HomeMy WebLinkAbout021950 ORD - 05/24/1994ORDINANCE
REGARDING REGULATION OF RATES CHARGED BY TCI
CABLEVISION OF TEXAS, INC. FOR BASIC CABLE SERVICE AND
RELATED EQUIPMENT; APPROVING OR PERMITTING CERTAIN
RATES AND CHARGES; AND PROVIDING FOR PUBLICATION OF
NOTICE OF THE CONTENTS OF THIS ORDINANCE (DISPOSITION
ORDER) AS REQUIRED BY SECTION 55-194 OF THE CORPUS CHRISTI
CODE.
WHEREAS, the City of Corpus Christi, Texas (the "City") is the Grantor of a cable
television franchise under Ordinance No. 16133, passed on March 25, 1981, and which
franchise is currently held by TCI Cablevision of Texas, Inc., hereinafter referred to as
"Grantee"; and
WHEREAS, in accordance with applicable provisions of the Cable Consumer
Protection and Competition Act of 1992 (hereinafter the "Cable Act") and rules adopted by
the Federal Communications Commission ("FCC"), the City has undertaken all appropriate
procedural steps to regulate the basic cable service tier and related equipment; and
WHEREAS, in accordance with applicable FCC regulations, on or about October
4, 1993, the City filed FCC Form 328 -- Certification of Franchising Authority to Regulate
Basic Cable Service Rates and Initial Finding of Lack of Effective Competition -- with the
FCC; and
WHEREAS, in accordance with applicable FCC regulations, on November 16, 1993,
the City passed a rate regulation ordinance (Ordinance No. 021802); and
WHEREAS, on November 18, 1993, the Grantee received a notification letter from
the City regarding FCC certification and the adoption of the rate regulation ordinance; and
WHEREAS, on January 18, 1994, the City received Grantee's completed FCC Form
393; and
WHEREAS, the Moss & Barnett law firm, the City's former legal counsel, was asked
to provide assistance to the City by reviewing Grantee's FCC Form 393; and
WHEREAS, Moss & Barnett issued a preliminary report, dated January 27, 1994,
identifying certain issues requiring Grantee's response before a final report could be
prepared; and
WHEREAS, on February 15, 1994, the City Council approved Resolution No. 021870
stating that the City would have a ninety (90) day extension period to obtain and analyze
MS0236.002.abf
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additional information from Grantee and to complete its review of Grantee's FCC Form
393; and
WHEREAS, pursuant to FCC regulations, on February 16, 1994, the City delivered
a letter to Grantee notifying it of this extension period; and
WHEREAS, on or about March 28, 1994, Grantee responded to the request for
additional information and filed such information with the City Secretary; and
WHEREAS, the City, in order to accomplish its review in a timely manner, scheduled
for its May 17, 1994 City Council meeting sufficient time for the purpose of reviewing the
final report of Fredrikson & Byron concerning Grantee's Rate Submission (and related
information). A copy of this report is attached to and made a part of this ordinance as
Exhibit A; and
WHEREAS, the Corpus Christi Cable Communications Commission (the
"Commission") conducted a meeting open to the public on May 16, 1994 to ensure that all
interested parties had ample opportunity to present information to the City and to express
their views concerning Grantee's Rate Submission; and
WHEREAS, at the May 2, 1994 meeting, the Commission concurred in the
recommendation of Fredrikson & Byron that the City approve the cable rates that were in
effect on September 1, 1993, and that there be no change to the current basic service tier
rate or to the current equipment installation charges and lease rates; and
WHEREAS, based upon the May 2, 1994 Commission meeting and the report from
Fredrikson & Byron, the City Council determined to make the conclusions and orders listed
below.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF CORPUS CHRISTI, TEXAS:
SECTION 1. The rate charged by the Grantee for the basic service tier (exclusive
of any franchise fee) of $10.23 is reasonable, and thus, approved.
SECTION 2. The Grantee's hourly service charge (exclusive of any franchise fee)
of $22.57 is reasonable, and thus, approved.
