R-8979
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cable\resoJan9
Clty Council Mtg. Jan 9, 1996
Santa Monlca, California
RESOLUTION NO. 8979 (eeS)
(Clty Council)
A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF SANTA MONICA
ADOPTING A RATE ORDER REGARDING
"SMARTBOX" CONVERTER AND "UNIVERSAL!I REMOTE CONTROL
DEVICE RATES OF CENTURY SOUTHWEST CABLE TELEVISION, INC.
WHEREAS, the Clty of Santa Monlca (the "City") became
certlfied to regulate baslc cable service rates and associated
charges as of October 7, 1993, and has followed regulatlons
presc~ibed by the Federal Communlcations Commission (nFCC") for the
regulation of the basic service tier and assoclated equipment,
lnstallatlon, services and charges (the "FCC Rules!I); and
WHEREAS, Century Southwest Cable Televlslon,
Inc.
(the
nCompanyll) submitted an FCC Form 1205 to the City on February 14,
1995 for the "SmartBox" converter and associated remote control
deVlce, an FCC Form 1205 on May 19, 1995 for the "Unlversalll remote
control device, and supplemental rate lnformatlon to the Clty on
August 8, 1995 (collectlvely, the IIRate Fllings"); and
WHEREAS, the remote control devlce used to operate the
"SmartBoxtJ converter and the "Universal I' remo':::e control deVlce are
the same piece of equlpment (referred to collectlvely herein as the
"Unlversal" remote control devlce); and
WHEREAS the Company requlres basic-only subscribers with
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'1cable-ready" televislons to install IISmartBoxll converters in order
to block such subscribers' receipt of "Century Select..; and
WHEREAS, the C1ty 1ssued a public not1ce seeking written
comments from lnterested partles on the Company's proposed rates,
and the Rate Fillngs were made avallable for publlC inspection in
order to obtain comment from any 1nterested party; and
WHEREAS, the City Staff has made a recommendation to the City
Council (IICounc1l") regard1ng the Company's rates based on: {a)
lnformation contalned In the Rate Fllings; (b) the assumed accuracy
of that 1nformat1oni (c) com~ents, eV1dence and informatlon from
interested parties, (d) the draft rate report prepared by the
City's flnancial consultant, (e) the Company's comments on the
draft rate report; {f) the flnanc1al consultant's flnal rate report
and December 15, 1995 letter responding to the Company's comments
on the draft rate report ( " collectively, the F1nal Report "); and
WHEREAS, the Council has considered the C1ty Staff's
recommendatlons and the reasons therefore, has received and
considered comments from the public, has reviewed and hereby adopts
(and by th1S reference incorporates herein), as approprlate and to
the extent not 1nconsistent with thlS Rate Order, the flndings,
assumpt10ns and other infor~ation set forth in the flnanclal
consultant's Flnal Report; and
WHEREAS, the Company subm1tted its annual FCC Form 1205 for
equipment and installat10n on November 6, 1995 as requlred by the
FCC ("November FCC Form 120511); and
WHEREAS, the Clty lS contlnuing to review the November FCC
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Form 1205 whlch shall govern among other thlngs the rates for the
11 Smart Box II converter and IIUnlversall1 remote control device after
the perlod covered by the February 14 and May 19 Form 1205 rate
filingsi and
WHEREAS, the Company has the burden of provlng by a
preponderance of eVldence that lts rates for the IISmartBoxH
converter and the "Unlversalll remote control device are reasonable
under the FCC Rules, 47 C.F.R. ~ 76 937(a);
NOW, THEREFORE, IT IS ORDERED THAT:
1. The maximum permltted rates for the l1SmartBox" converter
and the I1Unlversalll remote control device until the date Century
is permitted by the FCC Rules to adJust its rates pursuant to the
November FCC Form 1205 shall be as follows:
Maximum
Permitted Rates:
I1SmartBoxl1 converter
"UnlversalH remote control
device (including batteries)
$2.29
$0.71
The Company shall refund that portlon of the rates (plus interest)
paid by subscribers for the equlpment described in this Paragraph
to the extent such rates exceed the rates approved ln this
Paragraph
The Company shall not offset refunds by the amount of
any dlscounts provlded to subscrlbers on the equipment rates
subJect to thlS Rate Order. The refund period for the "SmartBox1!
1 The rates listed ln the column entitled "Maximum Permltted
Ratesl1 exclude franchlse fees.
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converter shall run from the date the Company first charged a
subscriber for a "SmartBox" converter untll the date that Century
lS permitted by the FCC Rules to adJust its rates pursuant to the
November FCC Form 1205 rates. The refund period for the I1Univeral"
remote control devlce shall run from the date the Company flrst
charged a subscriber for such "Dnl versal" remote control deVlce
until the date Century lS permitted by the FCC Rules to adjust ltS
rates pursuant to the November FCC Form 1205. With respect to each
affected subscriber entltled to a refund, the Company shall
implement the rate refunds pursuant to thlS Paragraph wlthin sixty
(60) days after the Clty Manager approves the refund plan that the
Company shall submlt pursuant to Paragraph No.2.
