission ( "FCC ") adopted and released an Order extending the expirations date of the cable television rate freeze from November 15, 1993 until February 15, 1994. In ' particular, the FCC's Order reads as follows: (a) The average monthly subscriber bill fo' services , provided by cable operators subject to regulation under Section 623 of the Communications Act shall not increase above the average monthly subscriber bill determined under rates in effect on April ' 5, 1993, until February 15, 1,994. (c) The freeze imposed by paragraph (a) of this section will not apply where a basic tier service has become subject to regulation by a local franchising ' authority or the Commission. The FCC extended the rate freeze in order to provide ' local franchising authorities and consumers a continued opportunity to exercise their rights under the 1992 Cable Act and FCC regulations in light of the September 1, 1993 effective date of cable rate regulation. As of November 3, 1993, the FCC had , received 3,425 applications for certification from local franchising authorities covering approximately 5,050 communities served by cable, and no more than approximately 836 properly completed subscribe complaints. These figures represent only a small percentage of the nearly 33,000 communities ' that are potentially eligible to regulate the basic service tier, and an even h II _MOSS & BARNETT A PROFESSIONAL ASSOCIATION smaller percentage of the country's 58 million cable subscribers. The FCC ' determined that the purposes of the 1992 Cable Act would best be fulfilled by establishing an additional opportunity for local franchising authorities and subscribers to participate in assuring the reasonableness of cable service ' rates prior to the expiration of the freeze. The FCC included a significant exception in the extension of the freeze ' by providing that the freeze will not apply to a basic service tier that has become "subject to regulation by a local franchising authority" or the FCC. In situations where the basic tier is already subject to regulation, it is not necessary to continue the freeze in effect for the cable programming service tier in order to prevent an evasion of rate regulation of the basic tier. Accordingly, where the basic tier has become subject to regulation, the freeze will expire on that date for both tiers. Where only the cable programming ' service tier is subject to regulation, the FCC does not believe the cable operator's capacity to evade the freeze of the basic tier by shifting programming to the higher tier is significantly diminished. Accordingly, where only the cable programming service tier is subject to regulation, the freeze will continue in effect for both tiers. Should you have any questions regarding the rate freeze extension from November 15,,1993 until February 15, 1994, please do not hesitate to contact Brian Grogan at 612- 347 -0340. We will continue to update all of our clients on a case -by -case basis as appropriate. I 91ZBTG H' 772Z140 CHANHASSEN, MINNESOTA AGENDA ITEM NO. IV CABLE TELEVISION COMITTEE I ITEM DATE JJ LINE EXTENSION 22, 1993 I We have discussed the attached proposed Letter of Agreement between the City of Chanhassen andlTriax regarding clarification of the line extension policy. Triax's only objection was that delays in installation violating the terms of the Letter of Agreement should not be considered a "material breach" of the Franchise. Changes have been made to reflect Triax's objection. Barring any further concerns, the letter appears to be acceptable and should be consid by the City for action. -4- 1 772Z140 LETTER OF AGREEMENT [To be typed on Triax letterhead.] Mr. Don Ashworth City Manager City of Chanhassen 690 Coulter Drive P.O. Boa 147 Chanhassen, MN 55371 RE: Clarification to Line Extension Policy Dear Mr. Ashworth: Triax Midwest Associates, L.P. (Triax) hereby agrees to undertake all necessary steps to install cable television equipment, wires and facilities in all developments meeting the line extension criteria outlined in Article V, Section 2 of the Cable Television Franchise Ordinance of the City of Chanhassen ( "Franchise "), so long as the City requires the developer to enter into a development agreement which (1) contains a provision requiring that such developer provide for installation of cable in the subject development and (2) requires the provision of funds as security for the installation of cable in the subject development. Triax will exercise its best efforts to undertake such installation at the same time other public utilities are installed so as to minimize disruption to the grounds within the development. In the event Triax substantially delays installation or otherwise violates the provisions of this agreement or Article 5, Section 2 of the Franchise, the City shall have the right to pursue all applicable remedies under the law including any remedies provided in the Franchise. If the City does not require a developer to enter into a development contract containing the provisions described above, 772Z140 i Triaa shall be relieved of its obligation �to immediately install cable in concert with other public utilities. However, such omission from a development contract shall not relieve Triaa of its Franchise obligations, in particul1lar, Article 5, Section 2 of the Franchise. , TRIAX MIDWEST ASSOCIATES, L.P. i i By ' Its: ACKNOWLEDGEMENT The City hereby agrees to all terms and provisions of this Letter of Agreement and will undertake all necessary steps to modify its standard development agreement to comply herewith. ' CITY OF CHANHASSEN, MINNESOTA By: I ts : , 7 I 1 I � i i -2 f 772Z140 CIHARHASSEN, MINNESOTA AGENDA ITEM NO. V CABLE TELEVISION CONKITTEE. ITEM DATE CUSTOMER SERVICE NOVEMBER 22, 1993 We have conferred with Triaz representatives regarding the customer service standards which the company follows in the City of Chanhassen, Minnesota. Based on these discussions it appears Triaz follows the customer service standards outlined within the City of Chanhassen Franchise Ordinance. These customer service provisions, while addressing several important and relevant issues, do not include the vast majority of new customer service standards adopted by the FCC in its recent rule making. In the last agenda we provided the City with a summary of the FCC's customer service standards for review and consideration. The City can require Triaz to comply with all or a portion of the FCC's customer service standards after providing Triaz with 90 days advance written notice. We recommend the City review the FCC's customer service ' standards and identify areas where additional regulatory authority may be needed. Perhaps another way to approach this question is to analyze any complaints or customer service issues which have arisen in the City of Chanhassen and determine the appropriate customer service standards which should be implemented to prevent these problems from occurring in the future. Since the FCC's customer service standards very ' closely parallel the cable television industries own customer service standards we do not anticipate Triaa would have difficulty in complying with all or a portion of the standards. 772Z140 i CHANHASSEN, MINNESOTA AGENDA ITEM NO. VI CABLE TELEVISION COMMITTEE ITEM DATE METRO CABLE NETWORK/CHANNEL 6 22, 1993 ' Attached please find a copy of a letter prepared by Moss & Barnett forwarded to Mr. Don Ashworth for consideration in ' communicating the City's concerns to Metro Cable Network. The letter attempts to identify the elimination of the signal on Triax's system and indicates the City of Chanhassen's support ' of the regional channel, its programming and its continued viability. To the extent this letter has not already been executed the City should review the provisions of Ithe letter and ' indicate any modifications or changes necessary. Thereafter, to the extent desired, the letter should be �forwarded on to I Mr. Chuck Slocum at Metro Cable Network. I � 1 a October 22, 1993 On June 11, 1993 the Honorable Mayor Don Chimiel received a letter from ' Ms. Jane Bremer, legal counsel for Triax Midwest Associates, L.P. ( "Triax ") indicating that Triax has removed programming supplied by regional Channel 6 from its cable television system because the signal Channel 6 provides fails Mr. Chuck Slocum ' Metro Cable Network 105 Fifth Avenue South ' Suite 485 letter is Minneapolis, Minnesota 55401 ' reference). Ms. Bremer goes on to indicate that Triax intends to carry C -SPAN Re: Chanhassen, Minnesota II in place of regional Channel 6 until such Our File No. 27981.1 ' Dear Mr. Slocum: On June 11, 1993 the Honorable Mayor Don Chimiel received a letter from ' Ms. Jane Bremer, legal counsel for Triax Midwest Associates, L.P. ( "Triax ") indicating that Triax has removed programming supplied by regional Channel 6 from its cable television system because the signal Channel 6 provides fails appreciation for the programming provided by regional Channel 6. We very much appreciate the political programming which airs on the regional channel, in particular the coverage of state legislative proceedings and related matters. to meet the new federal technical standards established by the Federal ' Communications Commission (a copy of Ms. Bremer's letter is attached for your provided to the residents reference). Ms. Bremer goes on to indicate that Triax intends to carry C -SPAN hopeful that regional Channel II in place of regional Channel 6 until such time as the region Channel 6 ' signal meets federal technical standards. the provision of an ' adequate On behalf of the City of Chanhassen I would like to express our appreciation for the programming provided by regional Channel 6. We very much appreciate the political programming which airs on the regional channel, in particular the coverage of state legislative proceedings and related matters. ' other endeavors of regional Channel 6 and are hopeful that your signal can be carried on the Trial system in the very near future. If we can assist your cause by contacting our state representatives to encourage a new means of I transmitting the regional Channel 6 signal please do not hesitate to contact The City of Chanhassen will truly miss the variety of "local" programming ' which the regional channel has provided to the residents of the city. We are hopeful that regional Channel 6 can work with Triax and other area cable operators to develop a technology which will facilitate the provision of an ' adequate signal which complies with all applicable federal technical standards. Once again, we wish to emphasize our support for the programming and ' other endeavors of regional Channel 6 and are hopeful that your signal can be carried on the Trial system in the very near future. If we can assist your cause by contacting our state representatives to encourage a new means of I transmitting the regional Channel 6 signal please do not hesitate to contact Mr. Chuck Slocum Page 2 October 22, 1993 US. In the meantime, please keep us updated regarding I the status of this issue and any feasible mechanisms which will bring about its resolution. Very truly yours, i CITY OF CHANHASSEN, MINNESOTA Mr. Don Ashworth BTG /slo 85ZBTG Enclosures I cc: Mr. Robert Langely, Regional Manager, Triaz Midwest Associates, L.P. Brian T. Grogan, Esq. I i 1 n 772Z140 CHANHASSEN, MINNESOTA AGENDA ITEM NO. VII CABLE TELEVISION COMMITTEE ITEM DATE REFERENCE GUIDE NOVEMBER 22, 1993 Moss & Barnett has developed a Ref City of Chanhassen in order to identify th the 1992 Cable Act and applicable FC Reference Guide attempts to summarize the of the 1992 Cable Act and FCC provisions. of the Reference Guide Moss & Barnett has of Chanhassen. We have described, on a tailor -made Chanhassen's Franchise Ordinance which changed in order to fully implement the requirements of new FCC regulations. erence Guide for the e new requirements of C regulations. The voluminous provisions Attached is a copy tailored for the City basis, the aspects of may be amended or 1992 Cable Act and At the last Cable Television Committee Meeting the Committee determined to review 2 issues from the Reference Guide at each Committee meeting, to the extent time permitted, so that the City may have the benefit of reviewing the entire Reference Guide and understanding new regulatory authority which the City may now possess as a result of the 1992 Cable Act and applicable FCC regulations. At this meeting we have chosen to review topics regarding transfer of ownership and immunity for franchising authorities. Information regarding these two issues is contained within the Reference Guide which was supplied in the last agenda packet for the October 19, 1993 meeting. -7- ACTION ALERT ' To: Moss and Barnett Clients and Interested Parties , From: Adrian E. Herbst Brian T. Grogan ' I Re: Extension of CATV Rate Freeze i Date: November 11, 1993 , I i I On November 10, 1993, the Federal Communications Commission ( "FCC ") adopted and released an Order extending the expiration date of the cable television rate freeze from November 15, 1993 until Febrivary 15, 1994. In particular, the FCC's Order reads as follows: , i (a) The average monthly subscriber bill for! services provided by cable operators subject to regulation , under Section 623 of the Communications Act shall not increase above the average monthly subscr ber bill determined under rates in effect on Aprill5, 1993, until February 15, 1994. ' e * *ee *�e,Rw *e i (c) The freeze imposed by paragraph (a) of th�ls section will not apply where a basic tier service has become subject to regulation by a local franchising authority or the Commission. ' The FCC extended the rate in order to providle local franchising authorities and consumers a continued opportunity to exercise their rights ' under the 1992 Cable Act and FCC regulations in light of the September 1, 1993 effective date of cable rate regulation. As of November 3i, 1993, the FCC had received 3,425 applications for certification from local franchising ' authorities covering approximately 5,050 communities served by cable, and no more than approximately 836 properly completed subscriber complaints. These figures represent only a small percentage of ,the nearly 33,000 communities that are potentially eligible to rRgulate the basic serviqIe