R-9741
ATTACHMENT A
City Council Meeting: January 22, 2002
Santa Monica, CA
RESOLUTION NO. 9741
(City Council Series)
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF SANTA MONICA
ADOPTING A RATE ORDER REGARDING
THE BASIC CABLE SERVICE TIER AND
THE EQUIPMENT AND INSTALLATION RATES FOR
CENTURY-TCI CALIFORNIA, L.P.
(D/B/A ADELPHIA COMMUNICATIONS CORPORATION)
THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES RESOLVE
AS FOLLOWS:
WHEREAS, the City of Santa Monica (the "City") became certified to regulate
basic cable service rates and associated charges as of October 7, 1993, and has
followed regulations prescribed by the Federal Communications Commission ("FCC")
for the regulation of the basic service tier and associated equipment, installation,
services and charges (the "FCC Rules"); and
WHEREAS, Century-TCI California, L.P. (the "Company") submitted FCC
Forms 1240 and 1205 to the City on February 22, 2001 for the basic cable service tier
and equipment and installation, and a supplemental Form 1205 dated April 23, 2001
(collectively, the "Rate Filings"); and
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WHEREAS, the Company implemented its basic service tier adjustment on
July 1, 2001, and its equipment and installation rate adjustments on August 1, 2001
both adjustments subject to the City's right to adopt a rate order and order rate refunds;
and
WHEREAS, the City issued a public notice seeking written comments from
interested parties on the Company's proposed rates, and the Rate Filings were made
available for public inspection in order to obtain comment from any interested party; and
WHEREAS, the City staff has made a recommendation to the City Council
("Council") regarding the Company's rates based on: (a) information contained in the
Rate Filings; (b) the assumed accuracy of that information; (c) comments, evidence and
information from interested parties; (d) the draft rate report prepared by the City's
financial consultant; (e) the Company's comments on the draft rate report; and (f) the
financial consultant's final rate report ("Final Report"); and
WHEREAS, the Company has the burden of proving by a preponderance of
evidence that its rates for the basic service tier, equipment and installations are
reasonable under the FCC Rules, 47 C.F.R. 9 76.937(a); and
WHEREAS, the FCC Rules permit a franchising authority to disallow a cost
where an operator has failed to meet its burden under FCC Rules to demonstrate the
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reasonableness of its rates, see, g.g., In re TCI Cablevision of St. Louis, Inc., DA 97-
2099 (FCC Cable Services Bureau, reI. Sept. 29, 1997); and
WHEREAS, FCC Rules permit a franchising authority to establish maximum
permitted rates for equipment and installations based on the "best information available"
where a cable operator fails to meet its burden of proving that its proposed rates are
reasonable, 47 C.F.R. 9 76.937(c); and
WHEREAS, the Company's Form 1205 establishes a rate for "Downgrade to
Basic"; and
WHEREAS, the FCC Rules state that "[d]owngrade charges that are the same
as, or lower than, upgrade charges are evidence of the reasonableness of such
downgrade charges"; 47 CFR 9 76.980; and
WHEREAS, the Company's rate card includes a charge of $29.00 for both the
"Trip Charge" and "Downgrade to Basic"; and
WHEREAS, the Company states that the Downgrade to Basic requires a
"truck roll plus the installation of a trap on the pole at the customer's home"; and
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WHEREAS, the Company does not have a specific charge for the upgrade to
a service, but states that it charges a "Trip Charge" for, among other things, converter
installation and removal of pay service traps; and
WHEREAS, the Company has failed to meet its burden of explaining why the
charge for a service upgrade requiring the installation of a trap and a truck roll is
significantly lower than the charge for a service downgrade requiring the removal of a
trap and a truck roll; and
WHEREAS, the Company claims that it takes on average one hour to
downgrade service to basic by undertaking a truck roll and removing a trap from a pole;
and
WHEREAS, the Company claims that it takes on average one hour to initially
install cable in a home that has never been wired for cable; and
WHEREAS, the Company has failed to meet its burden of explaining why it is
reasonable to assume that it takes the same amount of time to downgrade to basic