2. Wlthin seven (7) days after the date of adoptlon by the
Council of th~s Rate Order, the Company shall submlt a written plan
to the Cl ty Manager WhlCh, at a minlmum, shall set forth the
Company's method of providing refunds to subscrlbers (plus
interest) pursuant to Paragraph No. Ii identlfles the basis for the
calculation of the amount of refunds; identlfies the amount of the
refundi identifles the applicable lnterest rate and explalns how lt
was calculated, provldes the nu~ber of subscribers entitled to a
refund for each month durlng the refund perlod and the actual rate
charged such subscribers for the I1SmartBoxl1 converter and for the
"Univeralll remote control device during such period, and explains
how the rate refunds ordered hereln shall be lmplemented. Such
plan is subject to the City Manager's reVlew and approval. The
Company's obllgation to SUb'lllt such plan shall not affect the
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Company's obl~gation to ~mplement rate refunds, as set forth in
Paragraph No.1.
3. The Council reserves the right to order additional
adj ustments to the rates, and any refunds, for the II SmartBoxll
converter and the "Universall1 remote control dev~ce upon complet~on
of the C~ty's rev~ew of the Company's November FCC Form 1205.
4. W~thin seven (7) days after the date of adoptlon by the
Council of this Rate Order, the Company shall provide a wr~tten
statement as to whether the Compa~y charged or charges: (1) any
bas~c -only subscr~ber for a 11 SmartBoxtl converter or any other
converter the Company requ~res any such subscriber to have, and (2)
any such basic-only subscr~ber for the "Dniversaltl remote control
device or any other remote control dev~ce used to operate any such
converter. A copy of any source documents (and a detailed summary
of the information contained ~n the source docurrents) should
accompany the Company's response. The Counc~l reserves the right
to determine whether any charges lmposed by the Company on basic-
only subscribers for converter boxes and remote control devices are
permisslble under applicable law and to take appropriate act~on if
such charges are not perm~ssible under applicable law.
5. The Council reserves the r~ght to mod~fy this Rate Order
~f, at any time, i t determ~nes that informatlon the Company
provided to the C~ty is ~ncorrect ~n any mater~al manner.
6 The City Manager is ordered to ma~l a copy of this Rate
Order to the Company, provlde appropr~ate public notice of this
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Rate Order, and make a copy of thls Rate Order avallable to any
person upon request.
7. The City Clerk shall certlfy to the adoption of thls
Resolution, and thenceforth and thereafter the same shall be in
full force and effect
APPROVED AS TO FORM:
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SMO~
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~ISER SCHERER Be ScHLEGE~
CERTIFIED Pl.::"BI.IC ~~CCOU}o.-rASTS
1699 L STREET S W ~ SL""ITE 702
W~~HINGTON, D C 20036
TEL (202) 466-4656
FAX (202) 331-8342
..
December 15, 1995
Ms. Lynn C. Barrette
Assistant City Manager
City of Santa Monica
P.O. Box 2200
Santa Monica, California 90407-2200
Re: Century S.W. Cable Television III request for equipment
rates for universal remotes and ISmartBox" converters
Dear Ms. Barrette:
You have asked us to analyze the request for equipment rates
for universal remotes and IISmartBox" converters filed with the City
of Santa Monica regarding CO:LL.rLLlmity Unit Identification nUJllber
CA0456. The purpose of our analysis is to assist the City of Santa
Monica in its determination of whether the rates proposed by
Century Southwest Cable Television III (IICenturyll), for universal
remotes and ISmartBox" converters are reasonable under the
regulations adopted by the Federal Communications Commission
( II FCC .') .
While our efforts involved the analysis of accounting records
and other information supplied by Century, we did not perform an
audit of Century's financial statements in accordance with
generally accepted audi ting standards. Had we performed additional
procedures or had we made an examination in accordance with
generally accepted auditing standards, other matters might have
come to our attention that would have been reported to you.
Furthermore, our report assumes that the information provided and
represen ta tions made by Century are true and accura te . Our
analysis and this report are intended solely for use by Santa
Monica for the purpose described above. This report is based on
work performed to date and the regulations adopted by the FCC
including, among others, certain regulations which became effective
on May 15, 1994. The procedures we performed are attached as
Exhibit I.
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CEbr.L"UKi" S. W. CABLE TELEVISION III
UNIVERSAL REMOTES AND SMARTBOX CONVERTERS
SUMMARY OF FINDINGS
This section presents a summary of the results of our analysis
for those i tams which, based on a review of the information
provided and procedures performed, we believe should be considered
by Santa Monica in its review of the rates for universal remotes
and converters submitted by Century. Below is a chart which sets
forth Century's proposed rates and the recommended rates based on
our calculations:
Century's
Proposed Maximum
Permitted Rate
Form 1205 Recommended
Adiusted Rate
Universal remote
SmartBox converter
$1. 56
$3.20
$ .71
$2.29
EQUIPMENT RATES
The FCC rules address the process for filing the first 1205 to
establish equipment rates in conjunction with the FCC Form 1200.
