HomeMy WebLinkAboutAgenda - 11-19-2002-5aORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: November 19, 2002
Action Agenda
Item No. ~ Q
SUBJECT: Adoption of 2002 Rate Order and 2003 Tolling and Accounting Order
Regulating Cable Television in Unincorporated Orange County
DEPARTMENT: County Manager PUBLIC HEARING: (YIN) No
ATTACHMENT(S): INFORMATION CONTACT:
Gwen Harvey, ext. 2300
2002 Rate Order Michael Patrick, Cable Advisory
2003 Tolling and Accounting Order Committee
Bob Sepe, Cable Consultant
TELEPHONE NUMBERS:
Hillsborough 732-8181
Chapel Hill 968-4501
Durham 688-7331
Mebane 336-227-2031
PURPOSE: To consider adoption of two orders ("resolutions") that address rate increases
requested by Time Warner Cable (TWC) for service, equipment, and installation in both 2002
and 2003. The County as the franchise authority is certified by the Federal Communications
Commission (FCC) to regulate basic cable service, equipment and installation within
unincorporated Orange, and these orders are consistent with the exercise of that responsibility.
BACKGROUND: Two orders are attached for Board consideration. The orders were prepared
by Robert F. Sepe, the Triangle J Cable Consortium Consultant who assists Orange County
and other local governments.
2002 Rate Order -Approves 2002 rate for basic cable television service and denies Time
Warner's 26% increase in the hourly service charge for installation/service calls. TWC
proposed an hourly rate of $34.95 based upon national averaging.
The County received a report from its cable consultant, through the Triangle J Cable
Consortium, in February 2002 that recommended this action for all Consortium members. Time
Warner Cable requested that the County not act until the FCC had decided their appeal of the
Town of Smithfield's 2002 Rate Order. (Smithfield is also a member of the Consortium). The
Smithfield. Order denied the 26% rate increase on the same findings contained in the
consultant's report -that the rate increase was "excessive and unsubstantiated". To date, the
FCC has not issued a decision on the Smithfield Order and may not for some time. If the
County acts, TWC may choose to file an appeal, the same as in the Smithfield case.
Meanwhile, on October 1St, TWC moved ahead to file its 2003 rate increase request with the
County and all Consortium members. To proceed, the County should issue its 2002 Rate Order
which would allow the 2003 rate request to be evaluated by the cable consultant within that
context.
2003 Tolling and Accounting Order -Extends the review period for evaluation of the 2003
rate increase proposed by Time Warner Cable by approximately 150 days (from October 1St to
March 1St)
This action will enable the cable consultant to conduct a thorough review of the proposed rate
request and preserve the County's ability to order refunds by TWC for any identified
overcharges during the 2003 calendar year.
FINANCIAL IMPACT: There is no additional cost to the County in adopting these orders. Fees
for the cable consultant are already included within the current operating budget. Adoption of
these orders will however protect Orange County consumers from any charges found to be
unreasonable and ensure that TWC will have to provide refunds.
RECOMMENDATION(S): The Manager recommends the Board adopt both the 2002 Rate
Order and the 2003 Tolling and Accounting Order consistent with the authority granted Local
Franchising Authorities by the FCC to protect the public interest.
3
STATE OF NORTH CAROLINA
ORANGE COUNTY, NC-0256
BEFORE THE COUNTY BOARD
IN THE MATTER OF: )
The Review of FCC 1240 Annual Rate )
Adjustment Request, FCC1235 )
Abbreviated Cost of Service Rate Request, )
and FCC1205 Equipment and Installation )
Rate Request filed by Time Warner )
Cable )
An Order Finding Time Warner Cable's 2002
FCC1240 Basic Service Tier and FCC1235 Cost of
Service Rates Reasonable and Subject to the
Conditions Stated Herein.
And Finding Time Warner Cable's FCC1205
Equipment and Installation Rates Unreasonable. and
Subject to the Conditions Stated Herein.
WHEREAS, in accordance with the provisions of the Cable Television Consumer Protection and
Competition Act of 1992 (1992 Act), the Federal Telecommunications Act of 1996 (1996 Act), the County Code,
and regulations adopted pursuant to that Code, the County Board is permitted to regulate rates for basic cable
services and associated equipment;
WHEREAS, Time Warner Cable of Raleigh-Durham (Time Warner) submitted FCC1240 Updating
Annual Maximum Permitted Rates filings for Regulated Cable Services with the County. Time Warner's filings
encompass external costs, inflation, and program costs for the True-up period of October 2000 through September
2001, and the projected period of January 2002 through December 2002;
WHEREAS, the County received a report from its Consultant stating that Time Warner submitted its
FCC1240 before the FCC published its October 2001 updated inflation factors; Time Warner's FCC1240 rate
calculations comply with the FCC's rate-making rules;
WHEREAS Time Warner submitted a consolidated "Company" FCC1205 Determining Regulated
Equipment and Installation Costs filing with the County to set the regulated rate for the Hourly Service Charge,
Installation Services and Equipment rental rates;
WHEREAS, the County received a report from its Consultant stating that Time Warner was not able to
justify assumptions underlying the Hourly Service Charge ($35.84);
WHEREAS, the Consultant determined that Time Warner's FCC1205 filing does not comply with FCC
rules §76.923 (c)(1) and FCC §76.923 (c)(3) requiring the company FCC1205 methodology to produce just and
reasonable rates;
WHEREAS, Time Warner voluntarily selected a $34.95 HSC rate for its subscribers and not the
consolidated "Company" $35.84 FCC1205 rate and neither rate is reasonable;
WHEREAS, FCC rule §76.933 grants local franchisee authorities an initial ninety (90) day review period,
measured from the date of receipt of said filing by the franchise authority, with which to review the cable operator's
FCC1240 rate filing. If said ninety (90) day review period expires before the rates go into effect, the franchise
authority retains review and refund authority past the initial ninety (90) day review period as long as all inquiries
from the cable operator regarding said review are responded to in writing within fifteen (15) days of said inquire;
WHEREAS, on March 1, 2002 Time Warner appealed the Town of Smithfield's FCC 1205 HSC Rate
Order to the FCC and subsequently requested the County delay its Rate Order pending a ruling by the FCC on Time
Warner's appeal;
WHEREAS, as of the date of this Rate Order, the FCC has not ruled on Time Warner's appeal of the
Town of Smithfield's Rate Order;
WHEREAS, the County received Time Warner's 2003 FCC1205 rate filing and cannot delay
implementation of its 2002 Rate Order pending a timely ruling by the FCC in the Smithfield matter; and
WHEREAS, the County is certified with the FCC to regulate basic service tier rates provided by Time
Warner in the County.