tier, and an even 1 RECEIVED NOV 1 � 1993, i CITY OF CHANHASSE LAw Om a 1 MOSS & BARNETT A. PROFESSIONAL Assoc 1AT10N 4800 N ORWEST CE NTER PETER NANCY IS HERMAN J.RATELLE J. MICHAEL HIRSCH ;.: RICKAR RICHARD D J. K J. E LB ER .SCHN SE PATRICK P FLAHERTY WAYNE A. VANDER VORT EDWARD J. BLOMME ANN K. NEWHALL c 90 SOUTH SEVENTH ST REET JV LAU SUSAN ) M KNIGHT C. RHODE JONES CHARLES E ONES CHAR E BRIAN T. GROGAN DONALD E. WIESE MICHAEL]. AHERN MINNEAPOLIS, MINNESOTA 55402 -4129 TI10 M. HUGHES CORY LARSEN BETTENGA PAUL VAN VALKENBURG MAHER]. WEINSTEIN _ J. MICHAEL COLLOTON DANIEL P. DAMOND MICHAEL L FLANAGAN PHILLIP GAINSLEY L. WATSON TELEPHONE (612) 347 -0300 STEVE�12 MP1.AN MARGARET K. LAHAMMER W SCOITHERZOG JEFFREY NICK HAY WAYNE A. HERGOTT THOMAS J. SHROYER M. WAGNER TELECOPIER (612) 339 -6686 JEANNE K. STRETCH ' JAMES E. O'BRIEN DALE STUART - RE65E'3. CHEZICK PAUL G. HEIMANN BARBARA G. M. CBCILIA MY RETIRED EDWARD L. WIRIER DAVID P. ]BNDRZE]EK PAUL T. N EMIN L ADRIAN E. HERBST DANIEL J. GOLDBERG DANIEY. It R. S UNDE LL C C FLETCHER F REMONT TCHER WILLIAM N ROSTER CUR71S D. SMITH R. KLEIN VERNE W. MOSS WILLIAM A HAUG DAVE F. SBNGHR JosEFt� DAVICI M. HENRY JAMES N. HENNESSY CHARLES A. PARSONS. JR. LOUIS J. SPELTZ ANN M. MEYER STANLEY R. STASEL ' RICHARD J. JOHNSON MITCHELL H. COX VINCENT J. FAHNLANDER HOWARD S. COX ROBERT J. LUKES MICHAEL J. BRADLEY WRITER'S DIRER DIAL NUMBER I ACTION ALERT ' To: Moss and Barnett Clients and Interested Parties , From: Adrian E. Herbst Brian T. Grogan ' I Re: Extension of CATV Rate Freeze i Date: November 11, 1993 , I i I On November 10, 1993, the Federal Communications Commission ( "FCC ") adopted and released an Order extending the expiration date of the cable television rate freeze from November 15, 1993 until Febrivary 15, 1994. In particular, the FCC's Order reads as follows: , i (a) The average monthly subscriber bill for! services provided by cable operators subject to regulation , under Section 623 of the Communications Act shall not increase above the average monthly subscr ber bill determined under rates in effect on Aprill5, 1993, until February 15, 1994. ' e * *ee *�e,Rw *e i (c) The freeze imposed by paragraph (a) of th�ls section will not apply where a basic tier service has become subject to regulation by a local franchising authority or the Commission. ' The FCC extended the rate in order to providle local franchising authorities and consumers a continued opportunity to exercise their rights ' under the 1992 Cable Act and FCC regulations in light of the September 1, 1993 effective date of cable rate regulation. As of November 3i, 1993, the FCC had received 3,425 applications for certification from local franchising ' authorities covering approximately 5,050 communities served by cable, and no more than approximately 836 properly completed subscriber complaints. These figures represent only a small percentage of ,the nearly 33,000 communities that are potentially eligible to rRgulate the basic serviqIe tier, and an even 1 RECEIVED NOV 1 � 1993, i CITY OF CHANHASSE MOSS & BARNETT A PROFMIONAL ASSOCIATION smaller percentage of the country's 58 million cable subscribers. The FCC determined that the purposes of the 1992 Cable Act would best be fulfilled by establishing an additional opportunity for local franchising authorities and subscribers to participate in _ assuring the reasonableness of cable service rates prior to the expiration of the freeze. The FCC included a significant exception in the extension of the freeze ' by providing that the freeze will not apply to a basic service tier that has become "subject to regulation by a local franchising authority" or the FCC. In situations where the basic tier is already subject to regulation, it is not ' necessary to continue the freeze in effect for the cable programming service tier in order to prevent an evasion of rate regulation of the basic tier. Accordingly, where the basic tier has become subject to regulation, the freeze ' will expire on that date for both tiers. inhere Gnly the cable programming service tier is subject to regulation, the FCC does not believe the cable operator's capacity to evade the freeze of the basic tier by shifting programming to the higher tier is isignificantly diminished. Accordingly, ' where only the cable programming service tier is subject to regulation, the freeze will continue in effect for both tiers. ' In essence, if your community hash submitted FCC Form 328 and 30 days have elapsed from the date Form 328 was re!eived by the FCC and, in addition, your community has adopted regulations consistent with those of the FCC with respect to rate regulation, you have taken the necessary steps to cause the ' operator to become "subject to rate regulation." However, it is necessary for your community to notify the cable operator that its rates are subject to rate regulation by sending a brief letter indicating that you have been certified ' by the FCC (via Form 328), that you have adopted regulations consistent with those of the FCC and that the cable operator has 30 days from receipt of the notice to supply appropriate rate regulation information via FCC Form 393. ' Should you have any questions regarding the rate freeze extension from November 15, 1993 until February 15, 1994, please do not hesitate to contact us. we will continue to update all of our clients on a case -by -case basis as ' appropriate. September 29, 1993 Don Ashworth , LAW OFFICES City of Chanhassen 690 Coulter Drive t MOSS & BARNETT Chanhassen, MN 55317 '. A PROFESSIONAL ASSOCIATION HERMAN J. RATELLE J. MICHAEL HIRSCH 4800 NORWEST CENTER RICHARD J. KELBER CHARLES E. JONES PATRICK F. FLAHERTY EDWARD J. BLOMME 90 SOUTH SEVENTH STREET LAURA J. MCKNIGHT SUSAN C. RiiODE BRIAN T. GROGAN CORY LARSEN BETT ENGA WAYNE A. VANDER VORT MAR G0 S. STRUTHERS THOMAS M. HUGHES JEANNE , 'MARIE ALMONOR , DONALD E. WIESE PAUL VAN VALKENBL'RG ANN K. NEWHALL MICHAEL J. AHERN MINNEAPOLIS, MINNESOTA 55402 -4129 J. MICHAELICOLLOTON DANIEL P. DAMOND MICHAEL L. FLANAGAN MAHER J. WEINSTEIN STEVEN Z. "PLAN MARGARET K. LAHAMMER W. SCOTT HERZOG PHILLIP GAINSLEY TELEPHONE. (612) 347 -0300 NICK RAY WAYNE A. HERGOTT JEFPREY L. WATSON JEANNE K. STRETCH REESE E. CAEZICK JAMES E. O'BRIEN THOMAS J. SHROYER DALE M. WAGNER TELECOPIER ( 612) 339-6686 M. CECILIAIRAY JOHN F. STONE PAUL G. NEIMANN BARBARA G. STUART PAUL T. EIDSNESS EDWARD L. WINER DAVID P. JENDRZEJEK DANIEL R. SUNDELL ADRIAN E. HERBS? DANIEL J. GOLDBERG JOSEPH R. "IN RETIRED WILLIAM N KOSTER CURTIS D. SMITH DAVID M. HENRY Al BROOKS J. BRAINERD CLARKSON FREMONT C. PLETCHER WILLIAM A. HAUG DAVE F. SENGER 347 -0448 JENNIFER CHARLES A. PARSONS, JR. LOUIS J. SPELTZ ANN M. MEYER VERNE W. MOSS PHILIP A. PFAFFLY MITCHELL H. COX VINCENT J. JFAHNLANDER JAMES H. HENNESSY ' RICHARD J. JOHNSON MICHAEL J. BRADLEY WRITER'S DIRECT DIAL NUMBER NANCY M. KISKIS STANLEY R. STASEL ROBERT) LUKE$ PETER A. KOLLER HEIDI A. SCRNEIDER HOWARD S. COX September 29, 1993 Don Ashworth , City Manager City of Chanhassen 690 Coulter Drive t P.O. Box 147 Chanhassen, MN 55317 RE: CUST014ER SERVICE , Dear Mr. Ashworth: ' Enclosed is a draft notice to the cable company along an outline to assist you in implementing authority to enforce FCC customer service standards. ' After you have had an opportunity to review the enclosed materials please do not hesitate to contact me with any questions you may (have regarding how the City may begin to implement the new rights afforded franchising ' authorities under the 1992 Cable Act and FCC regulations. In addition, as new FCC regulations are released, please feel free to contact me for further information. ' Thank you for the opportunity to be of service. +i look forward to working with you on the City's cable: television- related needs. Ver r yours, Adrian E. Herbst AEH /mkr 26Z559 I I! CERTIFIED MAIL RETURN RECEIPT REQUESTED TRIA% CABLEVISION , 1993 1 RE: Consumer Service - Adoption of 1992 Cable Act and FCC Rules Dear ' Pursuant to Title 47 CFR, Part 76, Subpart H, Section 76.309 ( "Customer Service Standards "), a franchising authority must furnish affected cable operators with ninety (90) days advance written notice of its intent to ' enforce the Consumer Service Standards. The City of Chanhassen ( "City ") has reviewed the Customer Service Standards and the existing provisions of the Franchise Ordinance and the agreement between Triaz Cablevision and the City. It is the City's understanding that the Customer Service Standards may be enforced upon notice provided to Triax Cablevision. Further, the City understands that it can enforce any existing Franchise provisions relating to consumer service. i 0 n The City has determined to enforce the Customer Service Standards and reserves the right to also enforce existing consumer service provisions in the City's Franchise with Triaz Cablevision. The City will enforce the most stringent provision should a provision in the Customer Service Standards or the Franchise of the City address the same issue. In those cases where provisions of the Customer Service Standards are not addressed in the Franchise, any such new requirements will be enforced. We recognize that it may be somewhat cumbersome to coordinate these various requirements. In this regard, we request that you communicate with Mr. /Ms. for the City, and develop an agreed upon approach to ensure that both the City and Triaz Cablevision fully understand what requirements exist, as well as steps that will be taken by Triax Cablevision to ensure compliance. With respect to requirements in the Customer Service Standards relating to response to telephone calls, response to installation and maintenance calls and other such matters, we recommend that a form be included with your regular reports to the City identifying compliance with these requirements. Page 2 1993 If you have any questions concerning this letter or the effect of this notification, please inform us. Otherwise, we ezpect th't you will comply with the Consumer Service Standards within 90 days from the date of receipt of this letter. Sincerely, CITY OF CHANHASSEN I i i By: Its i 25Z559 THE EM CUSTOMER SERVICE STANDARDS ADOPTED MARCH 11; RE EAS ED APRIL 7, 1993 PREPARED BY MOSS & BARMETI 0 Copyright 1993 1. STANDARDS ARE EFFECTIVE JULY 1. 1993 FRANCHISING AUTHORITIES CANN ENFORCE UNLESS • OPERATOR IS PROVIDED 90 DAYS WRITTEN NOTICE SENT VIA CERTIFIED MAIL 2. IMPACT ON EXISTING CUSTOMER SERVICE FRANCHISE PROVISIONS IF THEY ARE LESS STRICT • FRANCHISING AUTHORITY CAN ENFORCE FCC STANDARDS IF THEY EXCEED FCC STANDARDS • MAY BE ENFORCED THROUGH TERM OF FRANCHISE 3. FRANCHISING AUTHORITY IS CHARGED WITH ENFORCEMENT FCC WILL STEP IN ONLY • "TO ADDRESS SYSTEMIC ABUSES THAT UNDERMINE THE STATUTORY OBJECTIVES" J S. 6. AGREEING WITH OPERATOR TO MORE STRINGENT REQUIREMENTS ENACTING AND ENFORCING ANY CONSUMER PROTECTION LAWS NOT PREEMPTED BY FCC i i ENACTING AND ENFORCING REGULATIONS WHICH ADDRESS (OR EXCEED) MATTERS NOT OUTLINED IN FdC STANDARDS • NEED NOT ADDRESS OTHER VIDEO PROVIDERS • ADDITIONAL 90 DAY WRITTEN NOTICE TO OPERATOR PROBABLY REQUIRED SHOW COST BURDENS j PROPOSE ALTERNATIVES GIVE DATE FOR END OF WAIVER I ATTACH VIEWS OF FRANCHISING AUTHORITY CONTENT OF FCC STANDARDS i A. NORMAL BUSINESS HOURS IN EXCESS OF 9-5 • BASED ON SIMILAR COMMUNITY IBUSINESSES BL NORMAL OPERATING CONDITIONS WITHIN CONTROL OF OPERATOR DOES NOT INCLUDE-- POWER/TELEPHONE OUTAGES, SEVERE WEATHER, ETC. i -2- 1 ■ r C G TELEPHONEACCE.SS LOCAL OR TOLL -FREE LINE AT ALL TIMES TRAINED REPRESENTATIVES AVAILABLE • ANSWERING MACHINE AFTER HOURS D. PERSONAL ACCESS FOR BILL PAYING CUSTOMER INQUIRIES • MUST BE CONVENIENTLY LOCATED E. RESPONSE TIMES 90% FULFILLMENT (MEASURED QUARTERLY) • ANSWER TELEPHONE WITHIN 30 SECONDS • 30 SECONDS FOR ANY TRANSFER • BUSY SIGNAL LESS THAN 3% OF TIME F. INSTALLATION, OUTAGES SERVICE CALLS 95% FULFILLMENT (MEASURED QUARTERLY) • STANDARD INSTALLATIONS (125 FEET) COMPLETED WITHIN 7 BUSINESS DAYS • RESTORE SERVICE WITHIN 24 HOURS AFTER INTERRUPTION • PROVIDE APPOINTMENT WINDOWS SPECIFIC TIME OR 4 HOUR BLOCK IF OPERATOR RUNNING LATE, MUST CONTACT CUSTOMER • IF NECESSARY, RESCHEDULE AT TIME CONVENIENT TO CUSTOMER -3- I , G. CUSTOMER COAffd ICATIONS ' MUST NOTIFY SUBSCRIBERS AT TIMEJ OF INSTALLATION, ANNUALLY AND /OR UPON REQUEST REGARDING • PRODUCTS AND SERVICES i • PRICES, OPTIONS, CONDITIONS 1 i ' • INSTALLATION AND MAINTENANCE POLICIES i • USE OF SERVICE, INCLUDING CHANNEL POSITIONS ' • BILLING AND COMPLAINT PROCEDURES • OPERATOR'S NUMBER AND ADDRESS ' - OPERATOR MUST NOTIFY SUBSCRIBER OF CHANGES IN ABOVE WITHIN 30 DAYS , i H. BILLING ' - MUST BE CLEAR, CONCISE, AND UNDERSTANDABLE - MUST COVER AT LEAST • BASIC, • PREMIUM, AND , • EQUIPMENT SERVICE CHARGES - MUST INCLUDE ALL ACTIVITY IN PERIOD, INCLUDING • OPTIONAL CHARGES, I • REBATES, A • CREDITS' , - MUST RESPOND TO DISPUTED BILL WITHIN 30 DAYS - MUST REFUND CHECKS THE EARLIER OF • 30 DAYS, • NEXT BILLING CYCLE, OR I ' • RETURN OF EQUIPMENT ON TERMINATION i - MUST PROVIDE CREDITS , • NEXT BILLING CYCLE AFTER AGREEMENT ON CREDIT I Please contact Brian T. Grogan, Esq., 612 -347 -0340, v �h questions. ' BTG / k l d 6741140 -4- CHARLES E. JONES BRIAN T. GROGAN CORY LARSEN BETTENGA JEANNE -MARIE ALMONOR DANIEL P. DAMOND MARGARET K. LAHAMMER RETIRED J. BRAINERD CLARKSON FREMONT C. FLETCHER VERNE W. MOSS JAMES H. HENNESSY STANLEY R. STASEL HOWARD S. COX RE: NECESSARY ACTION TO REGULATE CABLE TELEVISION RATES UNDER THE 1992 CABLE ACT AND FCC RULES Dear Mr. Ashworth: This letter will outline the key steps which must be undertaken by the City of Chanhassen, Minnesota ( "City ") should it desire to regulate the rates charged for the basic cable service tier and /or issue a complaint to seek FCC regulation of the expanded tier of service. It is important to recognize that assuming an absence of effective competition, the City only has authority to regulate rates for the basic cable service tier. To exercise this authority, the City must submit to the FCC a certification form (Form 328) and follow the steps described within this letter. For the expanded tier of service, the City may only issue a complaint to the FCC which will initiate a process whereby the FCC will determine a reasonable rate for that tier of service. Neither the City nor the FCC have authority to regulate