service as it does to do the initial install of cable service in an unwired home; and
WHEREAS, the City concludes that the maximum permitted rate for a "Trip
Charge" established herein is also a reasonable charge for a downgrade to the basic
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tier that is not effected solely by coded entry on a computer terminal or by other similarly
simple methods; and
WHEREAS, the Company indicated on its Rate Form that it would charge
$24.24 for the basic service tier, but the Company's rate card indicates a rate of $25.24
for the basic service tier; and
WHEREAS, both the Form 1240 and rate card rates for the basic service tier
are below the maximum permitted rate of $29.02 and, thus, are permissible rates under
the FCC Rules; and
WHEREAS, the FCC Rules permit cable operators to aggregate, on a company
level, equipment costs "into broad categories," 47 C.F.R. 9 76.923(c)(1); and
WHEREAS, the FCC Rules treat remote control devices as a broad equipment
category, 47 C.F.R. 9 76.923(a)(1); and
WHEREAS, the Company's rate card establishes a $0.79 rate for a univeral
remote control device; and
WHEREAS, the FCC Form 1205 does not include a calculation for a universal
remote control device in the amount of $0.79; and
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WHEREAS the Company states that the "universal remote charge of $0.79
included on the Adelphia rate card is not correct" and that "[t]his amount should be
$0.25"; and
WHEREAS, the Company chose to consolidate its rates for categories of
equipment pursuant to 47 C.F.R. 9 76.923(a)(1), and calculated a maximum permitted
rate of $0.35 for remote control devices; and
WHEREAS, the City concludes that $0.35 is a reasonable maximum permitted
rate for a universal remote control device; and
WHEREAS, the Company's Form 1205 includes a rate of $0.90 for a "lease of
additional outlets"; and
WHEREAS, the FCC Rules require that costs for installations be unbundled
from the costs of the basic service tier, equipment and other installations, 47 C.F.R.
9 76.923; and
WHEREAS, the Company has not met its burden of showing that the rate for
"lease of additional outlets" is reasonable under the FCC Rules; and
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WHEREAS, the Company does not include a charge for "lease of additional
outlets" on its rate card and has informed the City that it does not impose such a charge
in Santa Monica; and
WHEREAS, the Council has considered the City staff's recommendations and
the reasons therefore; has received and considered comments from the public; has
reviewed and hereby adopts (and by this reference incorporates herein), as appropriate
and to the extent not inconsistent with this Rate Order, the findings, assumptions and
other information set forth in the financial consultant's Final Report; and
WHEREAS, the Company acquired control of the cable system in Santa
Monica from Century Communications Corp. without the approval of the City; and
WHEREAS, the Company and the City are in the process of attempting to
resolve issues related to the Company's unapproved acquisition of control of the cable
system and to other unapproved transfers of control of the cable system;
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NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA
MONICA DOES RESOLVE AS FOLLOWS:
SECTION 1.
The maximum permitted rates on and after July ,2001 for
the basic service tier, and on and after August 1, 2001 for the equipment and installation
charges set forth below are as follows:
Maximum Permitted Rate 1
Basic Service Tier
$29.02
Equipment & Installation:
Hourly Service Charge
Unwired Homes
Prewired Homes
Underground Burial
Relocate Service
Trip Charge
Downgrade to Basic (Non-Addressable)
Additional Connections (initial)
Additional Connections (separate)
Changing Tier (Addressable)
Transfer
Non-Pay Reconnect
Remote Control Device (Addressable
Remote Control Device (Universal)
Remote Control Device (Digital)
Converter Box (Addressable)
Converter Box (Non-Addressable)
Converter Box (Digital)
Lease of Additional Outlets
44.66
44.66
33.50
78.16
33.50
29.92
29.92
22.33
33.50
2.00
33.50
33.50
.35
.35
.35
4.65
.97
4.65
.00
The rates set forth in this Paragraph shall remain in effect until the date in 2002 the
Company is permitted by the FCC Rules to adjust such rates pursuant to its next FCC
Form 1240 and Form 1205 rate filings.
