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HomeMy WebLinkAboutJANUARY 7,1997 I I I: OliO. s-O '39-: 0'00'1 OI07Q? c.c CITY COUNCIL MEETINGS ARE AUDIO AND VIDEO TAPE RECORDED AND ON FILE IN TIIE OFFICE OF TIIE CITY CLERK ROLL CALL 1. 08'10-..$0 MINUTES CITY COUNCIL OF TIIE CITY OF ARCADIA ADJOURNED REGULAR MEETING JANUARY 7,1997 The City Council met in an adjourned regular meeting on Tuesday, January 7, 1997 at 6:00 p,m, in the Arcadia Community Center, PRESENT Council members Chang, Harbicht, Kovacic, Young, and Kuhn ABSENT: None PRESENT A TION AND DISCUSSION OF CABLE TELEVISION RA TE REGULATIONS Since the implementation of the 1992 Cable Act, cable television rates are governed by the Federal Communications Commission (FCC), and the City has very little jurisdiction other than the regulation of "basic only" (basic broadcast) and the equipment used to receive basic channels, When TCI, the City's cable television operator, requests a rate increase, they submit FCC-created forms to the City for approval. These forms require extensive analysis by the City's consultant, Communications Support Group (CSG), to verify their accuracy, Each review costs between $1,000 and $3,000. depending on the level of review required, On February 1, 1996, TCI submitted Form 1240, which increased the basic cable service rate from $11.64 to $12,67, At the same time, TCI was required to submit Form 1205 covering increases in both equipment and installation rates, CSG recommended a detailed review of this form and found discrepancies with regard to converter costs, and recommends the City consider making a rate determination to lower equipment rates, John Risk, representative of Communications Support Group, gave an overview of cable television rate regulations, Details of his presentation are contained in the addendum to the January 7, 1997, staff report, In 1992, Congress passed the Cable Television Consumer Protection and Competition Act. Since 1993, the City's rate regulation efforts have lead to significant reductions in cable television rates, The City, as the franchise authority, may regulate basic service rates and associated equipment rates if the cabie operator is not subject to "effective competition," as is the case in Arcadia. An operator'may file a rate increase for the basic service tier or equipment annually, but may not submit a rate increase until the City has reached a decision about the reasonableness of the operator's current rates, Me Risk explained the regulation of basic tier rates and equipment costs, the process available to cable operators for requesting rate increases, review of the rates and decision by the City, and the appeal process available to the operator, CSG believes that TCl's November 1,1996, working copy of Form 1205 is unreasonable due to unallowed and unjustified increase in overall costs, CSG recalculated Form 1205 to exclude the increased costs added by TCI in the working copy, and shifted $20 per subscriber in overhead costs from Schedule C to Schedule B, Overcharges related to converters were estimated to be between $72,000 and $77.000 annually in the City, The FCC recently ruled in an appeal case originating in Des Moines, Iowa, that TCI did not show proof that the $20 overhead was not already included in Schedule B calculation and therefore was not justified, The FCC also 1/7 / 97 39:0002 dismissed assertions by TCI in three cities in Nevada, CSG believes the City can make a compelling case to disallow the $20 overhead cost per subscriber in Arcadia, Mr, Risk presented three oplions available to Council. The first would be to continue negotiating with TCI to determine a lower equipment rate and a higher installation rate than the current rates in Arcadia, This would result in some savings to customers for the monthly converter rates and would increase the first-time installalion rates commensurately, CSG's fee for their work in connection with this option is estimated to be $3,000, Option 2 would be to follow the precedent set by the City of Des Moines and subsequent decisions in three Nevada cities which disallows the $20 overhead charge altogether, and reject the working copy of Form 1205 which includes new costs and the $20, This would leave inslallation rales the same and lower equipment rates to the CSG revised rates, This option saves the customer the most money by lowering the current converter rate to $1.58 from the $2,01 being charged by TCI, and the installation rates would remain the same, The annual savings to the City's cable customers would be approximately $77,000, This action would require additional research, The CSG estimated fee for this option is $5,500, The third option would be to allow TCI to include the $20 overhead costs in Schedule B, but exclude the increased costs in the working copy, This option would allow TCI to raise its current installation rates and require lower equipment rates as discussed in Option 2, The CSG estimated fee for Option 3 is $4,000, Options I, 2, and 3 require adoption of a resolution, and public input is required with Options 2 and 3, Mr, Risk answered questions from Council. He explained thaI the estimated fee for each option is the total cost for CSG 10 assist City staff in adopting a resolution and corresponding with TCI and doing all the adequate paperwork to process the rate order. In addition to CSG's fee, approximately $1,000 should be allotted to pay the City's cable attorney and expert for legal support services, Mr, Risk will open for study, the possibility of having TCI reimburse the City's costs to CSG, However, the FCC believes that the franchise fee which cities receive should be used to help with the administration and regulation of the cable franchise, The City of Arcadia receives a franchise fee of about $200,000 annually, which is put into the General Fund and is not currently targeted for cable negotiations or analysis, Council concurred that it would be worthwhile to pursue Option 2, which would save Arcadia's cable customers $77.000 a year. It was suggested that the City Attorney look at possible evidence for recovery of costs, Council might also consider putting a portion of the franchise fee aside in a contingency fund for cable-related expenses, It was MOVED by Mayor Pro tern Harbicht, seconded by Councilmember Young, and CARRIED on roll call vote as follows to AUTHORIZE Option No, 2 and appropriate the necessary funds. AYES: NOES: ABSENT Council members Chang, Harbichl, Kovacic, Young, and Kuhn None None The City Manager commented this item will be brought back to the Council for formal action, ADJOURNMENT At 6:50 p,m, the Adjourned Regular Mecting ADJOURNED sine die, ATfEST: ~(' v~~ J D, Alford, City C _ 1/7 / 97 I I I