the rates for premium services or services offered on a pay - per -view basis. SHOULD THE CITY SEER FCC CERTIFICATION Generally speaking, we are advising most of our clients to seek certification from the FCC to regulate the rates charged for the basic service tier. We recommend that the City also seek certification from the FCC to regulate the basic tier. The City should utilize FCC Form 328 to accomplish this certification. The first date on which the City could have submitted Form 328 to the FCC was September 1, 1993. September 1st was H= a deadline but merely the first date you could submit Form 328. The reasons why the City may wish to submit Form 328 are as follows: 1. The FCC's rate freeze order which became effective April 5, 1993, will expire on November 15, 1993. Thereafter, cable operators may increase rates to the extent they are not subject to rate regulation. LAW OFFICES MOSS & BARNETT A PROFESSIONAL ASSOCIATION HERMAN J. RATELLE J. MICHAEL HIRSCH 7'4800'NORWEST CENTER RICHARD J. KELBER PATRICK P. FLAHERTY EDWARD J. BLOMME LAURA J. MCKNIGHT WAYNE A. VANDER VORT MARGO S. STRUTHERS 90 SOUTH SEVENTH STREET SUSAN C. RHODE DONALD E. WIESE ANN K. NEWHALL PAUL VAN VALKENBURG MICHAEL J. AHERN MINNEAPOLIS, MINNESOTA 55402 -4129 THOMAS M. HUGHES J. MICHAEL COLLOTON MICHAEL L. FLANAGAN MAHER J. WEINSTEIN STEVEN Z. KAPLAN W. SCOTT HERZOG PHILLIP GAINSLEY TELEPHONE )612) 347.0300 NICK HAY WAYNE A. HERGOTT JEFFREY L. WATSON JEANNE K. STRETCH JAMES E. O'BRIEN THOMAS J. SHROYER TELECOPIER (612) 339 -6686 REESE E. CHEZICK JOHN F. STONE DALE M. WAGNER M. CECILIA RAY PAUL G. HEIMANN BARBARA G.STUART PAUL T. EIDSNESS ' EDWARD L. WINER DAVID P. JENDRZEJEK DANIEL R. SUNDELL ADRIAN E. HERBST DANIEL J. GOLDBERG JOSEPH R. KLEIN WILLIAM N. ROSTER CURTIS D. SMITH DAVID M. HENRY WILLIAM A. HAUG DAVE F. SENGER 347 -0448 JENNIFER A. BROOKS CHARLES A. PARSONS. JR. LOUIS J. SPELTZ PHILIP A PFAFFLY MIl'CHELL H. COX ANN M. MEYER VINCENT J. FAHNLANDER ' RICHARD J. JOHNSON MICHAEL J. BRADLEY WRITER'S DIRECT DIAL NUMBER NANCY M. KISKIS ROBERT). LURES PETER A. KOLLER HEIDI A. SCHNEIDER September 29, 1993 Don Ashworth ' City Manager City of Chanhassen 690 Coulter Drive P.O. Boa 147 ' Chanhassen, Minnesota 55317 CHARLES E. JONES BRIAN T. GROGAN CORY LARSEN BETTENGA JEANNE -MARIE ALMONOR DANIEL P. DAMOND MARGARET K. LAHAMMER RETIRED J. BRAINERD CLARKSON FREMONT C. FLETCHER VERNE W. MOSS JAMES H. HENNESSY STANLEY R. STASEL HOWARD S. COX RE: NECESSARY ACTION TO REGULATE CABLE TELEVISION RATES UNDER THE 1992 CABLE ACT AND FCC RULES Dear Mr. Ashworth: This letter will outline the key steps which must be undertaken by the City of Chanhassen, Minnesota ( "City ") should it desire to regulate the rates charged for the basic cable service tier and /or issue a complaint to seek FCC regulation of the expanded tier of service. It is important to recognize that assuming an absence of effective competition, the City only has authority to regulate rates for the basic cable service tier. To exercise this authority, the City must submit to the FCC a certification form (Form 328) and follow the steps described within this letter. For the expanded tier of service, the City may only issue a complaint to the FCC which will initiate a process whereby the FCC will determine a reasonable rate for that tier of service. Neither the City nor the FCC have authority to regulate the rates for premium services or services offered on a pay - per -view basis. SHOULD THE CITY SEER FCC CERTIFICATION Generally speaking, we are advising most of our clients to seek certification from the FCC to regulate the rates charged for the basic service tier. We recommend that the City also seek certification from the FCC to regulate the basic tier. The City should utilize FCC Form 328 to accomplish this certification. The first date on which the City could have submitted Form 328 to the FCC was September 1, 1993. September 1st was H= a deadline but merely the first date you could submit Form 328. The reasons why the City may wish to submit Form 328 are as follows: 1. The FCC's rate freeze order which became effective April 5, 1993, will expire on November 15, 1993. Thereafter, cable operators may increase rates to the extent they are not subject to rate regulation. MOSS & BARNETT A PROFESSIONAL ASSOCIATION Don Ashworth Page 2 September 29, 1993 2. A minimum of 30 days will likely be required to achieve FCC certification and, thereafter, the City must adopt rate regulations consistent with the FCC's regulations prior to initiating rate regulation. 3. Since rates may only be reduced to the FCC benchmark or ten percent (10%) below September,. 1992 rates (whichever is the lesser reduction) and since the FCC's rate freeze will expire on November 15, 1993, a delay in filing for certification may result in higher rates. Some important considerations why the City may wish to wait before submitting a certification or choose not to submit a certification to the FCC are as follows: 1. By submitting Form 328 to the FCC, the City is stating that it will regulate the rates charged by the cable operaior for the basic service tier. The City cannot simply seek certification and then do nothing to enforce the FCC's regulations. I 2. A cost - benefit analysis may be appropriate. If the City has a very limited number of subscribers to the basic service tier, the potential savings which subscribers may experience should be weighed against the cost the City will incur to implement the FCC rate regulation process. 3. Cable operators have the right to require !municipalities to undertake a "cost -of- service" analysis should' the operator be dissatisfied with the municipality's initial decision. The FCC has provided little guidance regarding cost -of- service proceedings (although currently involved in a rule - making proceeding on this issue) but initial estimates throughout the !industry indicate significant expense would be incurred by both municipalities and cable operators in such a' proceeding. We have seen estimates range from $5,000- 25,000. 4. The City should consider whether it is philosophically in favor of rate regulation of the basic cable service tier, particularly if the operator has a low penetration rate or is subiect to increasing competition within the franchise area. If the City chooses to seek certification from the FCC to regulate the rates for the basic service tier, it will control not only, the rate for that tier of service, but also the ancillary equipment used to receive that tier of service. This equipment includes' converter and remotei control rentals; additional outlet charges; installation, disconnection,I and reconnection charges; as well as any charges for changing tiers of service. MOSS & BARNETT A PROFESSIONAL ASSOCIATION Don Ashworth Page 3 September 29, 1993 THE CERTIFICATION PROCESS If the City chooses to seek FCC certification utilizing Form 328, the certification will become effective 30 days after submission unless the FCC notifies you otherwise. Thereafter, the City must adopt rate regulations (within 120 days from date certification is effective) consistent with the FCC's regulations. We advise that the City begin to act on a rate regulation ordinance during the 30 days the FCC is considering the City's certification request. If the City wishes to accomplish these tasks prior to November 15, 1993 (the date on which the FCC freeze order will ezpire), it should seek certification in early September so that certification can be received by mid - October and the rate regulation process can begin shortly thereafter, assuming the City has also adopted its rate regulation ordinance. SHOULD THE CITY ISSUE A COMPLAINT REGARDING THE EXPANDED TIER OF SERVICE As mentioned above, the City does not have the right to regulate the rates for "other cable programming services" (i.e., the expanded tier of service). Rates for the expanded tier of service are to be regulated by the FCC once it receives a complaint from a subscriber, the franchising authority (the City), or another governmental entity. The question is whether the City should submit a complaint to the FCC that the rates charged for the expanded tier of service are "unreasonable." FCC Form 329 is to be utilized for such a complaint. ' The FCC will regulate the rates charged for the expanded tier of service utilizing the same benchmark rates and process described for the basic service tier. While some municipal consultants have stated that all franchising ' authorities should submit a complaint form to the FCC on or shortly after September 1, 1993, we believe certain considerations should be weighed prior to such submission. In particular, we believe the following should be considered by the City with respect to submission of FCC Form 329: ' 1. Will regulation of this expanded tier of service stifle the possibility of new programming offerings over this tier of service? ' 2. Are the current rates for the expanded tier of service "unreasonable" when viewed against the FCC's benchmark formula? ' 3. Are there political considerations between the City and' the cable operator which should be weighed before such complaint is submitted? ' 4. Are there issues within the existing Franchise presently being negotiated or otherwise in a state of flux which may be impacted by submission of a complaint regarding the operators rates for the ' expanded tier of service? MOSS & BARNETT A PROFESSIONAL ASSOCIATION I Don Ashworth Page 4 September 29, 1993 ACTION BY CITY COUNCIL We have attached hereto a set of draft Resolutions which the City Council may utilize should they desire to seek certification 1from the FCC for authority to regulate the rates charged for the basic service tier, and should the City wish to issue a complaint to the FCC regarding Ithe rates for the expanded tier of service. Please keep in mind that September 1, 1993, was only the first date on which Forms 328 and 329 could be submitted to the FCC. However, while September 1st was = a deadline, it is important to the extent the expiration of the FCC's rate freeze order on Novem]�er 15, 1993,' will impact the rates within your system. We have enclosed herewith the following additional information for your consideration and /or use: 1. A copy of FCC Form 328; 2. A copy of FCC Form 329; 3. A Resolution regarding certification; 4. A Resolution regarding unreasonable rates on the expanded tier; 5. A Rate Regulatory Ordinance; and 6. A summary regarding rate regulation. Please feel free to use these documents within the City to facilitate review of questions regarding rate regulation. Once you have had an opportunity to review the information within this letter, the draft Resolutions, FCC forms, Rate Regulatory Ordinance, and additional information, please do not hesitate to contact me with any questions or concerns you may have. Ve my yours, i 1 I i Adrian Herbst 8Z559 Enclosures C! Nor" OMe c • ..n.haliw C.�iris. »ss °s w.r�h�u, a c :sss FCC 328 For FCC Use only CERTIFICATION OF FRANCHISING AUTHORITY TO REGULATE BASIC CABLE SERVICE RATES AND INITIAL FINDING OF LACK OF EFFECTIVE COMPETITION 1 Name of Franchising Audwrity Mailing Address City State DP Code Telephone No. (innclsrde area colt Pawn to contact with respect to this form: 2. a. Name (s) and ad&vWu) of able system(:) and associated FCC community writ identifiers within your jurisdiction. W1aeh additional sheets if rneeessary. Cable System's Name Mailing Address City State I DP Code Cable System's FCC Community Unit Identifier: Cable System's Name Mailing Address City State I ZIP Code Cable System's FCC Community Unit Identifier: L b. Name (s) of system(s) and associated community unit identifier(s) you claim are subject to regulation and with rupee to which you are filing this ce tifiation. (Attach additional sheets if necessary.) ' Name of System Cauumity unit Ideudfia ' Name of System IdetC Unit ' L a Have you served a copy of this form on all parties O Yas 13 meted in 2.b.? 3. Will you► ka whims authority adopt (within 120 drys of certification) and Ores O NO adanirhista sepdeliorhs with aspect to basic cable service dw are corsisteht with the mp ladons adopted by the FCC pessert to 47 US.C. Section 543(b)? 4. With respect to the franchising authority's regulations refar:d to in Question 3, Oyu ONO a. Does yew faanclhising authority have the legal authority to adopt them? L Doe yaw kandsisft a OM* have OYes ONo the 111 1 1 10 admirhista then? (Effective oonhpetltah means that W fewer than 30 percent of the households in the franchise area subscribe to the cable service of a cable s) to r, Qty) the hamehise area is M served by at ked two wifiliated multichannel video pog amfmi g distributors each of which offers comparable video program meq to at least SO percent of the households in the franchise area; and (10 the nw A of households subscribing to programming m iees offered by multichannel video propammirg distributors other than the larpest nultidwwwd video programming distributor exceeds 15 paced of the households in the franchise area; or (U a multichannel video programming distributor operated by the franc hiamg authority for that franchise area offers video programming to at least SO percent of the households in that franchise area. Tide Date WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE PUNISHABLE BY FINE AND/OR IMPRISONMENT (Us CODE TITLE 1B, SECTION 1001). ' Return the original and one copy of this certification form (as indicated in Instructions), along with any attadhme ts, to: Federal Communications Commission Aftn: Cable hanchm g Authority Certification ' P.O. Box 1£!539 Washington, D. C. 20036 FCC 328 Oyes [] S. Do the poadhhral lawn and regulations to raw regulation p , , - - I p by your frarnchisirg authorit provide a reesoneble opportunity for consideeatin of the views of interested parties? Von NO 6. The Commission prenemes that the cable splem(s) tiled in 2.b6 is (are) not subject to effecli conpedtion. Based an the 66 111 below, do you have reason to believe that this presumption is correct? (Effective oonhpetltah means that W fewer than 30 percent of the households in the franchise area subscribe to the cable service of a cable s) to r, Qty) the hamehise area is M served by at ked two wifiliated multichannel video pog amfmi g distributors each of which offers comparable video program meq to at least SO percent of the households in the franchise area; and (10 the nw A of households subscribing to programming m iees offered by multichannel video propammirg distributors other than the larpest nultidwwwd video programming distributor exceeds 15 paced of the households in the franchise area; or (U a multichannel video programming distributor operated by the franc hiamg authority for that franchise area offers video programming to at least SO percent of the households in that franchise area. Tide Date WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE PUNISHABLE BY FINE AND/OR IMPRISONMENT (Us CODE TITLE 1B, SECTION 1001). ' Return the original and one copy of this certification form (as indicated in Instructions), along with any attadhme ts, to: Federal Communications Commission Aftn: Cable hanchm g Authority Certification ' P.O. Box 1£!539 Washington, D. C. 20036 FCC 328 Federal C.owawniatiom Commission I AV d 30604550 w"" W, O.C. 20554 INSTRUCTIONS FOR FCC 328 osr3t FRANCHISING AUTH ORITY CERTIFICATION ,. 