All rates listed in this Rate Order exclude franchise fees.
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SECTION 2. The Company shall refund that portion of the rates (plus
interest) paid by subscribers for the basic service tier and equipment and installations
described in Paragraph 1 to the extent such rates exceed the rates approved in
Paragraph 1. The Company shall not offset refunds by the amount of any discounts
provided to subscribers on the basic service tier, equipment and installation rates
subject to this Rate Order. The refund period shall run from the date the Company
implements the refunds required by this Rate Order back to July 1,2001 for the basic
service tier and August 1, 2001 for equipment and installations. With respect to each
affected subscriber entitled to a refund, the Company shall implement the refunds within
sixty (60) days after the date of this Rate Order.
SECTION 3. Within five (5) days after the date of this Rate Order, the
Company shall submit a written plan to the City Manager which, at a minimum, shall set
forth the Company's method of providing refunds to subscribers (plus interest), if any,
pursuant to Paragraphs 1 and 2; identifies the basis for the calculation of the amount of
refunds; identifies the amount of the refund; identifies the applicable interest rate and
explains how it was calculated; provides the actual rates charged subscribers for
equipment and installations each month during the refund period; and explains how the
rate refunds ordered herein shall be implemented. Such plan is subject to the City
Manager's review and approval. The Company's obligation to submit such plan shall
not affect the Company's obligation to implement rate refunds, as set forth in
Paragraphs 1 and 2.
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SECTION 4. In the event any of the Company's current rates are above
the level set forth in Paragraph 1, the Company shall adjust such rates to the levels set
forth in Paragraph 1 within 60 days after the date of this Order.
SECTION 5. The Company may not increase the rates for any of the
items listed in Paragraph 1, nor may the Company institute new charges for other types
of service, equipment or installations associated with the basic service tier which are not
listed in said Paragraph, without first complying with applicable law or regulation,
including the FCC Rules.
SECTION 6. Within five (5) days after the date of this Rate Order, the
Company shall identify in writing the actual rate for the basic service tier it has charged
subscribers for each month since June 30, 2001.
SECTION 7. Nothing in this Rate Order prohibits the Company from
submitting a supplemental rate filing for lease of additional outlets for review by the City
that satisfies the Company's burden of demonstrating that the rate is permissible under
the FCC Rules, and that the costs attributable to such lease rate have been unbundled
from the basic service tier, equipment and other installations.
SECTION 8. Nothing in this Rate Order prohibits the Company from
submitting with its 2002 rate filing a proposed rate for Downgrade to Basic for review by
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the City that satisfies the Company's burden of demonstrating that the rate is
permissible under the FCC Rules.
SECTION 9. The Council reserves the right to modify this Rate Order if, at
any time, it determines that information the Company provided to the City is incorrect in
any material manner.
SECTION 10. The City Manager is ordered to mail a copy of this Rate
Order to the Company, provide appropriate public notice of this Rate Order, and make a
copy of this Rate Order available to any person upon request.
SECTION 11. The City Clerk shall certify to the adoption of this Resolution,
and thenceforth and thereafter the same shall be in full force and effect.
SECTION 12. The City's adoption and approval of this Resolution shall not
be interpreted as a waiver by the City of any legal rights it may have with respect to the
Company's unapproved acquisition of control of the cable system in the City of Santa
Monica from Century Communications Corp. or with respect to any other unapproved
transfers of control of the cable system.
APPROVED AS TO FORM:
(}
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Adopted andappro-Jed Ibis ~ of ~, 2OIt2.
I, Maria M. Stewart, City Clerk of the City of Santa Monica, do hereby
certify that the foregoing Resolution No. 9741 (CCS) was duly adopted at a
meeting of the Santa Monica City Council held on the 22nd of January, 2002, by
the following vote:
Ayes: Council members:
O'Connor, Bloom, Mayor Pro Tem
McKeown, Mayor Feinstein
Noes: Council members:
None
Abstain: Council members:
None
Absent: Council members:
Holbrook, Genser, Katz
ATTEST:
~..:)~ ......
Maria Stewart, City Clsrk