The FCC recently clarified that the FCC Form 1205 is the
appropriate Form to use to determine the rate for new equipment
subject to certain modifications. See Thirteenth Order on
Reconsideration, MM Docket No. 92-266 at paragraph 91. (released
Sept. 20, 1995). We have attached pertinent sections of the Form
1205 which reflect the calculations we made. These calculations
are summarized as follows:
I. Universal Remote
KBB Calculation:
Gross book value
Accumulated depreciation
Return on investment
Current depreciation
Annual capital costs
300 *($12.00+$1.25) = $3,975
($3,975/10) = $398
11.25% * ($3,577) = $402
($3,975/10) = $398
$402 + $398 = $800
Maintenance costs
Total cost of remotes
Rate per month
75 hours * $23.48 = $1,761
$1,761 + $800 = $2,561
{$2,561/300)/12 = $ .71
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Our calculations differ from Century's calculations in several
respects. Century calculates its maximum permitted rate as
follows:
"
Century added the sum of the invoice cost ($12.00), cost of
batteries ($1.25), cost of handling ($.25 * 8), return on
gross book value of investment ($1.72) and finance cost
($1.70). These costs amounted to $18.67. Century divided
this total by 12 months to arrive at the $1.56 monthly lease
cost.
Century capitalized the $2.00 handling charge with each remote
instead of including these salary costs in the Hourly Service
Charge calculation. We allowed the related 75 hours on the
basis that these hours were used to install batteries, discuss
how to use the remote with subscribers, and to repair the
remotes.
Century added a 10% financing cost to the base price of the
remote.
We believe that Century's methodology is inconsistent with the
FCC's rules for the following reasons:
Century did not follow the methodology outlined in the FCC
rules which is to calculate equipment basket rates by adding
the operating costs plus rate of return on net assets.
The salary cost of employees to maintain and install the
remote should be included in the hourly service charge
calculation. The cost of batteries could also be included in
schedule B of the hourly service charge calculation. We are
allowing the capitalization here as the impact on the return
on investment calculation is de minimis.
Century did not state that the subscribers would be given the
remotes at the end of one year, yet Century recovers the costs
during the first twelve month period. We have depreciated the
cost of the remotes over a period of ten years, which is the
useful life used by Century in computing depreciation for
converters.
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II. SmartBox Converters
As with the calculation for the universal remote, we
calculated the maximum permitted rate for SmartBox Converters using
a FCC Form 1205 format, a copy of which is attached. The
calculations reflected on this form are summarized as follows:
,
K.SS Calculation:
Gross book value
Accumulated depreciation
Deferred taxes - tax dep
less book dep * tax rate
Return on investment
Current depreciation
Annual capital costs
Maintenance costs
Total cost of converters
Rate per month
2,000 * ($128.19) = $256,380
($256,380/10) = $25,638
($36,637-$25,638) * .4014 =
$4,414
11.25% * ($226,328) = $25,462
($256,380/10) = $25,638
$25,462 + $25,638 = $51,100
47.5 hours * $23.48 = $1,115
$1,115 + 51,100 = $52,215
($52,215/1,900)/12 = $2.29
Our calculations differ from Century's calculations in several
respects. Century's calculations are summarized as follows:
Century calculated gross book value as $256,380 by taking the
average cost of the three converters multiplied by the number
of converters.
Century calculated maintenance cost by multiplying maintenance
hours times an average hourly service charge of $16.00.
Century calculated depreciation expense.
Century calculated a return on investment.
Century computed total cost of investment by adding return on
the gross book value, depreciation, and maintenance costs.
Century computed the rate per month by dividing the total cost
of investment by the number of units in service by 12 months.
We believe that Century's methodology is inconsistent with the
FCC's rules for several reasons:
Century did not follow the methodology outlined in the FCC
rules which is to calculate equipment basket rates by adding
the operating costs plus rate of return on net assets.
Century calculated depreciation expense, but did not include
the corresponding accumulated depreciation of $25,638 required
in column C of its modified FCC Form 1205.
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Century did not calculate any estimated deferred taxes, which
al though de minimis for remotes are more significant for
SmartBox.
;0
Century used an average Hourly Service Charge (IIHSCII) of
$16.00. We used the HSC of $23.48 that the City of Santa
Monica approved in Resolution No. 8781 which established
approved rates for basic service and equipment and
installation rates.
We have no responsibility to update this report for events and
circumstances occurring after the date of this report.
Very truly yours,
~~Chle
Attachment: As stated
5
Lay S.W. CABLE TELEVISIO~II
UNIVERSAL REMOTES AND SMARTBOX CONVERTERS
~
EXHIBIT I
PROCEDURES
The procedures we performed included, but were not limited to,
the following:
GENERAL
1. We reviewed the eity of Santa Monica's Resolution No. 8781,
which established approved rates for basic service and
equipment and installation rates.
2. We assisted the City of Santa Monica in preparing a request
for information in July 1995.
3. We reviewed Century's response to the request for information
dated August 1995 and the supplemental infor.mation attached
thereto.
