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Home My WebLink AboutAgenda - 06-05-1995 - V-D 1 ORANGE COUNTY BOARD OF COMMISSIONERS Action Agenda Item No._V-D ACTION AGENDA ITEM ABSTRACT Meeting Date: June 5, 1995 SUBJECT: Resolution Adjusting Basic Rates Based on External Cable TV Cost -------------------------------------------------------------------- DEPARTMENT: County Manager PUBLIC HEARING YES: NO: X -------------------------------------------------------------------- ATTACHMENT(S) : INFORMATION CONTACT: Resolution/Order Approving Adjustments in Basic Service TELEPHONE NUMBER- Rates Based on External Costs Hillsborough -732-8181 Chapel Hill -968-4501 Mebane -227-2031 Durham -688-7331 -------------------------------------------------------------------- PURPOSE: To adopt a resolution/order approving adjustments in basic service rates based on external costs. BACKGROUND: In accordance with provisions of the 1992 Cable TV Act, Time Warner (Cablevision) has a request for adjustments in basic service rated based on external cost. External costs is the cost factors associated with programming. Cable operators are permitted under FCC regulation to pass through to subscribers the penny-for-penny cost program providers charge cable operators. On May 1, 1995 Time Warner submitted appropriate FCC forms request an adjustments to basic rates based on external cost. Bob Sepe, Cable Consultant for Triangle J Council of Governments, has reviewed the rate adjustments and recommends that the Board approve the adjustments. The consultants findings are included in the Resolution/Order Approving Adjustments in Basic Rates. The consultants recommend that the Board approve a $.07 increase in basic tier rates for the Chapel Hill Headend (approcimately 5,421 subscribers) , and a $.02 increase in basic tier rates for the Durham Headend (approximately 29 customers) . 2 , RECONMENDATION(S) : The Manager recommends adoption of Resolution/ Order Approving Adjustments in Basic Service Based on External Costs. 2a CitrJ. Of 6Raleigh -Worth (3arolina RATE REVIEW TIME WARNER CABLE ORANGE COUNTY, NC-0276 Chapel Hill and Durham Headends May 15, 1995 REPORT TO: Albert Kittrell,Assistant County Manager BY: Robert Sepe, Information Access Manager REVIEW: Cable television basic rate adjustment [May 1,FCC-12101 Summary The consultants have reviewed Time Warner Cable's February FCC-1210 filing, supporting documentation furnished by the company, and conducted fact finding discussions with company representatives. The values stated in the filing are the responsibility of the company's management. We reviewed the values to determine whether the company calculated "updated" rates consistent with the procedures prescribed by the Federal Communications Commission. Original computations were performed by the consultants and compared against those filed by the company. We believe that the data submitted by the company is free of material misstatements and that the accompanying report provides a reasonable basis for our recommendation. OFFICES•222 WEST HARGETT STREET•POST OFFICE BOX 590•RALEIGH,NORTH CAROLINA 27602 Recycled Paper r 3 Chapel Hill and Durham Headends: FCC-1210 In 1994 Time Warner Cable combined subscriber bases within the unincorporated areas of Orange County into two areas; approximately 200 subscribers from the Efland area were combined with the Chapel Hill subscriber base, according to Time Warner representatives. The Durham headend's service area within unincorporated Orange County consists of 29 subscribers. The area served by the Chapel Hill headend consists of approximately 5,421 subscribers. Following is the report on the FCC-1210 Updating of Maximum Permitted Rates filing submitted by Time Warner Cable, d/b/a Cablevision of Chapel Hi1UDurham. This submittal seeks to adjust the basic rates charged subscribers served by both headends based on external cost factors for the period of July 15, through December 31, 1994. Report Chapel Hill Headend: Time Warner Cable is requesting approval of a$.07 [cent] increase in basic tier rates attributable to external cost factors associated with programming costs. These expenses represent a penny-for-penny pass through to subscribers as allowed by the Federal Communications Commission. Though the County does not have regulatory authority over Tier II (Cable Programming Service), whose rate will decrease by $0.02; or Tier III, whose rate will increase by $32, it is recommended that the County acknowledge these rate changes. The FCC has jurisdiction over the second tier of service. Regulation of this tier is accomplished using a complaint-driven process through the FCC. Actual Rates: he actual rate charged subscribers will be $.04 [cents] higher than the one the County considers for approval, $7.93. This is because the FCC regulatory pass through charge is added to the approved rate set by the County. This pass-through fee is collected by the cable operator for the FCC and is assessed only to the basic tier of service. Franchise Related Costs: The operator reported no costs in this area for the this quarter. Such costs are usually associated with public, education, and government access television facilities. Inflationary A4justment: Cable operators are allowed to take an inflationary adjustment but once a year. Time Warner used an adjustment measurement figure of 1.021, based on the Gross National Product Price Index. The rate adjustment reflects a penny-for-penny pass through to subscribers. See the table below for a comparison between 1994 rates [with other items] and those proposed for the first quarter of 1995. 4 Table A Rate Comparison Chapel Hill Headend, Orange County .;:;:;::' ::::::::''''':'y::::::;;:; �'':i ire;..:....: pct.:.