The URL can be used to link to this page

Home My WebLink AboutAgenda - 04-19-2005-7aORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: April 19, 2005 Action Agenda Item No. 7_a SUBJECT: Presentation: Cable Regulatory Update DEPARTMENT: County Manager PUBLIC HEARING: (Y/N) No ATTACHMENT(S): Slides Handout INFORMATION CONTACT: Bob Sepe, Action Audits, LLC (919) 467-5392 Gwen Harvey, Assistant County Manager, ext 2300 TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 336-227-2031 PURPOSE: To receive a presentation from Bob Sepe, Action Audits, LLC, consultant to the Triangle J Council of Governments (COG) Cable Consortium. BACKGROUND: Recent actions by Time Warner Cable (TWC), the cable television operator in the Triangle, have caused some concern and criticism from member governments of the Triangle J COG Gable Consortium, to which Orange County belongs. First, TWC refused to honor a request of Action Audits to release figures pertaining to cable upgrade charges (known as a "1235" rate filing) on the grounds that it need not do so under existing FCC rules, Second, TWC was able to win a Federal Communications Commission (FCC) decision that frees it from rate oversight by most Triangle J local governments based on company data showing that competition from satellite companies was significant enough in the region such that TWG no longer monopolized the market, During the Triangle J COG Board meeting last month, Bob Sepe made a presentation on the history of rate regulation and the risks involved with the termination of local authority far rate setting. BOCC Vice Chair Barry Jacobs, who was in attendance, asked that staff coordinate a time and opportunity for Bab Sepe to appear and provide the same presentation to the BOCC, Subsequent to the Triangle J COG presentation, the following actions have occurred: Dave Permar of Hatch, Little & Bunn, LLP, attorney far the Triangle .l Cable Consortium, has made application to the FCC for review of the determination of effective competition, the ruling that revoked local rate regulatory authority, on behalf of all thirty- two North Garalina communities impacted, including Orange County. There is no additional cost to the County for participating in the appeal process, At the request of Action Audits, staff has made a formal written request to TWC via certified mail requesting release of the "1235 "financial data and again, as a member of Triangle J, Orange County will be a part of any appeal process and any subscriber refunds that may result pending data analysis. As the BOCC is aware, staff has been engaged in facilitated negotiations (with the services of Andy Sachs, Dispute Settlement Center) since the summer of 2004 in an effort to achieve a mutually agreeable franchise renewal agreement with TWC, County and TWC representatives have now held a total of eight facilitated sessions with focus on the major substantive areas -density requirements for service extension and live-casting of BOCC meetings (government access, capital equipment, and access fees). Periodic reports have been made to the Cable Advisory Committee, the full BOCC, and to Commissioner Halkiotis, the BOGC liaison, At the session held on April 11, the "1235" and "de-regulation" issues were raised by the County. TWC representatives admitted that while the timing of the de-regulation ruling was unfortunate, it nullified the 1235 request, They expressed doubt that the appeal by Triangle .J would lead to a reversal. They also said they could understand -but not necessarily agree with -the motivation or methodology they felt lay behind the Triangle J appeal. The next facilitated negotiation is scheduled to take place on May 17. The parties are hopeful that a mutually satisfactory franchise renewal agreement can be brought forward far BOCC consideration by the beginning of next fiscal year. FINANCIAL IMPACT: There is no financial impact to receiving the presentation as information, RECOMMENDATION(S): The Manager recommends that the Board receive the presentation and provide any direction or feedback as desired, 3 Why bother to Regulate?? . Assures cable operators provide high quality Customer Care. such as: - A local oRice Quick telephone response Rapid response Ip com01ain15 fmm the community - Assure that the cable operator enpantls Its cable plan) to meet density requirements Why bother to Regulate?? . Assure that operator delivers high quality picture and sound . Assure that operator offers advanced telecom services such as Internet and VoiP phone. . Develop e-commerce antl tele-work opportunities for community residents - craalas lobs ane pn=sarvas lax base • To Establish a corrpiiance record for evaluation at franchise renefAal or transfer. • The franchise agreement is anenforceabie agreement that provides penalties to remedy compliance or performance failures bythe operator - • Assure that operator pays franchise tees per franchise agreement -r I IIC IGQI 1111\cvlcYY • Time Warner's Petition before the FCC to suspend rate regubtion (Effective Competition) remains pending. • Charter's EC Petition has beengranted; however we plan to file petitions to re-institute rate regulation. '. • Reviewed BST, equipment and installation rates promulgated by local cable operators ': • Exploring strategies to control rate increases " • Provided periodic updates on cable/telecom matters >. • Investigated and resolved consumer issues/complaints about cable service • The Federal Court aftinned that Internet service via cable modem, in part, is an "information service;' hence. it is nu[ subject to telecommunication service and lax rules • Internet based telephone' service (VoIP) has been launched by area cable operators Some stale courts have affirmed that VoIP service is not subject to telecommunication service and tax rules • Developing new strategies to forestall revocation antl in other instances reclaim regulatory authority • Advisingleducating NC congressional representatives o(Ihe cable/telecom problems local governments and their residents face . Enforcing the provisions of the current franchise agreements 5 What We Are doing.. ~ • Providing regular updates regarding changes in (he cable/telecom regulatory landscape • Franchise Renewals • Resolve Technical Signal Quality Problems • Line Extensions - Orange County - Chatham County • Permanent ban on Internet taxes - Cable Mptlem &DSL can will apply Ip an estimatetl 5500 miltlpn (annually) in existing stale and local taxes on the Inlemel "back bone' or buslness~tp~business relaletl expenses in pmvitling DSL • On April 29, the Senate voted (S 150) to impose a temporary four-yearban on taxation of Internet access. The bill must now be combined vdth legislation (HR 49) passed by the House in September that Imposed a permanent ban on Intemet access taxes Potential for Mischief • Extends moratorium to 2008..)urisdicllons with DSL taxes In place as of 2003 would be grand fathered through November 1.2005. • Bans new taxes on any telecommunications services or technology to extent "such services are used to provide Internet access" • Jeopardizes franchise fees, sales taxes and/or rights-of-way users fees • Prohibits excise taxes on telecommunications • Immediate loss of revenue • Damage grows over time as telcos and cable operators operators migrate services to Internet r _____ ' What's coming.. • The termination of the franchise fee levy on Cahle Services. =` .Sunset of analog N Cable Services . Extension of the Tax moratorium on Internet Services '! • Further consolidation of ownership of electronic publishers . Proposals to eliminate PEG channels to reclaim the bandwidth for commercial use . Digital "IP-Video" television by 20 i o - N"programs wall travel over the broadband to consumers - IP-Video heralds the demise of Cable Service because it becomes'TV"delivered via the Internet 4