4. We recomputed the FCC Form 1205 Schedule C for the Universal
Remotes and SmartBox Converters.
5. We developed an understanding of the assumptions and
computations used by Century and analyzed the proposed rates
in relation to the explanations and information provided by
Century.
6. We compared the Book Cost, Accumulated Depreciation, Deferred
Taxes, Current Provision for Depreciation for each asset to
Century's supporting invoices and other documentation.
7. We computed estimated deferred taxes for the SmartBox.
8. We completed a modified FCC Form 1205.
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KAISER SCHERER Be SCHLEGEL
CERTIFIED PCBI.IC ACCO~"AN"TS
1899 L STREET N W, SUITE 702
'WASHnTGTOX, D C 20036
TEL (202) 466-4656
\
FAX (202) 331-8342
December 15, 1995
Ms. Lynn C. Barrette
Assistant City Manager
City of Santa Monica
P.O. Box 2200
Santa Monica, California 90407-2200
Re: Century S. w. Cable Television III response to Draft
Financial Report dated November 30, 1995 regarding the
Smartbox converter and the Universal remote control
Dear Ms. Barrette:
As we stated in our draft report, the FCC rules address the
process for filing the 1205 to establish equipment rates in
conjunction with the FCC Form 1200. The FCC recently clarified that
the FCC Form 1205 also is the appropriate Form to use to determine
the rate for new equipment subject to certain modifications. See
Thirteenth Order on Reconsideration, MM Docket No. 92-266 at
paragraphs 90-91, released Sept. 20, 1995, a copy of which is
attached. The purpose of following these procedures is to compute
an lIinterim ratell. This rate for new equipment would be adjusted
when the cable operator completed the next annual Form 1205 filing,
which is the filing the City received November 1995.
Our calculation for the Smartbox converter is sUllUTlarized
below:
1.
2 .
3 .
4.
5.
6.
7 .
8.
9.
Gross book value
Accumulated depreciation
Deferred taxes - tax dep
less book dep * tax rate
2,000 * ($128.19) = $256,380
($256,380/10) = $25,638
Return on investment
Current depreciation
Annual capital costs
($36,637-$25,638) * .4014 =
$4,414
11.25% * ($226,328) = $25,462
($256,380/10) = $25,638
$25,462+ $25,638 = $51,100
Maintenance costs
Total cost of converters
Rate per month
47.5 hours * $23.48 = $1,115
$1,115 + 51,100 = $52,215
($52,215/1,900)/12 = $2.29
e
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It is our understanding that Century disagrees with two parts
of the above calculation:
Line 2. Accumulated depreciation
Century states that since the "equipment is brand new, there
should be no accumulated depreciation. An annual depreciation
provision is necessary to determine a rate, however, depreciation
does not begin to accumulate until the end of the first year. II
The FCC rules state that a cable operator must use generally
accepted accounting principles ("GAAP") when completing the FCC
for.ms.1 On schedule C of the Form 1205, the cable operator is
asked to: a) state the gross book value; b)state the accumulated
depreciation; c) state the deferred taxes; d) compute the net book
value; and e) compute a rate of return on this "net asset" value.
This computed rate of return value forms one component of the rate
charged to subscribers. A separate component of the rate is
calculated by including the annual operating expenses relating to
the piece of equipment, i.e., depreciation expense and costs for
maintenance and repair of the equipment. In this case, Century
wants to include in the rate calculation the estimated annual
depreciation expense, but does not want to reduce the gross asset
value by the corresponding accumulated depreciation in computing
its rate of return. We believe this is inconsistent and is not
permitted by the FCC rules.
The Fee Forms consi s ten tly calculate a rate based on a
snapshot of the data at a point in time (i.e. data for a certain
fiscal year whereby the balance sheet items are as of the end of
the year and the expense items are for the 12 months in that fiscal
year), just as if the data had been recorded on the company's
general ledger in accordance with GAAP. Once the cable operator
takes depreciation against an asset, the net asset value decreases,
which in turn, decreases the base amount used to compute the return
component of the rate. The cable operator cannot recover
depreciation plus a rate of return on the original undepreciated
asset value.
Under GAAP, depreciation accumulates throughout the period of
service and is recorded as an offset to the original asset cost.
The net book value of an asset consists of its original cost less
accumulated depreciation. Depreciation expense begins when an asset
is placed in service, and hence, begins to generate revenue. It is
- Report and Order and Further Notice of Proposed Rulemak~ng,
February 22, 1994, V. Accountlng Requirements.
47 C.F.R. ~76 923 (c) and ~76.924 (b).
FCC Form 1205, May 1994, General Instructlons, p.3.
-2-
inconsistent to JIlk depreciation expense on4l!he profit and loss
side of a companyls ledger and not to book the corresponding credit
to accumulated depreciation on the balance sheet side of the
ledger. GAAP does not allow the one-sided entry Century is
attempting to justify.
Equipment is classified as an asset on the balance sheet or is
expensed immediately in a company's profit and loss statement
depending on its estimated useful life. If a piece of equipment
has a de minimis cost or has a useful life less than one year, a
company usually chooses to expense it immediately. If a company
estimates that the asset will generate revenue for, in this case,
ten years, then the company records the item on the books as an
asset and the value appears on the balance sheet of the company.