1. The Cable Television Consumer Protection and Competition Act, ' Question 4(b); The franchsing authority must have a sufficient enacted in October 1992, changes the manner in which able number of personnel to und ertake rate regulation. television systems that are not subject to effective competition are regulated. In general, taus for the hatir serviee tier (the tier requited ! A franchise authority unable to answer *W to questions 4W or 4(b) as a condition of access to all other video services and containing, _ may wish to review the s Repti Order in Ord in Dri&et 92_266 - among other services, local broadcast station signals and public, FCC 93.177 (released May 1993) for further information on the educational, and public access channels) and associated equipment establishment of alternative �deral regulatory procedures. will be subject to regulation by local or state govemmeM FCL ('franchising authorities'). Rates for cable programming services and 9. Question 5: Franchising must must have procedural regulations associated equipment (all services except basic and pay channels) will allowing for public partiapation in rate regulation proceedings R a be subject to regulation by the FCC -Rates for pay channels franchising auth0xt1Y does not have these regulations already to Pte , (channels for which there is a specific per-dhannel or per�program it must adopt them within 1 �0 days of certification and before it may' charge) are not regulated. undertake race regulation. 2. Only able systems that are are nix subject to a fecave competition may 10. Question 6: Most cable systems ate Opt subject to effective be regulated. Effective competition means that W fewer than 30 commpetition, as defined by t the in Are. (The definition is included' percent of the households in the franchise area subs to the cable above and an the form.) The franchising authority may J � a �T that service of a able system; (b) the franchise area is 0) served by at least the able system in its j risdiction is not subject to effective two unaffiliated multichannel video programming distributors each of competition. which offers comparable video programming to at least 50 percent of the households in the franchise area; and fit the number of For purposes of applying definition of effective eompetltion (tee households subscribing to programming services offered by hem 2 above),'muldchanr� video programmingdWbtrors' Include multichannel video programming distributors other than the largest a able operator, a multidwhnel muhipoint distribution service, a multichannel video programming distributor exceeds 15 percent of direct broadcast satellite service, a television recehoonly satellite the households in the franchise area; or (d a multichannel video program distributor, a vrded diawm senrice, and 'a satellite master programming distributor operated by the franchising authority for that sienna television system. I A multichannel video programming franchise area offers video programming to at least 50 percent of the dindbutoes services will be deemed 'offered' when they are both households in that franchise area. technically and actually ma labk. Service is 'uld"hicaly available' when the multichannel ft 4nor Is physically able to deliver the 3. In order to regulate basic service tier rates, a franchising authority service to a household writhing to subscribe, with only minimal , must be certified by the FCC In order to be certified, a franchising additional Investment by the distributor. A service is 'actually authority must complete this form. M original and one copy of the available If subscribes in die franchise area are reasonably aware completed form and all attachments must be Horned to the FCC through marketing efforts that the service is available. Subscribership by registered mail, return receipt requested, to the FCC at the of those multichannel video rogramming distr&Aots offering service' address on the form. to at least 50 percent Of households in a franchise area will be aggregated to determine at least 1 S percent of the 4. A copy of the form must be served on the able operator by first -class households in the franch'rte area are served by competitors. A mail on or before the date the form is sent or delivered to the FCC multichannel video programming distributor must offer at least 12 channels of programming, at least one channel of which its' 5. The franchising authority's certification will become effective 34 dais nonbroadast, to be found fled offer 'eomparable'video programming. after the date starnned on the postal return receipt unless odwwise notified by the Commission by that date. The franchising authority 11. This certification form must be signed by a government official with cannot begin to regulate rates, however, until it has actually adopted authority to act on behalf oflthe franchising authority. , the required regulations (see below) cad until it has notified the able operator that it has been certified and that it has adopted the required regulations. fcc NORO TO 1ND1v10wtf W D car TM MVACV ACT AND THE rAMKWOU' 6. In order to be certified, franchising authorities must answer ayes" to ! RMXX7 ON ACT Questions 3, 4, and 5, which are explained as follows: Ttr Wicklow of Penonal irifarmamio=2 ' ben is a Mmiaad by dw Cmmwris iii" ACS d 1934, as arimrrdad 7M Caemhrion iiifomnti I Pia iced in d* fain to dwankm 7. Question 3: The franchising authority must adopt rate regulations 9 the ftmehim aumhoft *mk be aid dud to r rAw table M' In ma0in art or d Consistent with the Commission's lotions for basic cable service. far law WdWcm it ca eorir �w to rakr veraarmd fulfill �� Yilorirrtion contained M dwb farm p�a be �Y. Ae inloreirtion provided N eMt To may s simply adopt requirement for erdo e c f indicating ranchising f auth d � ` te'r� fw °uMb ran" °'01 b 11111 to eheeri the wouer.e aadtorb. regulations established by the FCC hose 4aewr d,it aolleasoni y am„ is etainartd a avow 30 nrYaaas. franchising authority has 120 days to adopt these regulations ft einr far meviewiira iroairetiars aaardib .wiiia data .oiaeaa, The WWI case g MY wAk brie{ the dew needed and aasgl" ovolna do weaohoim am idonnamioa. Send after the time it is certified. The franchising authority may not, cairns teprti ft ft hoiden estbn car adw amw O l d * M' car bdonnrbn however, begin to regulate cable rates until after it has adopted these b�dmrdirgfuvestiorsfarieducbmadre �!W lotions and until it has notified the able operator that lt has been 1°'t oiritm°" Mto rt'cs' hY< ;+;< 20664 , and to dms'oma of 1MarcgMirenl regu and auftK Poinwak eadu0m P i t . wadthe a D. C 2=3. certified and has adopted the required regulations 111E FDREGOtt+G NOME a UQLM19 BY 111E Fa1YAL7 ACr OF »74. 91 11479, 8. Question 4(a): The franchising authority's *legal authority'to regulate DMMM et 31, IM, s U&C 522MM AND THE PAPSIM K REDUCTON Act Of 19es, ems only y . . DK McIR 11, Ives, cs U . 3W. basic service must come from state law. In game .,,.....�_. � PA 9"11 , staub.gpyemment may mgulate ea-hle rates. In those states, the state government should file this certification. Provisions in franchise agreements that prohibit rate regulation are x,QkL and do not prevent a franchising authority from regulating the basic service tier and associated equipment. , ' Federal Conmueicatioes Commission Wakinpon, D. C. 20554 1 F ' J I 1 u FCC 329 Approwd * OMB 3060.0549 Expires 0551196 For FCC Use Only CABLE PROGRAMMING SERVICE RATE COMPLAINT FORM (Carefully read instructions on reverse before filling out form) 1. Complainant's Name Mailing Address City State ZIP Code Daytime Telephone No. (include area code): 2. Local Franchising Authority's Name Mailing Address City State ZIP Code 3. Cable Company's Name Mailing Address City State I ZIP Code Cable Cor ipany's FCC Community Unit Identifier (if known): 4. Indicate whether this is the first time you have filed this complaint with the FCC or whether you are filing a corrected complaint to cure a defect in a prior complaint. CHECK ONE. First time complaint Corrected complaint 5. If you are filing a corrected complaint to cure a defect in a prior complaint, indicate the date the prior complaint was filed with the FCC and the date you received notification from the FCC that the prior complaint was defective. Month I Date Year Date prior complaint filed: Date you received FCC Month Date Year notification that the prior complaint was defective: _ _ _ _ _ _ ' 6. Indicate whether you are challenging the reasonableness of: (1) a rate concerning cable programming service or associated equipment in effect on September 1, 1993; or (2) a rate increase. (See the Instructions for different filing deadlines depending on which type of complaint you are filing.) CHECK ONE. Rate in effect on September 1, 1993 Rate increase 7. If you are a subscriber challenging the reasonableness of a rate increase, indicate the date you ;first received a bill from the cable operator reflecting the rate increa* about which you are complaining. Mont ate I Year 8. Indicate the current monthly rate for the cable programming service or associated equipment and, if you are challenging the reasonableness of a rate increase, the most recent rate in effect immediately prior to the rate increase. Month Year Current Monthly Rate: Mont ear Previous Monthly Rate: $ 9. In the tables below, describe the cable programming service to which the complaint is addressed and, if applicable, how it has changed. If th space is insufficient, include any additional comments on a separate page attached to this form. List channels by name included in the service: List channels by name deleted from the service (if any): List channels bv name added to the service (of any). 10. If you are a subscriber, you must attach a copy of your current bill reflecting the rate or rate increase about which you are complaining. NOTE: Failure to attach a copy of your current bill reflecting the rate or rate increase may result in dismissal of your complaint. I have attached a copy of my current bill. _ _ _ _ _ E] yes []No 11. Optional: If you are a subscriber challenging the reasonableness of a rate increase, attach a copy of a previous bill (if available) reflecting the rate immediately prior to the rate increase. I have attached a copy of my previous bill. _ _ _ _ ❑ Yes No 12. 1 certify that I am sending a copy of this complaint, including all attachments, to the cable company and the local franchising authority at the addresses listed above via first class mail, postage prepaid, at the same time I am sending a copy of this complaint to the FCC. NOTE: Failure to satisfy this requirement may result in dismissal of your complaint. The cable company will not be required to respond unless you send a copy of the complaint to the cable company by mail. 0 Yes []No Date sent: rowt, ar 13. 1 believe that4he cable company's rate for the cable programming service or associated equipment described above is unreasonable because it violates the FCC's rate regulations. (CHECK BOX) _ _ _ _ _ _ _ _ 14.1 certify that, to the best of my knowledge, the information supplied on this form is true and correct. Signature Date WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE PUNISHABLE BY FINE AND/OR IMPRISONMENT (US. CODE TITLE 18, SIR ON 1001) (Note to complainant This � number. it ill not be filed under your name.) cable company', FCC 329 August 1993 FedewI Communiatwns Commission I AWiosel Washington. D. C. 20554 bi g . FCC 329 INSTRUCTIONS 1. This FCC form is to be used by subscribers, franchising authorities, and other relevant state or local government entities seeking to file a complaint with the FCC challenging the reasonableness of a cable company's rates for cable programming service or for installation or rental of equipment used to receive cable programming service. 2. The term "cable programming service" includes all video programming provided by a cable company except: (1) programming provided on the basic service tier; or (2) programming provided on a pay - per<hannelior pay - per - program basis. See Question 9. 3. The "basic service tier" is the tier that includes over-the -air television broadcast signals and public, educational and governmental access channels. Under federal law, in most instances, your local franchising authority rather than the FCC regulates rates for the basic service tier or associated equipment. Therefore, if you believe that your rate for the basic service tier or associated equipment is unreasonable, you should contact your local franchising authority to determine if it is authorized to regulate basic service tier rates. 4. Under federal law, video programming provided on a pay - per - channel or pay - per - program basis (for example, a premium movie channel such as HBO or a pay - per -view sports event) is not subject to rate regulation by either the FCC or your local franchising authority. 