SECTION 3. Actual installation charges imposed by Grantee are specified at page
4, section III of Exhibit A. The Grantee's montly lease charge for an addressable converter
box is specified at page 4, section V of Exhibit A. The City Council concludes that certain
of the Grantee's installation charges and the lease charge for an addressable converter box
are in excess of the maximum permitted charges prescribed by the FCC. However, because
the differences between the Grantee's actual rates and the permitted rates are minimal, and
because the Grantee appears to have complied with the good faith requirements set forth
MS0236.002.abf
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in 47 C.F.R. § 76.922(b)(9), the City Council will not order the Grantee to reduce at this
time either its installation charges or its monthly lease charge for an addressable converter
box.
SECTION 4. The charge by Grantee for changing service tiers (exclusive of any
franchise fee) of $2.00 is reasonable, and thus, approved.
SECTION 5. The monthly lease charges (exclusive of any franchise fee) of $0.16 for
a remote control and $1.09 for a nonaddressable converter box are reasonable, and thus,
approved.
SECTION 6. Based on the foregoing findings and conclusions, the City Council
hereby enters the following orders:
1. Grantee shall be permitted to charge an initial rate for the basic service
tier of $10.23 and an hourly service charge of not more than $22.57.
2. The City Council reserves the right to reconsider this ordinance if
subsequent amendments or modifications to the FCC rules and regulations
require or permit such reconsideration.
3. This ordinance shall constitute a Disposition Order concerning the Rate
Submission.
4. Notice of the contents of this ordinance (Disposition Order) shall be
published as required by Section 55-194 of the Corpus Christi Code.
MS0236.002.abf
City of Corpus Christi, Texas
Final Report Regarding Regulation of
Rates Charged by TCI Cablevision of
Texas, Inc., for the Basic Cable Service
Tier and Related Equipment
April 25, 1994
Prepared by:
Adrian E. Herbst, Esq.
F. Chet Taylor, Esq.
John L. Nelson, Client Financial Services Mgr.
Fredrikson & Byron, P.A.
Attorneys at Law
1100 International Centre
900 Second Avenue S.
Minneapolis, MN 35402-33.'77
(612) 347-7000
EXHIBIT
(rL M )
This Report summarizes our analysis of the FCC Form 393 submitted by TCI
Cablevison of Texas, Inc., (TCI), which the City of Corpus Christi, Texas received on January
18, 1994.
Overview of Our Report Preparation
In reviewing TCI's FCC Form 393 on behalf of the City of Corpus Christi, Fredrikson
& Byron performed a "desk audit" of the information provided. This desk audit
mathematically verified the steps necessary to complete the worksheets and accompanying
schedules of FCC Form 393. It also verified that all required additional information had been
provided. Upon verifying that the numbers were accurately calculated by TCI, we then
verified that appropriate rate information was used to calculate the maximum initial permitted
rate for the Basic Service Tier.
The third page of this Report compares the FCC benchmark rates and TCI's actual
rates that apply to the Basic Service Tier and related services. The permitted rates and
charges have been compared to FCC benchmark information and are an accurate reflection of
the rates and charges that TCI may charge for the Basic Service Tier programming and
related services.
Fredrikson & Byron has not undertaken an "on-site audit" of TCI's books and records
to determine whether the information included in the FCC Form 393 worksheets and
accompanying schedules is accurate. An on-site audit would require physical presence by
employees of Fredrikson & Byron, or a qualified accounting subcontractor, at the premises of
TCI to review the books and records and ensure entries have been accurately recorded and
assumptions properly calculated.
In completing the worksheets and schedules of FCC Form 393, cable operators are
required to make certain assumptions and report information to the best of their ability. In
some cases, it may be appropriate for franchising authorities to verify the accuracy of the
information reported by a cable operator by conducting an on-site audit of the operator's
books and records. At the present time, we do not believe such an on-site audit is necessary,
based on the information we have reviewed in TCI's FCC Form 393 and the other relevant
information we reviewed. However, we make no representation with respect to the accuracy
of the information reported by TCI on its FCC Form 393, but simply base our conclusions
and analysis on the information TCI has provided.