A company also realizes that the asset value deteriorates over time
and accounts for this deterioration by establishing a depreciation
policy. GAAP requires that this asset cost be spread over the
expected useful life of the asset in such a way as to allocate it
as equitably as possible to the periods during which services are
obtained from the use of the asset. This procedure is known as
depreciation accounting.
Generally accepted accounting principles define depreciation
accounting as follows:
A system of accounting that aims to distribute
the cost or other basic value of tangible
capital assetsl over the estimated useful life
of the uni t in a sys tema tic and rational
manner. It is a process of allocationl not of
val ua tion . 2
The FCC rules require cable operators to establish equipment
rates in accordance with GAAP. 3 In this case, since Century
established a ten year useful life for these converters I Century
should take one tenth of the asset value away each year by making
a debit entry to depreciation expense for one tenth of the value
and by making a corresponding credit entry to accumulated
deprecation, an account which appears on the balance sheet. This
IIdouble-entry" procedure is in accordance with FCC policy stated at
47 C.F.R. S76.1152 (b) Accumulated Depreciation as follows:
This account shall be credited with
depreciation amounts concurrently charged to
the Depreciation Expense--eable Services Plant
in Service Account. [Emphasis added]
Century's
subscribers by
methodology
seeking to
overstates
exclude the
the rate charged to
concurrently charged
;,:
ARB43 , ch9C, nar.5
- See 47 C F.R. ~76.923 (c} and ~76.924 (b).
-3-
depreciation expe.e from the asset value and !cluding in the rate
calculation the full original cost of the equipment plus a full
year of depreciation expense. Because Century seeks to include
depreciation expense in calculating its rate, we believe it is
appropriate under GAAP and the FCC rules to reduce the net asset
value by posting a corresponding value to accumulated depreciation.
Inclusion of accumulated depreciation decreases Century's proposed
rate by $.13.
Line 3. Est~ted deferred taxes
Regarding deferred taxes, Century states, "because the
equipment is new, there would be no deduction for deferred taxes
since the asset has not yet been depreciated (creating a book
versus tax depreciation difference.)
For the reasons stated above, book and tax depreciation
expense are theoretically computed simultaneously. The
instructions to the FCC Form 1205 Schedule C. Line F state that
deferred taxes should be included in the calculation. The
instructions explain that deferred taxes result from the use of
faster depreciation write-offs for tax purposes than for financial
reporting purposes. In this case Century uses a ten year life for
financial reporting purposes and a seven year life for tax return
purposes. This "book-tax" difference results in Century accruing a
future tax liability relating to these assets. The FCC rules
require that this deferred tax liability value be included as a
component of the net equipment asset value. Inclusion of an
estimate of deferred taxes decreases Century's proposed rate by
$.02.
Please call us if your have any questions regarding this
matter or if we can be of further service.
Very truly yours,
J5k!f!:ch
-4-
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e
c
equipmem COSIS.
90. M()reo\'~r. under ~"I~[Jng ruJ~$. Il~r.UOrs "Cf Ih~Jr ~Quipm~nf Jnu mSfaJJauon
rates on .In Jnnu.lI basIs uSing (h~ rr~t:l..hng tisc.tl ~t:Jr \\'~ Lllnunu~ [U ~h~\~. as \\c:
found 10 che nunl Reco/rJu!ercJ([ol/ Order. chac x'"cung racc:~ u!'oHlg C:lI~C:- nuc prl..'Jt:Cled pc:rmHs
opef"dtors [0 ret.o\er [helf tull l.:O~t (If c:qulpment. ll'~ For dlll~ t,;.I~S \\ ht:re llpt:r.ltO[l) tac~ an
unusuaJ change in operations [hac \\ l..1uld not ~ retll::Cted 111 [he pre\ IllUS ~ ears annual <.I:U3.
the First RecOIlSlderatloll Order stated thac operalors Jre pt:rmiued to use a n:presemauve
month for the purpose of calculaung equipment rones. pro\ IlJed that franchlsmg authorities
agree to this arrangement 1M
91. FinaJly. we clanf} huw an opef'3tor should set us initial rates for new t)'pes of
equipmem.1n.4 We have previousl} Slated th3t when an oP'=nuor mtroduces a new t}.pe of
equipmenc. the operator may set a race tor thac equipment at ~ ci~ IC is imroduce:d .""
Unut now, however. we h3\"e not provitJcd a mcthodolog~. Ac~onJingly. no earlier than 60
days before [he date the new [y~ of equipment is scheUuld [0 ~ intnxluccd to subscnbers.
the oper.nor wllJ be: permiued to tile for:1 ratt adjlbtmcnt lln a Form 1205. The proposc=c.I
rate would go into c:tfeet at the end of thiS 6O~ay JkrioU unlcs) [he: fmochising authoru~
rc:jectS th~ proposed rate :1S unreas('lnabl~ or tlb: franchL<ing nuthorit~ tinds that t~ operator
has submiued an mcomplccc tiling In setting r.u~s fllf ne:w t~ ~s of equipment. op.:=r.uon.