5. If you are concerned about your rates for cable programming service or associated equipment, then you may fill out this form and submit it to the FCC. The FCC will examine the reasonableness of your cable programming service rate according to a specific formula. If the rate t cable company currently is charging you for the cable programming service is greater than the rate produced by the FCC's formula, the cable company's rate will be presumed unreasonable. In these circumstances, unless the cable company can provide cost information to justify the reasonableness of its rate, the FCC may order a refund and/or, a prospective rate reduction for the cable programming service at issue:; 6. Please note the following time limitations for filing a complaint: e If you are challenging the reasonableness of a rate increase for cable programming service or associated equipment, your complaint must be actually received by the FCC within 45 days from the date you receive a bill from your cable company reflecting the rate increase. (Note: a reduction in number of channels may constitute an effective rate increase even though the existing rate for the cable programming service remaihs unchanged.) • The only exception to the 45 day time limitation concerns cable programming service and associated equipment rates in effect when the FCC's rules become effective — that is, September 1, 1993. You may challenge the reasonableness of such rates, but you must file your complaint within 180 days from September 1, 1993 — that is, by February 28, 1994. 9. If you are a subscriber, you mtist attach a copy of your monthly cable bill reflecting the rate or rate increase about which you are complaining. If you are challenging the reasonableness of a rate concerning cable programming service or associated equipment in effect on September 1, 1993, the bill should reflect that rate. If you are challenging the reasonableness of a rate increase, the bill should reflect the increased rate. (If you are challenging the reasonableness of a rate increase and have a previous bill which ' flects the rate immediately prior to the increase, of the bill note, however, that please attach a copy previous — this is optional.) 10. You must check the box stating your belief that the cable programming service rate is unreasonable. The FCC staff will apply the formula mentioned in paragraph 5 to determine is presumed reasonable or whether the cable company's rate not — you do not need to make this calculation. 11. You must fill in all information 12. You local franchising i required by this form. authority for assistance in filling' may contact your out this form. In addition, yo 16 may attach a statement from your local franchising authority descrjbi cable programming service ra l g its views on the reasonableness of the to question. This is not a requirement. If you do attach such a stateme t, you should also mail a copy of it to the able company. 13. You must sign and date this form. 14. Copies must be mailed, including all attachments, to the following: Original• Federal Communkations t Ission Attn: Cable Programming SSe I ivt'ee Rate Complaint, P.O. Box 18958 Washington, D.C. 20036; the able company (at the a i as listed on your complaint); and the local franchising authority (at the address listed on your complaint). Please be sure to send all copies to the correct address. If you do not we may not be able to procel your complaint. 15. NOTE: If you do not miail a copy of this form, including all attachments, to the able company at the same time you mail your complaint to the FCC, the it company will not be required to respond and your complaint I be dismissed. 16. If your complaint meets the requirements listed above, the FCC will require the cable company tol respond to your complaint within thirty days and provide a justification for the reasonableness of your rate. The able company must provide you with a copy of its response to the FCC. e After February 28, 1994, you may only file complaints about rate increases and you must follow the general 45-day filing requirement described above. e Late -filed complaints will be dismissed with no opportunity to refile. In addition to the cable company's name and mailing address, you should provide the cable company's "FCC Community Unit Identifier." (The FCC Community Unit Identifier is a number assigned to each cable System by the FCC for administrative purposes.) Also, you must provide the name and mailing address of the local franchising authority. (The local franchising authority is the local municipal, county or other government organization that regulates cable television in your community.) FCC rules require the cable company to fumish all this information to you on your monthly bill. If this information does not appear either on the front or back of your monthly bill, contact your cable company, your local franchising authority, or your local government to obtain the necessary information before filling out this form. 8. You must indicate whether you are challenging the reasonableness of: (1) a rate concerning cable programming service or associated equipment in effect on September 1, 1993; or (2) a rate increase. Except for a limited opportunity to challenge existing rates in effect on September'l, 1993, complaints may be filed only in the event of a rate increase. 17. The FCC staff will examine your complaint and the cable company's response and then rule on the ableness of the cable programming' service rate. This ruling will bie�in�writing, and you will receive a copy by mail. If the FCC staff determines that the rate in question is unreasonable, it may order refunds and/or prospective rate reductions. If it determines that the rate inlquestion is reasonable, the FCC staff will &ny the complaint. , I FCC NOTICE To INDIVIDUALS R" BY THE PRIVACY ACT AND THE PAPERWORK REDUCTION ACT The solicitation of personal information in this form is authorized by the Communications Act of 1934, as amended. The Commission will use Msa information provided in this form to determine the reasonableness of a able company's rases. In reaching that determination, or for law enforcement purposes, rt may become necessary to rakr 0- al information conoined in this form to another government agency. All information provided in this form will be available for public inspection. Your response is required to obtain the requested ref. Public reporting burden for this collection of 'frmation is estimated to average 1 hour, including the time for reviewing instructions, searching exiting data sources, gathering and maintaining the data needed, and completing and reviewing the cgllection of information. Send comments regarding this b asmilifeor any other aspect of this col ion of information, includingsuggestions for reducing the burden, to the Federal Communications Commission, Records Management Division. AMD-MRS, Washington, D. C. 20554, and to the Office ruipment and Budget. Paperwork Reduction Project (3060-0549), Washington, D. C. 20503. THE FOREGOING NOTICE K REQUIRED BY THE PRIVACY ACT OF 1974, P.L. 93-S79, DECEMBER 31, 1975, S U.S.C. 522LXOM�J AND THE ►A�ORK REDUCTION ACT OF 1980, P.L. WS 11, DECEMBER 11, 19BQ 44 US.C. 3507. THE CHYOF CHANFIASSEN, MINNESOTA RESOLU77ON NO. ' A RESOLUTION AUTHORIZING CITY ADMINISTRATOR TO SUBMIT NECESSARY FORMS TO THE FEDERAL COMMUNICATIONS COMMISSION SEEKING ' CERTIFICATION TO REGULATE THE RATES CHARGED BY CABLE OPERATORS WITHIN THE CITY FOR BASIC CABLE SERVICE. WHEREAS, on April 1, 1993, the Federal Communications Commission adopted a Report and Order and Further Notice of Proposed Rule - making in MM Docket No. 92 -266, implementation of sections of the Cable Television Consumer Protection and Competition Act of 1992, Rate Regulation, FCC No. 93 -177, released May 3, 1993, effective September 1, 1993, ( "FCC regulations ") which describes a comprehensive process whereby franchising authorities may regulate the rates charged by existing cable television operators for the basic service tier; and WHEREAS, the FCC procedure allows franchising authorities to seek certification from the FCC and thereafter regulate the rates charged by cable operators for the basic service tier; and WHEREAS, the City, as franchising authority, has reviewed the FCC certification process and applicable FCC forms and determined that it has the legal authority and financial capability to exercise rate regulation under the FCC's regulations; and WHEREAS, the City, with assistance from qualified advisors, has determined that it is in the best interests of the City, its residents, and cable television subscribers to exercise the regulatory authority afforded franchising authorities under the FCC's regulations; and WHEREAS, the City has determined that its best interests are served by moving forward in an expeditious manner seeking certification from the FCC to regulate the basic cable service tier to avoid potential rate increases which may result in higher overall rates charged to cable television subscribers within the City; NOW, THEREFORE, be it resolved by the ICity Council of Chanhassen, Minnesota; i I 1. City administrator is hereby! authorized to submit all applicable forms to they FCC to seek certification for regulation of the basic service tier. 2. No further action or approval by the City Council shall be required for execution Iof any and all appropriate forms to be submitted to the FCC for regulation of the basic service tier. i Passed and adopted this day of 1993. j CITY OF CHANHASSE�1, MINNESOTA By: Its: Mayor ATTEST: By: Its: Secretary 18Z559 THE CITY OF CK9NHASSEN MINNESOTA ' RESOLUTION NO. A RESOLUTION AUTHORIZING CITY ADMINISTRATOR ' TO SUBMIT NECESSARY FORDS TO THE FEDERAL COMMUNICATIONS COMMISSION REGARDING UNREASONABLE RATES CHARGED FOR OTHER CABLE ' PROGRAMING SERVICES (A/R/A THE EXPANDED BASIC TIER). WHEREAS, on April 1, 1993, the Federal Communications Commission adopted a Report and Order and Further Notice of Proposed Rule - making in MM Docket No. 92 -266, implementation ' of sections of the Cable Television Consumer Protection and Competition Act of 1992, Rate Regulation, FCC No. 93 -177, released May 3, 1993, effective September 1, 1993, ( "FCC regulations ") which describes a process whereby franchising ' authorities may issue complaints to the FCC regarding the rates charged by existing cable television operators for other cable programming services (a /k /a the expanded basic tier); and Ll WHEREAS, the City, as franchising authority, and with assistance from qualified advisors, has determined that the existing rates for the expanded basic tier are "unreasonable" and the City should, therefore, issue a complaint to the FCC regarding the rates charged for the expanded basic tier; and WHEREAS, the City has reviewed FCC complaint Form 329 and determined that the City has the authority to complete and submit said form to the FCC; and WHEREAS, the City has determined that its best interests will be served by moving forward in an expeditious manner to submit Form 329 to the FCC to avoid potential rate increases which may result in higher overall rates charged to cable television subscribers within the City; NOW, THEREFORE, be it resolved by the City of Chanhassen, Minnesota; 1. City administrator is hereby authorized to submit all applicable forms to the FCC regarding unreasonable existing rates for the expanded basic tier. 2. No further action or approval by the City Council shall be required for execution �of any and all appropriate forms to be submitted to the FCC for the above - described purpose. Passed and adopted this day of 1993. i CITY OF CHANHASSEN i By: Its: Mayor ATTEST: By: Its: Secretary 17Z559 2 ORDINANCE 90. ' AN ORDINANCE GOVERNING THE PROCEDURES AND STANDARDS FOR THE REGULATION OF CABLE TELEVISION RATES PURSUANT TO THE RULES OF ' THE FEDERAL ©OMNICATIONS 0014 KISSION AND THE CABLE TELEVISION CONSUMER PROTECTION AND COMPETITION ACT OF 1992 ' The City Council of the City of Chanhassen, Minnesota ordains as follows: SECTION 1. Background and Purpose. A. On the day of , 19 , the i City of Chanhassen, Minnesota ( "City ") passed and adopted Ordinance No. granting to ( "Grantee") the nonexclusive right to construct, own, and operate a cable ' television system in the City. ' B. The Cable Television Consumer Protection and Competition Act of 1992 ( "1992 Cable Act ") was enacted on October 5, 1992, and became effective on December 4, 1992. The 1992 Cable Act amends the Cable Communications Policy Act ' of 1984 and, in particular, Section 623 (47 U.S.C. 543) governing the regulation of rates ' charged by cable television operators. C. On April 1, 1993, the Federal Communications Commission ( "FCC ") adopted rate regulations pursuant to the 1992 Cable Act. These FCC rate regulations were released May 3, 1993, and became effective September 1, 1993. ' D. Pursuant to 47 C.F.R. Part 76.900, Subpart N, Section 76.910, on the day of , ' 1993, the City submitted FCC Form 328 -- Certification for Local Franchising Authorities - -to the FCC via Registered Mail, Return Receipt Requested. Pursuant to Section 76.910, the date on the return ' receipt, 1993, is to be considered the date filed. A copy of FCC Form 328 was also served on Grantee ' on , 1993, the same day it was filed with the FCC. ' E. Pursuant to Section 76.910, the City's certification becomes effective 30 days after the date filed. 