SR-6H (2)
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cable\ccrfund Santa Monlca, Callfornia
City Council~ Feb. 28, 1995
FEB 2 8 f995
TO, Mayor and Clty Council
FROM: City Staff
SUBJECT: Recommendation to Adopt Resolution Regardlng Addltlonal
Refunds of BaS1C Service Rates by Century Southwest
Cable Television, Inc.
INTRODUCTION
This report recommends that the Clty Council issue by resolution a
rate order to Century Southwest Cable Televlslon, Inc. ("Century" )
which orders Century to make additional refunds of basic serVlce
rates for the perlod from April 1, 1994 to July 14, 1994 based on
service changes made by Century on April 1, 1994 The Clty Councll
reserved its right to order such addltlonal refunds ln its rate
order adopted on July 19/ 1994
BACKGROUND
The Clty has been certified by the Federal COffill"lUnlcatlons
Commission (FCC) to regulate baslc cable televlslon rates (WhlCh
includes the "basic cable" tler and rates for associated equlpment,
installatlon and services) . Pursuant to FCC regulations, a cable
company must justify the rates lt charges as reasonable ln
accordance with federally-devised formulas. The City serves as the
lmplementlng agency for determlnlng Century's compliance wlth
federal regulatlons with regard to baS1C cable teleV1Slon rates.
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FEB 2 8 1995
The rate order adopted by the City Councll on July 19, 1994 (a)
established Century's permitted rates for the basic cable service
tler and assoclated equipment, installation and serVlces for the
perlod from September I, 1993 to July 14, 1994i and (b) ordered
refunds for overcharges for the basic service tler and for certaln
lnstallatlon rates during that same period Further, the City
Council reserved its rlght to order addltional refunds for the
perlod from Aprll I, 1994 to July 14, 1994 to account for the
service changes made
The rate order required Century to reduce 1ts basic service tler
rate from $22.14 to $18.20 for the period from September I, 1993 to
July 14, 1994. This reduction was based on what the City
determined to be the permitted rate under the FCC rules for the
basic serV1ce tier. Century appealed the Clty'S rate reduction to
the FCC on August 18, 1994 The Cable Services Bureau of the FCC
recently denied the Century's appeal. Th1S declslon 1S however
subject to further appeal.
On Aprll I, 1994, Century made a number of changes to ltS
programmlng service offerlngs, includlng adding a channel to the
baslC serv].ce tler and creatlng a two-channel cable programming
service tier. The net result of these changes was to lncrease the
number of channels on tlers subject to regulatlon under the FCC
Rules from 43 to 46 channels
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When these channel addltlons are taken into account in establishing
the initlal permitted rate for the basic service tler for the
period from April I, 1994 to July 14, 1994, the initlal permitted
rate for thlS period would decrease from $18.20 to $17.84 - - thus
lncreaslng the refund for baslc serVlce subscrlbers by $0 36 per
month for thlS perlod.
On July 26, 1994, the Clty requested that the FCC clarlfy the right
of a franchising authority to take into account channel addltlons
occurrlng after the lnltlal date of regulation, but prlor to a rate
decision. Although the FCC has not responded to the City's letter,
a recent FCC declsion clarified that additions and/or deletlons to
channel line-ups of regulated tiers occurrlng after the initial
date of regulation but prlor to a rate decision should be taken
lnto account Based on thlS clarlflcation, staff belleves that the
three additional channels should be counted in determlnlng the
permltted rate for the baS1C service tier for the perlod April I,
1994 to July 14, 1994. Staff is reconmendlng that the City Council
act now to preserve Century's subscrlbers' rlghts to refunds during
this time period.
BUDGET IMPACT
There 18 no slgnlflcant City budgetary impact resulting from the
issuance of the attached rate order.
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RECOMMENDATION
City Staff recommends that City Councll adopt the attached order
provldlng for additional refunds to subscribers of an additional
$0.36 per month for basic service t~er overcharges for the period
commencing April 1, 1994 and endlng July 14, 1994.