\,,'ould compJe:Je [he relevant pornon ot S..:h((jule: C and [he: reJ(\'ant SI(P uf th~ Worksheet for
Cak:ulaling PemlHced Equtpmenr :md lnsmllauun Charges llt .l F\.~rm 1';05 ~Iorc:over.
where applicable. the operawr \\.ould use: tigures tram tll<' most recc:m Form I.~OS tor the:
informatlun nor ~pc:t:ltiC.ll1~ rdah~..J tll the ne\\ equlpm.:m. ~ g [ht: Hl1url~ Service Chdrge.
In calcul.mng th( .1Ilnuitl m~l1nten.lOCC: dnu "C:(\ i~t: hllU~ for [he n~\\. e....ulpmcm. the: opc:rJ[\,.lr
:-.hould bJst: ns ~l1lQ on cllt: .n t.:r:lg~ Jnnual e'l;pe\:t~tJ [line requm::u III malOcam the unit. Ie.
expecteU serv...;!: huurs rl;::4utr~d l'\ ~r (h~ lite ur th~ ~l.Julrm~nt umt ~mg mtmduct:u Ji\ tued
by the ~qUlpm~nt UOlt"~ ~"{pt:Llt:d Ilk
6 Regulator~ Re\ ie\\ Period for Annual Rate Changes
3. Basic Sen ice Tier
92 Op(:rators that d~ct thl:: .mnual ratc adjustment methodulllgy must tile aST nue:
change request'; Jt least 90 :.Id~ s rnor to the dace: they plan to Imph:m~nt the: proposed
!I>~ Tlurd ReUJIl;:'ldi!/alwn O/{ft:/ 9 FCC Red ~372
1:... Fu M R!!({Jllsldt:r.mu/I ()f,it:r. 9 FCC Rcu at l200
~. Thl' ,lppr0.1ch I~ not Illnlt~J tn \lp~r..lt0n. (h~H de!"[ the annUJI r"i1mg. hut Jpph~;\ tl' .111
'.lp~r.1Ctlr~ ch.u nk F,Irm I ~05
..... ['tn' ,R~'c(wJtdcra({/JN O'd.'.' t.; FCC 1<..;] J~ I! \jL)
3~
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Adopted and approved thIs 9th of January, 1996
1Lf~
Mayor
I hereby certIfy that the foregomg ResolutlOn 8979 (CCS) was duly adopted at a meetmg
of the CIty CouncIl held on the 9th of January, 1996 by the followmg vote
Ayes
CouncIl members
Abdo, Ebner, Genser, Holbrook, Rosenste~n
Noes
CounCIl members
None
Abstam
Councll members
None
Absent
Councd members
Greenberg, O'Connor
ATTEST
~.~ -~
CIty Clerk
~
PROO' OF PU8L'A liON
(2015.5 C.C. P.)
STATE OF CALI FORN lA,
County of Los Angeles,
I am a citizen of the United States and a
resident of the County aforesaid; I am over
the age of eighteen years, and not a party to
or Interested in the above-entltled matter I
am the principal clerk of the printer of the
.........................................,..........
THE OUTLOOK
...........~.~-.......~.......................~....~
a newspaper of general circulation. printed
and published .~~IJ..X.f;i\~t:.~.~Y'H?hX.
In the City of . ~Atl:r A. r-HJJfJQA...... ... ...
County of Los Angeles, and which
newspaper has been adjudged a newspaper
of general circulation by the Superior Court
of the County of Los Angeles, State of
Cal ifornia, under the date of.J~~...~~ 19 .~~.,
Case Number ..;u~.n~.....; that the notice.
of which the annexed IS a printed copy (set
1M type not smaller than nonpareil), has
been published in each regular and entire
issue of said newspaper and not In any
supplement thereof on the following dates,
to-wit:
JoAN 13
....................................................
all In the year 19., ~~
I certify (or declare) under penalty of
perjury that the foregoing 15 true and
correct .
Dated at SANTA nONICA
.~........~.........I......I.I'...~I.I...
ni ,thIS....~~....daYo//'.~... 19 96
...,1f~~~~......
'Ihe Oudool,
1920 Colorado Ave
Santa Monica, California 90404
(310) 829-6811
&pre, A~LES ~
~~_. on
~
.
. .
This space Is for the County Clerk's FlIlng Stamp
Proof of Publication of
.1.6...............................................~......
EO 1.35
RESOLUTION NO 8979
lC~ty Council)
(ees)
~~
"',
A RBSOLu~ION OF THE CITY COUNCIL OF
THE C!TY oP SANTA MONICA ,-
1\DOPTING A RATE ORDER REGARDING 'J
"SMARTBOX" CONVERTBR AND "tlliIVERSAL" REMOTE CONTROL
DEVICE RATES OF C~v1RY SQUTqWEST CABLE TELEVISION, INC
WHEREAS, the Clty of Santa Monica (the .Clty"i becalT'e.'.
certJ.fied to regulate baS1C cable servJ.ce rates and associat.ed,
charges as of Oct-ober 7, 1993, ar.d has followed regulatJ.ons
prescn.bed by the Federal ComMU=:lJ.catlons Commlssion (" FCC") for tbe "
regulatJ.on of the baS1C serVlce tJ.er and assOClated equJ.pment, '~
J.nstallatJ.on, servloces and char"es :the "FCC Rules"), and .