NOW THEREFORE THE COUNTY BOARD MAKES THE FOLLOWING FINDINGS:
THAT Time Warner's Combined Maximum Permitted Rates for Basic Tier Service are reasonable;
THAT Time Warner's Combined Maximum Permitted Rates for Basic Tier Service are reasonable;
THAT Time Warner did not justify the reasonableness of its "Company" $35.84 HSC nor its selected
$34.95 HSC rate;
THAT Time Warner's selected $34.95 HSC Rate is unreasonable;
THAT Time Warner may charge a Basic Service Tier rate below the approved combined maximum
permitted rate;
THAT Time Warner shall not implement its 2002 FCC1205 HSC rate nor its selected $34.95 HSC rate;
and
THAT Time Warner has substantiated the other adjustments to its cable service rates based on past and
estimated cost elements.
IT IS THEREFORE ORDERED:
THAT Time Warner's Combined Maximum Permitted Rate for Basic Tier Service is reasonable and that
Time Warner may charge a combined "selected" BST rate below the approved maximum permitted rates, but not
above it;
THAT the maximum permitted Basic Service Tier rate for Time Warner subscribers for the projected
period shall not exceed $13.83 in ETJ nor $11.51 in County per month, subject to subsequent fmdings by the Board
to the contrary;
THAT Time Warner's HSC Rate for Equipment and Installation Service $35.84 is not reasonable and its
selected a $34.95 HSC is unreasonable and neither shall be come effective;
THAT Time Warner must keep a full and accurate account of all revenues and costs associated with the
aforementioned HSC rate adjustments and, upon a 30 day request, submit a refund plan to the County regarding the
distribution of customer refunds pursuant to any overcharges associated with the January 2002 FCC1205 HSC rate
implementation;
THAT this Order shall be effective immediately and an executed original copy provided to Time Warner
Cable and copies provided to the public.
5
ISSUED BY ORDER OF THE ORANGE COUNTY BOARD
This the day of
BY:
Chair
ATTEST:
Clerk
2002.
Deliver Report and Executed Order via Certified U.S. Mail to: Time Warner Cable
Copy to: Action Audits, LLC.
~D
STATE OF NORTH CAROLINA
ORANGE COUNTY
Tolling and Accounting Order to
IN THE MATTER OF: ) Extend the Review Period for
Regulated Cable Service Provided by Time ) Time Warner Cable's 2003
Warner Cable to its Orange County Cable ) FCC-1240, 1205, 1235 Rate Filing
Television Subscribers, NC-0256 & 0276 ) 'Through January 2003
BEFORE THE BOARD OF COUNTY COMMISSIONERS:
WHEREAS, on October 1, 2002, Time Warner Cable submitted an FCC-1240 Updating Maximum
Permitted Rates filing, FCC-1205 Determining Regulated Equipment and Installation costs, and FCC-1235 cost of
Service Filing for Cable Network Upgrades for Regulated Cable Service with the County, Time Warner Cable's
filing includes actual and estimated costs it may incur during the projected period January -December 2003, along
with previous expenses from the "true up" period October 2001-September 31, 2002;
WHEREAS, the Federal Communications Commission has promulgated rate filing procedures that allow
cable operators to estimate future external costs, and costs associated with system upgrades, and recover those
projected costs utilizing the FCC-1240 filing process, performed annually;
WHEREAS, the County is certified with the FCC to regulate basic cable service, equipment and
installation rates and services within the County; and
WHEREAS, the FCC §76.933 grants franchise authorities the ability to toll the time in which to review
rate filings submitted by cable operators, extending the period of review from the initia130 days, to an additiona190
days (120 days total) past the original date of receipt by the franchise authority.
IT IS THEREFORE ORDERED:
THAT the time period in which the County has to review Time Warner Cable's FCC-1240 rate filing is
tolled 90 days past the origina130 days (120 days total) allowed by the FCC, extending the total review period
deadline; and
THAT Time Warner Cable is directed to maintain a complete and accurate accounting of all costs and
revenues associated with the aforementioned filing.
ISSUED BY ORDER OF THE BOARD OF COUNTY COMMISSIONERS:
This the _ day of 2002.
BY:
Mayor
ATTEST:
Clerk
Deliver via Certified U.S. Mail to: Paul Baccellieri, Vice President-Finance; Time Warner Cable, Raleigh-Durham Division
File copy to: Robert F. Sepe, Action Audits, LLC