Prepared by: Lynne C. Barrette, Asslstant City Manager
Kate Vernez, Senior Management Analyst
Linda A. Mills-Coyne, Deputy City Attorney
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RESOLUTION NO. 8873
(Clty COUDCll Serles)
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF SANTA MONICA ADOPTING A RATE ORDER
REGARDING ADDITIONAL REFUNDS OF BASIC SERVICE
RATES BY CENTURY SOUTHWEST CABLE TELEVISION, INC.
THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES RESOLVE AS
FOLLOWS:
WHEREAS, the City of Santa Monica (the "City") became
certif~ed to regulate baslc cable serVlce rates and assoclated
charges as of October 7, 1993, and has followed regulations
prescribed by the Federal Communicat~ons CommlSSlon (IIFCCII) for the
regulation of the baslc service tler and associated equlpment,
installatl.on, serVl.ces and charges (the IIFCC Rules") i and
WHEREAS, the City adopted a rate order on July 19, 1994
(Resolutlon No. 87Bl(CCSl (tlRate Order II ) that, among other things,
ordered Century to refund the amount of $3.94 to subscrlbers for
basl.c service tier rate overcharges, subject to offsets for any
undercharges for equl.pment and installatl.on, for the perlod from
September I, 1993 to July 14, 1994i and
WHEREAS, the Cable Servl.ces Bureau of the FCC recently denied
the Company's appeal of the City's Rate Order, see In re Century
Southwest Cable Televlsion, Santa Monlca, California, Order, DA 95-
123 (C.B.B. January 31, 1995) i and
WHEREAS, ln the Rate Order, the City noted that lithe net
lmpact of the Company's serv1ce changes on April I, 1994 ( lncI uding
restructurlng A & E and VH-I [f rom Century Select] lnto a 2
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channel cable programm~ng serv1ce tier and adding a broadcast
channel to the basic service t~er) would be to increase the number
of channels on the cable system on serv~ce t~ers subJect to
regulat~on by three (3) , or from 43 to 46 channelsll (Rate Order at
p. 7) i and
WHEREAS, the City further noted that the "FCC Rules do not
appear to permlt the City to take lnto account the service changes
made by the Company on April I, 199411 (Rate Order at p.7); and
WHEREAS, the C~ty further noted that II subscribers to the basJ.c
service tier during the period from Aprll I, 1994 to July 14, 1994
would be ent~tled to a larger refund for that time perlod if the
City could take into account the Company's Apr1l 1 service changes
~n calculatlng refunds" (Rate Order at p.8); and
WHEREAS, the C1ty'S f1nancial consultant concluded that if the
City could take 1nto account the Apr1l 1 serV1ce changes, "the
maX1mum proposed charge for BaS1C Serv1ce would decrease from
$18.20 to $17.84,11 ~ Letter from James C Atklnson, Prlce
Waterhouse, to Patrick J Grant, Esq. (July 13, 1994) ( II FinancJ..al
Consultant's Report II ) , which would result in an additlonal $0.36
refund per month to subscribers for the time period between April
1, 1994 and July 14, 1994, and
WHEREAS, the Company had an opportunlty to prov1de comments on
the draft of the financial consultant's Report; and
WHEREAS, in the Rate Order the City Council "reserve Cd] the
right to order add1tional refunds for the period from Apr~l 1, 1994
to July 14, 1994 to account for servJ..ce changes made by the Company
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on Aprl.l 1, 1994, lTI the event the FCC clar~fies that the Clty
Counell has the rlght to take lnto account such service changes l~
establishing the maXl.mum permltted basic rate for that time perlod"
{Rate Order at p.12); and
WHEREAS, on July 26, 1994, the City requested that "the
Commission clarlfy the right of a franchlslng authority to take
lnto account channel additions that occur after the 1nitial date of
regulatl.on, but prior to a rate decislon, in establlshing the
lnitia1 perml.tted rate and rate refunds for the basic serVl.ce