WHEREAS, Century Southwest Cable TelevisJ.on, Inc (the"
"Company") submitted an FCC Fcr~ 1205 to the City on February 14,
1995 for the "SmartBox" ccnver:er and assoclated remote control
device. an FCC Form 1205 on lAay 19, 1995 for the . Universal " re'llote ".
control devJ.ce, and supple~ertal rate ~nformation to t~e City on
AUgust 8, 1995 (collectlvely, the "Rate Fllings"), and
WHEREAS. the remote cO"1tr-ol device used to operate the
.SmartBox' CO'1verter and the "Un:.versal" remote control device are <
the same piece of equipment ireferre:i to collect:Lvely hereln as the,
" UnJ.versal" remote control deV1Ce), and
WHEREAS the CO""lpany recj"I.i1res baslc-only subscr:Lbers with .
"cable-ready' televlSJ.ons to 1ns::'all "SmartBox. converters J.n order '-,
to block such subscrJ.bers' recelpt of "Century Select", and '
WHEREAS, the City issued a public notloce seeklong wrJ.tten
co~ments from interested partiea on the COmpany's proposed rates..,
and the Rate Fillongs were made available for puhlJ.c inspect:.on J.n~'
order to obtain comment from any 1nterested party, and
WHEREAS, the C:Lty Staff ~as ma:ie a recommendatloon to the Cloty
Council {"Councll.) regardlong the Company's rates based on (a) 0
J.nformation contalned in the Rate <J.lings: (b) the assumed accuracy' '
of that inforltlatlon, (c) COi"'1'1\en~s, eVJ.dence and informatJ.O'l. from '.
interested partloes, (dl the draft rate report prepared by the
CJ.ty's fJ.nancial consultant, (e) t':le Company's comments on the -
draft rate report, (f) the fi"1anc1al consultant's fJ.nal rate report
and December 15, 1995 letter respondlng to the Company's commentB ~
on the draft rate report ("co:'lective1y, the Final Report"), and ~:
WHEREAS, the Cauncll has consldered the City Staff'~~
recommendations and the reasons eherefore, has recelved and"-
considered comments from the p'.JblJ.c, has reviewed and hereby adopts
[apd by thlos reference ~ncorpora~es he~ein), as appropriate and t~~
the extent not inconsistent with thlS Rate Order, the fJ.ndings~-~
-..;~
aBsunpt~ons and other ~nfornatJ.o"l set forth ~n the firanoJ.al
conB~ltant'~Pinal Report, a"1d ~
WHEREAS, the Company sub~ltted ltB annual FCC Form 1205 for ~
equipment ana lnstallatJ.on on ~ove~~er 6, 1995 as required by th~~
FCC lflNove-nber FCC Form 1205"i, ard
WHEREAS, the C:Lty is con:lnuing to reVlew the November FCC ...
Form 1205 whloch shall govern a~ong o~~er things the rates for th~~
"SmartBox" converter and "UnlvE'rsal" remo~e control device afte~~
t~e perlod covered by the February 14 and May 19 Foru 1205 rate
flolings, and
WHERBAS, the Corrpa"lY h;l5 the burden af prov~ng by af..
preponderance of evider-ce thac 1ts rates for the "SmartBox",
converter and the "universal" rerrote control device are reaaonable-
under the FCC Rules, 47 C FRS 76 937(a), '
NOW, THBREFORE, IT IS ORDERED THAT ~
1 The maxJ.ffium permJ.tted rates for the "SmartBox" convertel!-."
and the ":JnJ.versal" remote contrcl device unti: the date Century'
18 pennJ.tted by the FCC Rules to adJust J.1:S rates pursuan~ to the-"
November FCC Form 1205 shall be a6 follows '
""-axlolIIum
PerfnJ.tted Rates'
,.
_/
u~.. r---.
.
e
MaxJ.mum
Pannitt@d Ratelii~
I" SmartBoK"' converter
"Universal It remote cent.roI
device (l.nch..:ding batteries)
$2 29
$0 71
The Company shall refund that port~.on of tr..e rates (plus interest(. ~
aid by subacribe~B for the equJ.prrent desc:n.bed in thl.S Paragraph to'....
the- extent such rates @J(ceed the rates approved In th~.s Paragraph .....
