HomeMy WebLinkAboutJANUARY 7,1997
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CITY COUNCIL MEETINGS ARE AUDIO AND VIDEO TAPE RECORDED AND ON FILE IN TIIE OFFICE
OF TIIE CITY CLERK
ROLL CALL
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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
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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:
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J D, Alford, City C _
1/7 / 97
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