tler, II see Letter from John Jalili, City Manager, City of Santa
Monlca, to Meredith J. Jones, Chief, Cable Services Bureau, FCC
(July 26, 1994) , and
WHEREAS, although the FCC has not responded to the City's
letter, the Commisslon in a recent rate order Clarlfl.ed that
additlons or deletions to channel line-ups of regulated tiers after
the lnitlal date of regulatlon, but before the issuance of a rate
order, should be taken into account In determinlng the maXlmum
permitted rate after the date of such serv1ce changes, ~ In re
Warner Cable Communicat~ons, Milwaukee, Wisconsin, DA 94-1285, at
5,' 9 (C.B.B. Nov. 18, 1994) i and
WHEREAS, therefore, the City believes the FCC Rules permit the
City to take into account the April I, 1994 serVlces changes by the
Company and to order additional rate refunds; and
WHEREAS, the City believes that 45 days 1S a sufflcient amount
of time for the Company to lmplement rate refunds Slnce the Company
previously agreed to lmplement rate refunds pursuant to the Rate
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Order wlthln 45 days of the order by the FCC's Cable SerVlces
Bureau affirmlng the Rate Order, see Letter Agreement between John
Jallll, City Manager, City of Santa Monica, Callfornia to Scott N.
Schnelder, Senlor Vice Presldent, Century Southwest Cable
Televlsion, III (Aug 22, 1994) quotlnq ("Century agrees that lt
wlll commence lmp1ementatlon of lts refund plan ordered pursuant to
the [Rate Order] to Santa Monica subscribers wlth1n 45 days after
a decislon by the [Cable Serv1ces) Bureau affirming, 1n whol e or ln
part, the [Rate Order]") ;
NOW, THEREFORE, IT IS ORDERED THAT:
l. The Company shall refund to subscrlbers, in add1tlon to
such amounts refunded pursuant to the Rate Order, an additional
$0.36 per month for baslc service tler overcharges for the period
commenclng on April 1, 994 and endlng on July 14, 1994. With
respect to each affected subscrlber entitled to a refund, the
Company shall lmp1ement the rate refunds ordered in this Paragraph
1 withln 45 days after the effectlve date of this Rate Order.
2. Wlthin ten (10) days after the effectlve date of this Rate
Order, the Company shall submlt a wrltten plan to the Clty Manager
which, at a minlmum, sets forth the Company's method of provlding
refunds to subscribers (plus lnterest) ordered 1n Paragraph 1;
ldentlfies the basis for the calculatlon of the amount of refunds;
ldent1fies the applicable lnterest rate and explains how It was
calculated; and explalns how the rate refunds ordered hereln shall
be 1mplemented. Such plan is ~ubJect to the City Manager's review
and approval. The Company's obligation to submit such plan shall
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not affect the Company's obligat1on to lmplement rate refunds, as
set forth in Paragraph 1.
3 The Council reserves the right to modlfy this Order 1f, at
any time, it determlnes that informat~on the Company provided to
the Clty 1S incorrect 1n any material manner.
4. The City Manager is ordered to mail a copy of this Order
to the Company, provide approprlate public notice of this Order,
and make a copy of thlS Order available to any person upon request.
S. The City Clerk shall certify to the adoption of th~s
Resolution, and thenceforth and thereafter the same shall be in
full force and effect.
APPROVED AS TO FORM:
~hhuu.A<1
Marsha J e Moutrie
City Attorney
(f.\cmanager\cable\rreso)
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Adopted and approved thIs 28th of February. 1995
U~
Mayor
I hereby cemfy that the foregomg Resolution 8873 (CCS) was duly adopted at a
meetIng of the City CauDell held on the 28th of February. 1995 by the followmg vote-
Ayes' CouncIlmembers Abdo. O'Connor. Greenberg, Holbrook. Genser
Rosenstem,
Noes. CouncIlmembers None
Abstam Councllmembers None
Absent. Councllmembers, Ebner
ATTEST
v}~C!-6/
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City Clerk