The Company shall not off!;let refunds by the aMount of any d~lijIcounta ~
provl.ded to subscrIbers On the equ:Lp'ne"'lt rates subJect; to this Rate
Qrder The r-efuYJ.d perIod for the nSmartBox" converter ahall run
from the date t:~e Company f.1:rs.:. charged a .eubscr~ber for it
"SMartBox" Conver\:er unt.Il the date that Century l8 permitted by
the FCC Rules to adJust lts :::-att=!:s purs'.Jant to t1-.le N'overnber FCC Form
1205 rates The refund per10d for the l'Un1verall< remote control
devJ.ce shall ::-un from t.he date the Company f1:tst charged a
subsqr~ber for such .t'raversal" rerrlote control dev~ce unt~l t.he'
date Century IS perfIl:!.tted by ti.e FCC Rules to adJust l.~S rates
ouraliant to t~e November FCC Forn. 1205 WJ.th resoect to each
affected sub!;:cr~ber entItled to a refund, the Compa.,y sral:
implement. the rate re.funds pu~s\Jan-: to this Paragraph within aixty
(60) days after t.he C~ty Manager approves the refund plan that the
Company shall eubm~ t pursuant ~o Para.graph No :2 ..
2 With~n seven (7) days after the date of adoption by the~
Council of th1.s Rate Order, the Compar~y shall 5ubm1.t a wr~tten plan' ~
to the C~ty Manager which, at a minimum, Shall set fort.h the #
Company' IS m.ethod of prov~d1ng refunds to eubscr~ber8 (plus:
interest.) pursuant to Para9rap~ No 1, idet::.t~f~ea the bas1.S for the'
calculat~on of the amount of refu"lds, ~dent1.f1el5 the amount of t.he
refandl 1dentifles the appb.cable 1nterest rate and expla::.ns how :l~"" ,
was calculated# prov:.des the nurrr..ber of subscrlbers em:l.tled to a I .
refund for each month ::lur~ng th~ ~e~L:."1d perl-od and the actual rate ,
charged such subscribers for the "SM.a.rt9ox'" converter and for the~~
IIUnl veral" remote control devlce durl.ng s....ch period, and explalne
how the rate refunds ::.rdered herein shall be im;lemented Such"....
plan 19 S-.J.bJect to the City MaI"ager# s r.eV1ew and approval The._
Company' s obl~gatJ,.on to subml.t suc'1 plan shall not affect the I
Company'S Obligation to lmplell1eC't rate refunds. as set forth ~d..i J
Paragraph No 1 "r"
3 The Council reserves the r.:.ght to order addi~~onal
adJustments to the rates~ and any refunds. for the "SmartBox-
convert.er and the "iJniver15aln rem::::lte control device upon complet~onv:
of the CIty' S rev~ew of the Corrpany's November FCC Form 1205 ...
4 Wlt.h~n Seven (7) days after the date of adopt~on by thE1 .
Counc~l of thl-s R.a.t.e Order, the Company shall prov:tde a wrltten
statement as to whether t1e Compa~y charged or charges {ll anyf
basic-only subscr1ber fcr a "SmartBox" converter or any other..-
convert&r the Company requ~res any such subscriber to have, a.nd (2)
any such ba8~c-o~ly subscrlber for the "Un1Ver$a~" remote control_
device or any ot;her remote contrel devlce used to operate any such ......
converter A copy of any soarce documents (and a deta~led Bummary
of the inf:trmil.t.l.on conta1"'led l.r the source dOcuments) 'Should-
accompany the Company's response The Coancil reser-....es the r~ght
to determine whether any charges Imposed by the COmpany on basic-
oniy subscn.bers for converter boxes end remote cont.rol devl.ces are
perruSls~ble under applJ.cable law and t.o take approprlate action If
sue!]. charges are not. perm1.ss::..ble under applJ.cable law
5 The Council relierves tbe rIght to TT1odl.fy thIS Rate Order
if, at any time, lt determl.nes that l.nfo:ttnatJ.on the Company
provided to the C~ty IS incorrect in any mater-l.al manner
6 The C~t.y Manager is ordered to ma11 a copy of th~s Rate
Order to the Company, prov1de appropriate pub11c rotlce of th:s
Rate Order, 8Tld make a copy of this Rate Order avaJ.lable to any
person upon request
7 The CIty Clerk ahal: ce-rtJ.fy to the adoptlon of th~s
Resolution, and thenceforth and thereafter the same sh~ll be l.n
full force and effect
t Tr.e rates lUlted J.n the 'Column ent1tl@d "MaxJ..mum Permitted
Rates. exclude franch1se fees
APPROVED AS TO FORI!
MARSHA JONES MOCTRIB
CITY A'ITORNE'i
Adopted and approved thIS 9th of January. ] 996
ISI PAUl. ROSENSTEIN
Mayor
I. Mana M Stewart, City Clerk of the City of Santa Moo'ea. do hereby certIfy Ihat the foregomg
ResoLutIOn 8979 (CCS) WIS duly adopted at. meeting of the City Council held on the 9th of
January, 1996 by the follOWing vote
Ayes
Council members
Abdo. Ebn.... Genser, Holbrook, Rosenste,.
Noes
Council membm
"'ione
~bstam Council members
None
Abs.ent Council members
Greenberg. O'Connor
ATTEST
ISI MARlA I\l STEWo.RT
C,tyCI...k
Pub January 13 1996
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