�:::.. » :>::>:<:> : :::>:::::::::<:>:::«<:::: Basic Rates $7.86 $7.93 $0.07 Total Cost of Programming - $688.00 $1,055.64 $367.64 Basic Tier Cost of Programming per $0.13 $0.20 $0.07 Subscriber - Basic Tier Subscribers 5193 5421 - 228 Number of Channels 12 12 0 Inflationary Adjustment 1 1.021 0.021 Durham Headend: Time Warner Cable is requesting approval of a $.02 [cent] increase in basic tier rates attributable to external cost factors associated with programming costs. These expenses represent a penny-for-penny pass through to subscribers as allowed by the Federal Communications Commission. Though the County does not have regulatory authority over Tier II(Cable Programming Service), whose rate will increase by$.50 [cents], it is recommended that the County acknowledge this rate change. The FCC has jurisdiction over the second tier of service. Regulation of this tier is accomplished using a complaint-driven process through the FCC. Actual Rates: The actual rate charged subscribers will be$.04 [cents] higher than the one the County considers for approval, $9.70. This is because the FCC regulatory pass through fee is added to the approved rate set by the County. This pass through is collected by the cable operator for the FCC and is assessed only to the basic tier of service. Franchise Related Costs: The operator reported no costs in this area for the this quarter. Such costs are usually associated with public, education, and government access television facilities. Inflationary Adjustment: Cable operators are allowed to take an inflationary adjustment but once a year. Time Warner used an adjustment measurement figure of 1.021, based on the Gross National Product Price Index. 5 The following rate adjustment reflects a penny-for-penny pass through to subscribers. See the table below for a comparison between 1994 rates [with other items] and those proposed for the first quarter of 1995. Table B Rate Comparison Durham Headend, Orange County ............... .................I.-...................................... .......... ................................... ................... ........ ............ ............. AO& ............ . ..... ........ ............ ................ .... ............. ........... ............ ......... ................. .. . ..... .. ........ .......... .................... .......... Basic Rates $9.64 $9.66 $0.02 Total Cost of Programming $8.65 $9.64 $0.99 Basic Tier Cost of Programming $0.31 $0.33 $0.02 per Subscriber - Basic Tier Subscribers 28 29 1 Number of Channels 12 12 0 Inflationary Adjustment 1 1.021 0. RECOMMENDATION The consultants recommend that the County approve the basic rate adjustments proposed by Time Warner Cable. Basic Rates Chapel Hill Headend Subscribers --------------- .. . ...... . ............... ......... ..... -C 'Wit X, . ............. . en :�KNM W: ............... .. .... .... . .. ........ A ..... ..... ... ....... Z"'I"", W C. I :.:::....... ...... .............. .. .............. ......................... ..... . ..... ------------ ... ....... . . .. . ..... $7.86 $7.93 6 Basic Rates Durham Headend Subscribers each m� ,. : < ......:................................................. $9.64 $9.66 PROCEEDING The FCC regulatory rules require the franchise authority to issue an order, based upon a finding of fact, regarding the approval or denial of the cable operator's FCC-1200 series rate submittal. The rules require that the franchise authority adopt this report and the public be granted an opportunity to comment. It is suggested that the public comment period coincide with a regular public meeting. CHRONOLOGY 1) Public Notice: The County will advertise, in local media, the date, time, and location of the public comment period on Time Warner's FCC-1210 rate adjustment filing. 2) Written Report: The report must be submitted to the County Commission during a regularly scheduled commission meeting. 3) Public Comment: The County Commission must allow the public an opportunity to comment after the report has been presented by staff. 4) Consider & Adopt Report: The Commission will be asked to consider and adopt the consultant's report as its own, as stated in FCC rules. 5) Execute Order: After adopting the report, the Commission should issue an order in three original copies, approving or denying, based upon a finding of fact, Time Warner's FCC-1210 rate filing request. 6) Distribute Order: Provide original executed copies to Time Warner Cable [via Certified mail], the consultants, and place an original in the County's permanent file. Though the public comment period is intended to allow interested parties the opportunity to comment on the cable operator's rate filing, it is not constrained by formal advertising rules which are often associated with municipal zoning issues. 7 STATE OF NORTH CAROLINA ORANGE COUNTY BEFORE ORANGE COUNTY IN THE MATTER OF: ) RESOLUTION/ORDER Review of Basic Cable Service Rates ) APPROVING ADJUSTMENTS FCC-1210 Updating Maximum ) IN BASIC SERVICE RATES Permitted Rates filed by Timer Warner ) BASED ON EXTERNAL COSTS Cable, Cablevision of Chapel Hill/Durham, ) for Orange County, NC-0276. ) BY ORANGE COUNTY: WHEREAS, on May 1, 1995, Time Warner Cable, d/b/a Cablevision of Chapel Hill/ Durham, filed an FCC-1210 Updating Maximum Permitted Rates form for Regulated Cable Services with the County. This filing covers the period of July 15, through December 31, 1994. WHEREAS, on May 16, 1995, the County received a report from its consultants indicating that Time Warner Cable's said filing was in compliance with Federal Communications Commission procedures, allowing for the adjustment of basic cable service rates based on external cost factors; and, WHEREAS,the County has authority to regulate basic service rates charged by Time Warner Cable serving franchise NC-0276, Orange County. IT IS A FINDING: That Time Warner Cable has justified the adjustment of its basic tier service rates based on external cost factors. f 8 IT IS THEREFORE ORDERED: That Time Warner Cable's basic tier for subscribers served by the Chapel Hill Headend are approved as follows: Basic Service $7.93: and, That Time Warner Cable's basic tier rate for subscribers served by the Durham Headend are approved as follows: Basic Service $9.66 ISSUED BY RESOLUTION/ORDER OF ORANGE COUNTY This the day of , 1995. ATTEST: CHARUV AN: Clerk seal Via U.S. Postal Service Certified Mail original copies to: Time Warner Cable City of Raleigh