1 F. In adopting this Ordinance, the City reviewed applicable FCC regulations governing the basic service tier and provided a reasonable opportunity for consideration of the views of interested parties. G. This Ordinance will govern the procedures to be undertaken by the City for the regulation of Grantee's cable television, rates pursuant to the 1992 Cable Act and they regulations of the FCC. f i SECTION 2. Full Reaulatom Power Reserved. ;All rates and charges for basic cable service and'any other cable programming services, as defined byl the 1992 Cable Act and applicable FCC regulations t shall, to the extent permissible, be subject to regulation by the City in a manner provided by this Ordinance. This Ordinance shall apply to all cable television system operators in the City. The Grantee and /or any other operator of a cable television system operating in the City shall be subject to the rate regulation provisions provided for herein, and those of the FCC at 47 C.F.R., Part 76.900, Subpart N . The City reserves the right to amend this Ordinance from time to time consistent with the requirements of the FCC, and state and federal law. SECTION 3. Procedures For 'Implementina Regulation of Basic Cable Service, A. The City hereby adopts and shall follow the rules relating to cable rate regulation promulgated by the FCC at 47 C.F.R., Part 76.900, Subpart N. B. Upon adoption of this Ordinance, a City representative will send to Grantee and each operator of a cable television system in the City, via Certified Mail, Return Receipt Requested, a written notice,, which shall include a 'copy of this Ordinance and the completed FCC Form 328. C. Within thirty (30) days after receipt of the notice referenced in Section 3JB., Grantee and any other cable television operator shall have thirty (30) days to respond I with rate and benchmark :information utilizing FCC Form 393 -- Determination of Maximum Initial Permitted Rates For Regulated Cable Services and Actual Cost of Equipment. i -2- t 1 L 1 1 1. If the initial rates and /or any subsequent,. rate increases are within the FCC standards, the rates will be effective thirty (30) days after submission. ' 2. If the City is unable to determine whether the rate in issue is within the FCC's standards, based on the material before it, or if the Grantee or any other ' cable operator has submitted a cost -of- service showing seeking to justify a rate above the FCC's reasonable ' rate .level, the City may take an additional period of time to make a final determination and toll the effective date ' of the proposed rates for a commensurate period. a. The City may take an additional 90 ' days if it needs more time to ensure ' that a rate is within the FCC's rate standards. disapprove b. The City may take an additional 150 schedule or days to evaluate a cost -of- service continue showing seeking to justify a rate ' above the reasonable rate level. ' C. The City must issue a brief written decision regarding its invocation of the additional time period. 5. If rates 3. If no action is taken within the above the FCC's referenced time periods, the proposed standards, rates will go into effect, subject to may be subsequent refund orders if the City later issues a decision disapproving any ' portion of the proposed rates. ' 4. In all written cases, the decision to City will issue a approve the rate schedule, disapprove the rate schedule or continue for review. ' 5. If rates are in excess of the FCC's standards, the rates may be reduced by ' the . City pursuant to applicable FCC regulations. D. After the initial rate schedule procedures are followed, as described in this Section, Grantee and /or any other cable operator shall, in conjunction with each change in the rates E and charges; applicable to basic cable service, conform to the standards of the FCC. Before any rate change is effective,! Grantee and /or any other cable operator shallinotify the City of its requested rate change!, by giving the City thirty (30) days advance' written notice before the change is eff�ctive and by providing ,the City with its rates' and applicable i information pursuant to FCC regulations. E. To the eztent specifically J' permitted by federal law, and applicable FCC rules, Grantee and /or any; other cable operator shall be permitted to appeal to the FCCIfor a review of the decision of the City. 4. Consultant and Costs. i A. The City may utilize a rat e! consultant to advise it on proposed rate changes and to assist it in the procedures and the standards for review adopted by the FCC. A rate consultant may be any person who has sufficient background and experience, in the sole opinion of the City, to properly evaluate and analyze''rates and charges. j B. All costs for the review of i itial rates or rate changes shall be paid 7 by the cable operator upon demand of the City, unless contrary to applicable rule of the FCC governing these procedures or unless otherwise specifically preempted by state or federal law. The costs shall include, but not be limited to, rate consultants, !attorney's fees and the reasonable value of services (as determined by the City) rendered by the I City or any City employees,] agents or representatives of the City. SECTION 5. Application of the Requirements in this Ordinance. The requirements described in this Ordinance are applicable to the Grantee and all operators of cable televisiowl systems within the City subject to rate regulation according to the 19.2 Cable Act and applicable FCC rules. PASSED AND ADOPTED THIS Attest: DAY OF , 1993. j By a 1 1 � `J L r i 192559 1 THE FCC's RATE REGULATION PROCESS Prepared by Moss & Barnett e Copyright 1993 REGULATING RATES ON THE BASIC TIER 1. CITIES MAY SEEK CERTIFICATION: ON OR AFTER SEPTEMBER 1, 1993 (PREVIOUSLY JUNE 21 1993) • SUBMIT FORM 328 TO FCC • SEND VIA REGISTERED MAIL, RETURN RECEIPT REQUESTED • PROVIDE CABLE OPERATOR WITH A COPY THERE IS X0 DEADLINE TO SEEK CERTIFICATION IMPORTANT CONSIDERATION: FCC RATE FREEZE EFFECTIVE APRIL 5, 1993 WILL EXPIRE NOVEMBER 15, 1993 • OPERATORS HAVE DISCRETION TO INCREASE RATES IF NOT SUBJECT TO RATE REGULATION 2. CERTIFICATION EFFECTIVE WITHIN 30 DAYS: UNLESS FCC F -x lDS PROBLEM • IF SO, CITY MAY REFILE E REGULATING RATES ON THE, BASIC TIER (continued) 3. WITHIN 120 DAYS OF CERTIFICATION: CITIES MUST ADOPT REGULATIONS CONSISTENT WITH FCC'S i • MAY BE BY ORDINANCE AMENDMENT OR SEPARATE ORDINANCE. I 4. OPERATORS HAVE 30 DAYS FROM, GRANT OF CERTIFICATION: TO SEEK RECONSIDERATION BY FCC i 5. OPERATORS MAY, AT ANYTIME, PETITION FCC: i TO REVOKE CERTIFICATION 1 L l IF PETITION CONCERNS EXISTENCE ' OF * EFFECTIVE , COMPETITION ": • "AUTOMATIC STAY" FOR RATE REGULATION i • SUBJECT TO !REFUNDS IF UNSUCCESSFUL • SUBJECT TO FORFEITURES IF 6. ONCE CITY IS READY TO REGULATE, IT MUST: NOTIFY OPERATOR • SHOULD OBTAIN RETURN RECEIf�T • OPERATOR HAS 30 DAYS TO RESPOND WITH RATE AND BENCHMARK INFORMATION (FORM 393) l i 7 J I i REGULATING RATES ON THE BASIC TIER (continued) 7. IF RATES ARE WITHIN FCC STANDARDS: RATE WILL BE EFFECTIVE 30 DAYS AFTER SUBMISSION OF SCHEDULE 8. RATES MAY BE REDUCED TO THE FCC'S BENCHMARK LEVEL; OR 10% BELOW SEPTEMBER 1992 LEVEL — WHICHEVER IS LESSER REDUCTION 9. CITY MUST ISSUE A WRITTEN DECISION FOR: • APPROVAL • DISAPPROVAL • CONTINUANCE 10. IF CITY NEEDS MORE TIME (I.E. CONTINUANCE): UP TO 90 DAYS ALLOWED UP TO 150 FOR COST -OF- SERVICE PROCEEDING 11. IF RATES EXCEED FCC STANDARDS: CITY HAS POWER TO ORDER REFUNDS BACK TO THE SHORTER OF • SEPTEMBER 1,1993; OR • 1 YEAR REGULATING RATES ON THE BASIC TIER (continued) 12. OPERATOR MAY: REQUIRE COST -OF- SERVICE PROCEEDING APPEAL DECISION TO FCC REGUL ATING RATES ON THE EXPANDED TIER 1. FEBRUARY 28, 1994 DEADLINE FOR ;COMPLAINT EXISTING RATES: THEREAFTER WITHIN 45 DAYS OF INCREASE 2. COPY OF COMPLAINT MUST BE SENT TO BOTH: CITY AND CABLE OPERATOR I USE FCC FORM 329 SEND ON OR AFTER SEPTEMBER 1, 1993 ON � SEND VIA REGISTERED I MAIL, RETURN RECEIPT REQUESTED OPERATOR HAS 30 DAYS TO RESPOND TO FCC 3. FCC MAY ORDER: j PROSPECTIVE REDUCTION IN RATES REFUNDS, WITH INTEREST, FROM DATE OF COMPLAINT 4. OPERATOR MAY REQUIRE COST -OF- SERVICE ANALYSIS. I Please contact Brian T. Grogan, Esq., 6112- 347 -0340, with questions. BTG /kjd 6712140 ri I! u u SUMMARY ARY OF FCC S 1993 RATE REGULATIONS (Assumes Absence of Effective Competition) 1 _ IL• �1 _ 11� j A. Jurisdiction 1. Franchising Authorities: i. Must certify to FCC that -- • Rate regulations consistent with FCC's. • Have legal authority to adopt, and personnel to administer, rate regulations. • Procedural rules provide an opportunity for consideration of the views of interested parties. ii. Certification form may be filed with FCC on or after June 21, 1993 • Certification will become effective 30 days after filing unless otherwise notified by FCC. • If disapproved, FCC will notify regarding revisions or modifications needed. • If disapproved, FCC will exercise franchising authority's regulatory jurisdiction until franchising authority becomes qualified via a new certification. Such new certifications will become effective upon approval by the FCC, which approval (or disapproval) will be issued within 90 days of filing for recertification. 2. FCC Will Not Exercise Jurisdiction Unless: • A local franchising authority's certification is denied or revoked; 2Z • The franchising authority requests FCC to regulate basic rates because it has insufficient resources to regulate or it lacks the legal authority to do so. 0 Copyright, 1993 Moss & Barnett, A Professional Association B . C. Franchising authority requesting FCC intervention due to insufficient funds must explain why franchise fees cannot be used. Preemption Issues 1. Preemption of Franchise Agreements: • All provisions in franchise agreements that prohibit rate regulation are preempted by the 1992 Cable Act. 2. Preemption of State Law: j • State laws that preclude rate regulation are n2t preempted, although in such cases the FCC will assume jurisdiction over basic service and equipment rates. The Certification Process 1. The Certification Form: • Franchising authorities intending to regulate basic ratesi must first submit a form certification with the FCC. 1 1 2. Joint Certification: • Joint certification for communities served by the same cable system is permitted but not required. 3. Approval of Certification by the FCC: i. Franchising authorities may j begin filing certifications on June 21, 1993. ii. There is no deadline by which a franchising authority must seek certification!. iii. Franchising authority must either mail the form by registered; mail, return receiit requested, or hand deliver the form and obtain a date stamped r 0 i 11 4. • Certification will effect in 30 days is defective. automatically go into unless the FCC finds it - The 30 -day period will run from the date stamped on the return receipt or copy. V. Franchising authorities will not be able to begin regulating rates until they have adopted regulations consistent with those adopted by the FCC and have implemented rules which give interested parties a reasonable opportunity to comment during the rate regulation process. • Franchising authorities have 120 days from the effective date of certification to adopt these rules and regulations. Cable Operator's Challenge to Certification: i. Cable operators may file a petition for reconsideration challenging the franchising authority's certification • Petitions may be filed any time within the 30 day period after a certification has become effective. • Operators may file petition for reconsideration on the ground system is subject to effective competition. - Operators will be granted an automatic stay of rate regulation until resolution of this petition, subject to refund liability back to the date the petition was filed, if the FCC subsequently determines that there is no effective competition. - Operators filing frivolous effective competition petitions to take advantage of the "automatic stay" provision will be subject to forfeitures. ii. If an operator believes the franchising authority cannot be certified due to other defects (lack of legal authority, lack of adequate resources or inconsistent rate regulations), the operator may file either: -3- (1) a petition for reconsideration (which would be filed within 30 days after the certification becomes effective), or t (2) a petition for revocation (which could be filed at anytime). • Operators filing such 'petitions will not be entitled to an automatic stay of regulation but may request a stay. , • If the FCC denies la franchising authority's certification, it will be ,. notified and informedl of necessary modifications to obtain FCC approval. ' D. Revocation of Certification 1. Certification may be revoked if franchising authority fails to fulfill !one of the above- rgferenced three conditions for certification. • while a petition for revocations is pending, a ' franchising authority may continue to regulate the basic service rates of its franchises. • If a certification is revoked,) the FCC will assume jurisdiction over basic service rates until franchising authority becomes recertified. ' 2. An operator not subject to effective competition that later becomes subject to effective competition may petition the franchising authority for a change in its regulatory status. • The operator bears the burden of proving the existence of effective competition. • Cable operators denied a change sin status by a franchising authority may seek Ireview of that ' finding at the FCC by filing A petition for revocation. • A joint statement may also be sppbmitted by the , cable operator and a franchising authority stating that effective competition exists. ' E. Assumption of Jurisdiction 1. If the FCC denies or revokes a franchising authority's certification, it will exercise the franchising author' jurisdiction over basic 'rate regulation until the authority requalifies. -4- B. Franchising Authority Review of Basic Cable Rates: • A two -step approach will be utilized by franchising ' authorities to review a cable operator's current rates for the basic service tier and accompanying equipment, or proposed increases in those rates. • Upon denial 'of or revocation of certification, the FCC will assume jurisdiction and notify the franchising authority and the cable operator. - This notification to the cable operator ' will require it to file its basic rate schedule with the FCC within 30 days, with ' a copy to the franchising authority. 2. Basic rate filings for existing rates or proposed rate increases for services and equipment must be accompanied by the appropriate FCC forms. 3. Cable operators with existing or proposed rates above the permitted tier rate must submit a cost -of- service ' showing to the FCC sufficient to support a finding that their rates are reasonable. ' 4. The FCC will assume basic rate jurisdiction until the franchising authority files a "petition for recertification" that is subsequently approved. ' • The petition must contain a clear showing, supported by either objectively verifiable data r underlying such as a state statute, or affidavit, that the reasons for revocation or denial no longer pertain; and • Must attach a copy of the earlier decision ' denying or revoking the original certification. 