Conclusions and Actions Steps
Based on our review of TCI's FCC Form 393, we have determined that TCI accurately
calculated the proper monthly charges for the Basic Service Tier and accurately calculated the
permitted installation and lease charges for equipment for the Basic Service Tier, although for
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certain equipment charges their actual rates differ from the permitted rates they calculated.
The following is a summary of the conclusions regarding rates for the Basic Service Tier and
related equipment and what action may need to be taken by you with regard to these
conclusions.
I. The maximum monthly charge that is permitted for the Basic Service Tier is $10.23
per month. This is equal to the current TCI monthly rate. Therefore, there is no
adjustment needed to TCI's Basic Service Tier Charge.
II. The permitted Hourly Service Charge is $22.57. This amount is calculated on the
FCC Form 393, and is used to determine permitted rates for installation and equipment
charges.
III. For all installation charges except one, the actual TCI rates exceed the permitted rates
as calculated on Form 393. As a general rule, the City of Corpus Christi has the
authority to prescribe charges equal to the permitted rates and order refunds of charges
in excess of the permitted rates. However, as discussed below, we recommend that
there be no change in the rates currently being charged by TCI.
IV. The permitted charge for changing tiers is $2.00. This is equal to the current TCI
charge. Therefore, there is no adjustment needed to TCI's tier change rate.
V. For leases of addressable converter boxes, the maximum permitted monthly charge is
$1.73. TCI's current lease charge is $2.02. As a general rule, the City of Corpus
Christi has the authority to prescribe charges equal to the permitted rates and order
refunds of charges in excess of the permitted rates. However, as discussed below, we
recommend that there be no change in the rates currently being charged by TCI.
The FCC rules give franchising authorities the authority to prescribe rates and order refunds.
However, an exception to this rule exists for cable operators who revised their rates in
response to the FCC rules when first published in 1993, based on data that was accurate at
that time. The FCC was concerned that these operators may have to revise their rates when
they become subject to regulation, solely based on newer data. The FCC reasoned that this
would penalize operators for making a good faith attempt to comply with the rules in a timely
manner and would be confusing to subscribers to have another rate change in a relatively
short period of time. The FCC also noted that any changes in rates would probably be
minimal.
As a result, the FCC adopted a rule which says that cable operators who did revise their rates
to comply with FCC rules prior to becoming subject to regulation, and relied on data that was
current and accurate at that time, will not be required to change their rates based on current
data at the time of regulation. A copy of the rule is attached. The FCC does allow the
franchising authority the ability to petition for a waiver of this rule where application of this
rule will cause significant harm to consumers.
Page 2
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TCI did adjust its rates in September of 1993 to comply with the FCC rules. The rates they
set appear to have been made according to data that was accurate and current at the time they
set the new rates. We also note that the change in installation rates is relatively small, about
2.1%, and that the rates at issue will apply only to the time the FCC Form 1200 rates go into
effect, which should be either May 15, 1994 or July 14, 1994.
We recommend that the City of Corpus Christi approve the cable rates that were in effect on
September 1, 1993, and that there be no change to the current Basic Service Tier rate or to
the current equipment installation and lease rates.