2 IMPLEMENTATION OF BASIC TIER RATES A. Initiation of Basic Cable Bate Review: 1 • Once a franchising authority has been certified and has adopted the appropriate rules, it must notify the cable operator that these requirements have been met ' and that it intends to regulate basic service rates. - The cable operator will have 30 days to file its t basic rate schedule (and any supporting material concerning the reasonableness of its rates) with the franchising authority. B. Franchising Authority Review of Basic Cable Rates: • A two -step approach will be utilized by franchising ' authorities to review a cable operator's current rates for the basic service tier and accompanying equipment, or proposed increases in those rates. D 1. First Step If a franchising authority is able to determine that a cable operator's "current rates" are within the FCC's reasonable rate standards, the rates may go into effect 30 days after they are submitted. - If the franchising authority finds that a , "proposed rate increase" is within the FCC ' s rate standards, the increase may go into effect 30 day after filing with the franchising s ' authority. 2. Second Step If the franchising authority is unable to determine whether the rate in issue is within the FCC's reasonable 'rate standards, IPased on the material before it, or if the cable operator has submitted a cost -of- service showing seeking to ' justify a rate above the FCC's reasonable rate level, the franchising authority may take an additional period of time to make a final determination. , - A franchising authority may take an additional 90 days if it needs more time to ensure that a rate is within the FCC's rate standard. , - The franchising authority may take an additional 150 days to evaluate a cost -of- service showing seeking to justify a rate above !the reasonable rate level. • The franchising authority (must issue a brief written decision (regarding its invocation of the additional Itime period. • If no action is taken within these time periods, the proposed rates; will go into effect, subject to subsequent refund orders if a franchising authority later issues a ' decision disapproving any portion of the proposedrates. C. Notification of Rates • The cable operator: must notify subscribers, as well ' as the franchising authority at least]30 days before any proposed increase is effective. - The cable operator will Mt a required to S publish a notice of the propose rate increase in newspapers or provide information to subscribers regarding how to lodge a complaint. ' - operators will be required to include in their subscriber notifications the name; and address of the local franchising authority, so that the requisite information on complaint procedures can be readily obtained by a subscriber. F. Remedies • Franchising authorities may order prospective rate reductions and, where they have determined that ' existing or proposed rates are unreasonable, prescribe a reasonable rate. ' • Franchising authorities may also invoke the remedy of ordering refunds in three (3) situations: ' 1. If the operator fails to comply with a rate decision and continues to charge unreasonable rates: ' - The franchising authority can order refunds back to the effective date of its rate order. ' 2. As part of its initial review of existing cable rates, an authority has the discretion to order refunds for reasonable rates that exceed the D. Due Process • The franchising authority is required to issue a written decision to the public whenever it ' disapproves: i. An initial basic cable rate; in ii. A request for an increase in whole or part; or Approves a proposed rate over the objections of interested parties. ' - No written decision is necessary approving a basic cable rate or rate increase in its entirety if there have been no objections. Information E. Proprietary • Franchising authorities have the right to collect ' information, including proprietary information, in order to make a rate determination in those cases where operators have submitted initial rates or proposed rate increases that exceed the FCC's reasonable rate standard. F. Remedies • Franchising authorities may order prospective rate reductions and, where they have determined that ' existing or proposed rates are unreasonable, prescribe a reasonable rate. ' • Franchising authorities may also invoke the remedy of ordering refunds in three (3) situations: ' 1. If the operator fails to comply with a rate decision and continues to charge unreasonable rates: ' - The franchising authority can order refunds back to the effective date of its rate order. ' 2. As part of its initial review of existing cable rates, an authority has the discretion to order refunds for reasonable rates that exceed the -8- FCC's permitted tier charge *d are not supported by a persuasive ,cost -of- service showing by the cable operator. 3. If the franchising authority !has tolled a proposed rate increase for 90 or! 150 additional days and has not completed its review by the end of these timelperiods: - The proposed rates can go into effect subject to a refund if portions of the rates are later found to be unreasonable. Note For matters; 2 and 3 above, the refund period ' is limited to a maximum of one year. G. Notification of Basic Tier ' • Cable operators must notify subscribers of the availability of basic tier service within 90 days or 3- billing cycles from the effective Idate (June 21, ' 1993) of the FCC's rules and are required to notify new subscribers at the time of installation. - Cable operators who can demonstrate they have satisfied the !notification requirement in the 12 months prior to June 21, 1993, will be exempt ' from this requirement provided! their notice conforms to the format and content requirements of the FCC's rules. 3. REGULATION OF BASIC SERVICE TIER RATES AND EQUIPMENT A. Benchmark Used to Govern Rates for the Basic Service Tier 1. Introduction of Benchmark: 1 , • The FCC has adopted a table of benchma rks based on the average September 30, 1992, rates of systems subject to effective competition. , • The FCC applies different benchmark rates to systems based the individual system's ' - number of channels, - subscribers, and I i - satellite signals. -8- i 2. Application of S6nchmark`"Formula: a. The FCC will consider reasonable a per - channel rate for the basic service tier that is at, or below, the benchmark level when a system becomes subject to regulation. - The initial regulated rate for such a system shall be its rate in effect on the date the system becomes subject to regulation, regardless of the amount that rate is below the benchmark. b. Rates exceeding the applicable benchmark at the time regulation begins are presumably unreasonable because they exceed the average rate charged by system subject to effective competition. C. Some systems with rates at the onset of regulation that are above the benchmark may have had rates that were below the benchmark on September 30, 1992. - Such systems are not subject to a rollback from levels in effect on September 30th, because the rates were presumably reasonable on that date. • These systems must reduce rates from existing levels to the benchmark, but they may maintain increases from September 30, 1992, levels up to the benchmark and adjust rates to reflect inflation. d. For a system with basic tier rates above the benchmark, both when it becomes subject to regulation and on September 30, 1992: The maximum permitted rate will be the September 30, 1992, rates reduced ten percent (10 %) but no lower than the benchmark rate for that system. e. Those sys =ems with initial rates based on adjusted September 30, 1992, rates may further adjust those rates to reflect inflation occurring between September 30, 1992, and the time when-regulation of the basic service tier begins. -9- Ll B. - They must also apply fan efficiency adjustment, specified the rples, to those rates if the total number ofd subscriber's or channels on the system changes between September 30, 1992, and !the time of regulation. , - After those adjustments are made, the initial permitted rate fpr the basic service tier will then !be caoved as ' described herein. Adoption of the Price Cap ' i • The FCC has adopted a price cap mechanism to ensure that future rate increases remain within reasonable bounds. - The price cap rate for the basin service tier will be expressed as a rate per channel to ' facilitate rate calculations and review. - The price cap, applies to all regulated systems, ' including those systems with �ates that, are below the benchmark on the date that regulation commences: ' • unless a cable system justifies higher rates based on cost -of- servile principles. 1. Annual Adjustment Index: • The FCC establishes an annual adjustment index that permits 'changes in each system cap', for ' the basic service tier based on ;eneral changes in the cost of doing business. • The FCC adopts the GNP fixed weight price index (GNP -PI) as the annual adjustment index for the cap for basic service tier rates.] ' • Cable operators may adjust the capped base per - channel rate for the basic service tier annually after the final GNP -PI }s published by ' the Department of Commerce for (the preceeding year. f 2. External Costs: a. Retransmission} Consent , • The FCC concludes that 1 retransmission consent costs should be treajted as external to the benchmark. -10- i 1 Fj' b. r z Retransmission consent costs shall be accorded external treatment only after October 6, 1994, and only for new or additional fees beyond those already in effect on October 6, 1994. Programming Costs Other Than Retransmission Consent: • FCC will treat programming cost increases, other than retransmission consent, as external to the benchmark. - The FCC's accounting and cost allocation requirements will determine the share of programming costs to be allocated to the basic service tier. - Programming costs for programming obtained from affiliated entities is limited to the percentage change in the, admissions component of the Consumer Price Index between the effective date of the price increase and the date the previous price took effect. • The FCC also excludes from the cap -- - taxes, franchise fees, and the costs of satisfying franchise requirements including: • costs of satisfying franchise requirements for local, public, educational, and governmental (PEG) access channels. • The FCC's accounting and cost allocation requirements provide the costs associated with PEG channels carried on the basic tier will be 1irectly assigned to the basic tier where possible and remaining costs will be allocated between tiers in proportion to the number of channels on each tier. • For all categories of external costs, other than franchise fees, changes in external -11- C. D. I costs shall be measured from the date on which the system becomes subject to regulation, or 180 days from the effective date of the FCC's regulations (December 20, 1993), whichever occurs first. • Changes in external costs occurring prior to December 20, 1993, including from September 30, 1992, will not be accorded external treatment. Cost of Service Showings • The cable operator is permitted! to make a cost -of- service showing to determine !the reasonable rate for its system. - The resulting rate determination will the FCC's benchmark/rollback prov`1sions - An operator may exceed the benchmark rate if it can make the necessary cos t in certain circumstances. A cost -of- service determination resulting rate below the system's September 30, 1992, minus ten percent (10 %) will prescribe system's new rate. E 1 J supersede or capped showings in a rate ' that • The FCC will shortly issue a second further Notice of Proposed Rulemaking to seek additional comment on the development of appropriate cost -of- ser standards. • Pending the above- referenced rulemaking, cable operators may elect to maintain current above - benchmark rates and attempt to justify them in their initial rate filings pursuant to the general principles for cost -of- service regulation. Cost of Service Standards • Alternatively, operators may elect to reduce these rates as required by the FCC's benchma�k regulations. • Cable operators that reduce rates in accordance with FCC requirements may seek to raise rates above the cap pursuant to the general procedures the FCC is establishing for' cable operators seeking rate increases for the basic service tier. I • Franchising authorities (or the FCC din appropriate circumstances) will review cost -of- service showings -12- r 1 1 11 by cable operators seeking to raise rates above capped levels. - Cable operators 'or subscribers may appeal a local decision to the FCC. The FCC will review such local decisions on a case -by -case basis pending the cost -of- service rulemaking. i � - K 9 1 ,1 1 , -44►1l A. Equipment Covered • The FCC concludes that equipment "used to receive the basic service tier" includes: - Converter boxes - Remote controls Connections for additional television sets and cable home wiring • All systems subject to rate regulation must comply with the actual cost standards for equipment and service installations used to receive the basic service tier. B. Unbundling • Cable systems must unbundle charges for equipment, installation, and additional outlets from the rates for basic service. - Operators must also calculate separate charges for installations, remote control units, converter boxes, and other customer equipment. C. Actual Cost Standards • Franchising authorities regulating equipment used to receive the basic service tier shall require cable operators to establish an eauioment basket to which the operator will assign the direct costs of service installation, leasing, and maintaining and servicing customer equipment. - The basket will include an allocation of all system Joint and common costs that installation, leasing, and repairing equipment share with other system activities, excluding general system overhead. -13- E D . • The equipment basket costs include a reasonable profit. - A cable operator must also calculate an hourly service charge ( "HSC ") through which it would ' recover all equipment basket costs (including a reasonable profit) except for Ithe operator's cost of purchasing and financing the lease of customer equipment. , • Charges for leasing each type of remote control unit shall be designed to recover the operator's cost of purchasing and financing the remote; and expected repair and service charges over the (useful life of the equipment. i ' - Expected repair and service charges are to be the average determined by multiplying estimated number of repair and service hours per remote by ' the HSC. - Charges for 'leasing converter Iboxes and all , other equipment shall be calculated in the same manner as for remotes. • For installation charges,, the cable , operator must elect a uniform installation charge that is calculated based upon either: ' - The, HSC x the person] hours of the visit; 21 - The HSC z the average hours spent per ' installation visit. • The FCC's rules do not preclude anj operator from ' selling equipment in a ui ment to subscribers. - The equipment price shall be set at no higher , than necessary to recover the operator's costs, including all costs incurred for storing and preparing equipment for sale up !to the time it is provided to the customer; including a ' reasonable profit. Promotions , • FCC rules permit, operators to offer promotions, including a permanent below -cost] offering of , installations. - Cable operators must exclude the costs of but may promotions from the equipment basket, -14- include these costs -in general overhead as part of a cost -of- service showing. 8. Additional Connections • The FCC requires that costs associated with the ' installation of, and equipment used with, additional connections be included in the equipment basket. ' - The installation charged for additional connections is the HSC x the person hours of the visit or the HSC x the average number of hours ' spent per visit. • If the operator elects to use an average installation ' time, the FCC requires two rates: 1. For wiring additional connections at the time of ' the installation; and equipment or service tiers. ' 2. If the operator makes a separate visit to install the additional connection. ' • The FCC allows a cable operator, if it incurs additional charges for programming carried on basic or cable programming services channels that it ' transmits to additional outlets, to recover these charges through a monthly charge levied for additional outlets in fact receiving that programming. ' F. Cost of Franchise Requirements • The FCC has determined that cost attributable to ' satisfying franchise requirements shall include: 1. The sum of per - channel costs for the number of ' channels used to meet franchise requirements for public, educational, and governmental channels; 2. Any direct costs of providing any other services ' required under the franchise; and 3... A reasonable allocation of overhead. G. Customer Changes • The FCC's standards and procedures are expected to ' prevent unreasonable charges for a customer changing equipment or service tiers. ' - The FCC's regulations apply to any changes in the number of service tiers and charges for -15- E changing equipment that are initiated at the subscriber's request after the 'installation of initial service. • These same standards apply I to upgrades and t downgrades in service tiers. - The FCC requires that customers be allowed 30 days after, notice of retiering or rate increases to change service tiers at no chatue • Operators may impose only a nominal charge for ' changing service triers affected solely; by coded entry on a computer terminal or by other similarly simple method. ' - The FCC considers any charge under $2.00 nominal. - These charges cannot exceed the factual costs of , changing tiers. • Operators who believe their system has an increasing ' and unacceptable level of "churn" in service tiers may establish an increased charged for changing service tiers more than two times in one year. , - The operator must prove to the franchising authority that the churn level in cable service tiers has reached an unacceptable level and that , its escalating scale of charges is reasonable. - The operator must notify all subscribers that ' they will be subject to an increased charge if they change service tiers >ore than the specified number of times in one year. ' • For changes in service tiers or 'equipment that involve more than 'coded entry on a computer or other the actual similarly - simple method, the FCC adopts ' cost guidelines for equipment and installation. either HSC z - The actual cost charge would be the the amount of time it takes to affect the change ' or HSC z the average time such changes take. 5. REGULATION OF QMLE PROGRAMMING SERVICES , Note "Cable programming services is del all video programming provided over a cable sy provided on the basic service tier or on a per - program basis. -16- fined broadly as tem except that , per - channel or n • The complainant must supply certain readily available factual information and must allege that the rate is unreasonable because it I violates the FCC's rate regulations. - Complainants must use the complaint form ' adopted by the FCC and serve a copy on the cable operator and franchising authority. Franchising authorities are encouraged to ' assist subscribers in completing complaint forms and subscribers are free to attach the view of the franchising authority when ' submitting a complaint to the FCC. Franchising authorities will not be permitted to formally review and adjudicate cable programming service complaints in the first instance. ' • Upon receipt of a cable programming service complaint submitted on the FCC form, the FCC will review the complaint to determine whether ' it meets the minimum showing needed to permit the complaint to go forward. The operator must respond to a complaint ' filed on the standard complaint form within 30 days of service of the complaint, unless the FCC notifies the operator that the 1 -17- -6 A. Complaints Regarding Cable Programming Service Rates ' 1. Procedures for Receiving, Considering, and Resolving Complaints: ' • The FCC will not regulate cable programming service rates until it receives a complaint that a particular operator's rates are unreasonable. ' - Complaints alleging that a cable operator's current programming rates are unreasonable ' will have 180 days from the effective date of the FCC's rules to challenge existing rates (approximately December 10, 1993). ' - With regard to rate increases, complainants must file complaints about cable programming service and equipment rates within 45 days from the time subscribers ' receive a. bill that reflects the rate increase. • The complainant must supply certain readily available factual information and must allege that the rate is unreasonable because it I violates the FCC's rate regulations. - Complainants must use the complaint form ' adopted by the FCC and serve a copy on the cable operator and franchising authority. Franchising authorities are encouraged to ' assist subscribers in completing complaint forms and subscribers are free to attach the view of the franchising authority when ' submitting a complaint to the FCC. Franchising authorities will not be permitted to formally review and adjudicate cable programming service complaints in the first instance. ' • Upon receipt of a cable programming service complaint submitted on the FCC form, the FCC will review the complaint to determine whether ' it meets the minimum showing needed to permit the complaint to go forward. The operator must respond to a complaint ' filed on the standard complaint form within 30 days of service of the complaint, unless the FCC notifies the operator that the 1 -17- E B. C. complaint fails to satisfy the minimum showing requirement. ' Remedial and Enforcement Procedures for Babes Found to be Unreasonable ! i ' • If cable programming service rates are found to be unreasonable, the :FCC will order the operator to reduce rates perspectively and to reflect that reduction in perspective bills to customers. - The operator will also be required to refund overages (plus interest) to subscribers, with ithe date the refunds being calculated from complaint was filed until the date the operator implements the reduced rate perspectively in ' bills to subscribers. a when assessing a complaint that a cable system's ' cable programming service rates are unreasonable, the FCC will use the same test of reasonableness adopted for basic service rate regulation. ' • The FCC will use a benchmark approach as the principal form of rate regulation for cable programming services, with cost -of- service showings ' used only by cable systems whose rates exceed the benchmark. for Adoption of the Benchmark and Price Cap Cable Programming Services • The FCC adopts the same competitive benchmark for ' cable programming !services as for the basic service tier and applies it in the same manner to determine the initial permitted per - channel late for cable , programming services. • The FCC also adopts the same price cap requirements for cable programming service as for the basic ' service tier, including the same annual adjustment index, and requirements for, and treatment of, external costs. ' 1. Application of Benchmark: • Systems with a per- channel rate for cable ' programming services at or below the benchmark at the time. the system becomes subject to regulatory review will be considered reasonable , and that rate'will be its permitted rate. -18- • Systems with' rates`` in effect at the time of regulation that are below the benchmark will be ' capped at that level. • For systems with rates at the time of regulation ' that are above the benchmark, the permitted level for such systems will be determined by a further comparison to the benchmark of rates in ' effect on September 30, 1992. • For systems with September 30, 1992, rates that are above the benchmark, the rates shall be the ' September 30, 1992, per - channel rate reduced by ten percent (10 %) but no lower than the benchmark, and then adjusted forward by ' inflation. • For systems with rates on September 30, 1992, that were below the benchmark, the permitted ' rate shall be the benchmark rate adjusted forward by inflation. 2. Application of Price Cap: • The price cap will then be applied to the per- channel rate determined by the above comparison of rates to the benchmark. - Price cap requirements will be the same as for the basic service tier. • As for basic service, the FCC will permit cable operators to exceed the benchmark rate for cable ' programming services based on costs. D. installation or Rental of Equipment Used to Receive Cable ' Programming Services • Complaints concerning rates for equipment and installation used to receive cable programming ' services, either solely or in conjunction with unregulated programming, shall be subject to the same actual cost standard implemented for basic tier equipment and installation. - The costs of equipment and installation used to ' t receive cable programming services shall be 'equipment the included in the basket" and charges associated with this equipment shall be determined on the same basis as charges for other equipment subject to the actual cost methodology. -19- E A . B . C. i i i • Cable operators are required to unbu die equipment and installation rates from the equipment used to ' receive these services. - Cable operators are required i to unbundle installation rates for cable programming , services from rates for equipment leasing. Geographically Uniform Bate Structure • A cable system must have a uniform irate structure ' throughout the franchise area. i • Cable operators may offer reasonable discounts to disadvantaged senior citizens and other economically individuals (persons who receive fede =al, state, or local welfare assistance). ' Negative Option Billing • Cable operators may 4t charge a subscriber for any a service or equipment that the subscriber has not affirmatively requested by name. - This provision shall not apply *changes in the mix of channels in a tier, or restructurings of service, even when those changes are accompanied by a rate increase, unless the changes alter'the fundamental nature of the service tier. Small System Burdens • Franchising authorities regulating small cable systems are permitted to exempt those systems from ' having to file an initial rate schedule with the franchising authority. - In such cases, the small system need simply , certify to the authority that fits rates for basic services and equipment are ,, reasonable and mark are within the applicable bench formula. ' - A small system whose rates exceed the benchmark, a small system proposing to increase its basic ' rates or a small system that is the subject of a cable programming service complaint, is not exempted from the procedures the FCC has established. ' -20- 1 1 • For these purposes, a "small system" is a system ' served by an integrated headend with fewer than 1,000 subscribers. D. Leased Commercial Access • A cable operator and commercial leased access user may negotiate channel placement and tier access for leased programming. Cable operators may not set terms and conditions ' for users based on content except to the extent necessary to establish a reasonable price for use of channel capacity and to comply with the ' FCC's indecency standards. Cable operators are also required to provide billing and collection services for leased access users, unless the operator demonstrates the existence of third party billing and collection services which in terms of cost and accessibility, offer leased access users an alternative substantially equivalent to that offered comparable non - leased programmers. i -21- • The maximum commercial leased access rates that a cable operator may charge is the highest net implicit fee charged by any nonaffiliated programmer within the same program category. - The implicit rate is calculated by determining the amount paid per month by subscribers for the ' service and deducting from that the amount that is paid per month to the programming service vendor. ' - The difference between the amount received and the amount paid is the net implicit leased channel rate. - Such rates are to be calculated separately for: 1. Pay - per - program or pay channels; 2. Channels containing more than 50% direct sales.(home shopping networks); and 3. All other channels. i -21- E. Subscriber Bill Itemization • Cable operators may identify as a separate line item on each subscriber bill the amount of any fee, tax, assessment, or charge imposed by a government entity on the transaction between the operator and the subscriber. i 649Z140 -22-