Page 3
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(p. 4of3)
Summary Comparison of Permitted and Actual Rates
1
I. Maximum Permitted Rate for the Basic Service Tier
Maximum permitted rate calculated on Form 393
Current TCI Cablevision Rate
Difference
I1. Hourly Service Charge
$10.23
$10.23
$0.00
Hourly Service Charge permitted pursuant to Form 393 $22.57
III. Installation Charges
Installation of unwired homes
Installation of prewired homes
Additional connection at initial install
Additional connection separately installed
Move outlet
Upgrade\Downgrade outlet
Connect VCR at initial install
Connect VCR separately
Connect FM at initial install
Connect FM separately
DMX installed initially
DMX installed separately
NB installed initially
A/B installed separately
IV. Charge for Changing Tiers
Permitted Charge $2.00
Actual Charge $2.00
V. Monthly Lease Charges
Remote control
Nonaddressable converter box
Addressable converter box
Permitted Actual
Rate Rate Difference
$33.86 $34.59 ($0.73)
$16.93 $17.29 ($0.36)
$5.64 $5.77 ($0.13)
$16.93 $17.29 ($0.36)
$16.93 $17.29 ($0.36)
$11.29 $11.53 ($0.24)
$5.64 $5.77 ($0.13)
$11.29 $11.53 ($0.24)
$5.64 $5.77 ($0.13)
$11.29 $11.53 ($0.24)
$5.64 $5.77 ($0.13)
$11.29 $11.53 ($0.24)
$3.84 $3.84 $0.00
$11.29 $11.53 ($0.24)
Permitted Actual
Rate Rate Difference
$0.19 $0.16 $0.03
$1.10 $1.09 $0.01
$1.73 $2.02 ($0.29)
Page 4
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That the foregoing ordinance was r
to its second reading on this the
19 tp4 , by the following vote:
Mary Rhodes
Dr. Jack Best
Melody Cooper
Cezar Galindo
Betty Jean Longoria
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(IA IL
L) 1y
erad for the f4et time and passed
i 1 day of NAIL1
Edward A. Martin 61y -
Dr. David McNichols
David Noyola
Clif Moss
That the foregoing ordinance wap read
pasped finally on this the 14 day
194 , by the following vote:
Mary Rhodes
Dr. Jack Best
Melody Cooper
Cezar Galindo
Betty Jean Longoria
cunt vd
n Y^
PAS$ED AND APPROVED, this the 24
19
ATTEST:
�_7
zjit ity Secretary
for the second time and
of MU,t
Edward A. Martin / w
Dr. David McNichols Zip
David Noyola air/leak
Clif Moss 0(01eAk
day of Mai
MAYOR
THE CITY
,1971.
APPROVED: 04 DAY OF May
JAMES R. BRAY, JR., CITY ATTORNEY
By / z.,4.1
k.lK
Assistant City Attorney
\forms\044
021.950
ORPUS CHRISTI
r.
THAT BY ORDINANCE
PASSED OTHE an,N OF DS-
1894,
-
TI HAS APPROVED �RATyES�
CHARGED BY TO FOR
BA C CABLE OF ASERVICICE FANO 1
ASSOCIATED EQUIPMENT.
THE RATES ANO CHARGES t
APPROVED ARE SPECIFIED
IN THIS ORDINANCE. A COPY 1
OF THIS DOCUMENT MAY 1
BE OSTAINEO FROM THE I
CITY SECRETARY'S OFFICE, N
CITY HALL, 1201 LEOPARD
STREET, CORPUS CHRISTI, A
TEXAS 78401.
mead t
and. V!CV.dro�by the 01Y I
nth :
8401MrrY
PUBLISHER'8 AFFIDAVIT
State of Texas, } CITY OF CORPUS CHRISTI
County of Nueces } ss: AD# 38869
POI
Before me, the undersigned, a Notary Public, this day personally
came Beverly Bennett, who being first duly sworn, according to
law, says that she is Business Office Secretary of the Corpus
Christi Caller -Times, a daily newspaper published at Cornus
Christi in said County and State, generally circulated in
Aransas, Bee, Brooks, Cameron, Duval, Hidalgo, Jim Hogg, Jim
Wells, Karnes, Kenedy, Kleberg, Live Oak, Nueces, Refugio, San
Patricio, Victoria, and Webb Counties, and that the publication
of NOTICE OF PASSAGE OF ORDINANCE NO. 021950 PUBLIC NOTICE IS
GIVEN THAT BY ORDINANCE PASSED ON MAY 24. 1994. THE CITY which
the annexed is a true copy, was published in the Corpus Christi
Caller -Times on the 29th day(s) of May, 1994.
One Time(s)
S44.80
Subscribed and sworn to before me this 6th day
of June, 1994.
Notary Public, Nueces County, Texas
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