HomeMy WebLinkAboutMiscellaneousA SENDER: Complete items 1 and 2 when additional services are desired, and complete items
3 and 4.
Put your address in the "RETURN TO" Space on the reverse side. Failure to do this will prevent this card
from being returned to you. The return receipt fee will provide you the name of the person delivered to and
the date of delivery. For additional fees the following services
are available. Consult postmaster for fees
2. ❑ Restricted Delivery
(Extra charge)
and check box(es) for additional service(s) requested.
1. ❑ Show to whom delivered, date, and addressee's address.
(Extra charge)
3. Article Addressed to:
Barbara Lukens
General Manager
American Community Cablevision
519 W. State Street
Ithaca, NY 14850
4. Article Number
P 640 989 072
Type of Service:
• Registered • Insured
E Certified l. COD
• Express Mail • Return Receirt
for Merchandise
Always obtain signature of addressee
or agent and DATE DELIVERED.
5. Signature — Addressee
X a
8. Addressee's Address (ONLY if
requested and fee paid)
6. Sign tune — A ent
X liL2
7. Date of Deliv y h
1
PS Fnrm 3811. Anr. 1989 *U.S.G.P.o._1989-2384815_ DOMESTIC RETURN RECEIPT
U
C
Attorney
Sent to
Barbara Lukens
Street & No.
American Community Cablevj
P.¢„S}�Ie ZIP Ade Y to Street
7Itthyaca, NY 14850
k
io
0
1.00
Postmark or Date
Postage
Certified Fee
Special Delivery Fee
Restricted Delivery Fee
Return Receipt Showing
to Whom & Date Delivered
Return Receipt Showing to Whom,
Date, & Address of Delivery
TOTAL Postage
& Fees
LZ2uz0 ��ZO 61. aunt '0085 WJod Sd
��
UNITED STATES POSTAL SERVICE
OFFICIAL BUSINESS
SENDER INSTRUCTIONS
Print your name, address and ZIP Code
in the space below.
• Complete items 1, 2, 3, and 4 on the
reverse.
• Attach to front of article if space
permits, otherwise affix to back of
article.
• Endorse article "Return Receipt
Requested" adjacent to number.
RETURN
TO
u 0
11
PENALTY FOR PRIVATE
USE, $300 /�
Print Sender's name, address, and ZIP Code in the space below. ,f
Charles Guttman, City Attorney
The City of Ithaca
108 East Greer Street
Ithaca,_NY 14850
L
STICK POSTAGE STAMPS TO ARTICLE TO COVER FIRST CLASS POSTAGE,
CERTIFIED MAIL FEE, AND CHARGES FOR ANY SELECTED OPTIONAL SERVICES (see front).
1. If you want this receipt postmarked, stick the gummed stub to the right of the return address
leaving the receipt attached and present the article at a post office service window or hand it to
your rural carrier (no extra charge).
2. If you do not want this receipt postmarked, stick the gummed stubto the right of the retum
address of the article, date, detach and retain the receipt, and mail the article.
3. If you want a retum receipt, write the certified mail number and your name and address on a
retum receipt card, Form 3811, and attach it to the front of the article by means of the gummed
ends if space permits. Otherwise, affix to the back of article.' Endorse front of article RETURN
RECEIPT REQUESTED adjacent to the number.
4. If you want delivery restricted to the addressee, or to an authorized agent of 'the addressee;
endorse RESTRICTED DELIVERY on the front of the article.
5. Enter fees for the services requested in the appropriate spaces on the front of this receipt. If
return receipt is requested, check the applicable blocks in item 1 of Form 3811.
6. Save this receipt and present it if you make inquiry. trU.S.G.P.O. 1990-270.153
PS Form 3800, June 1990 (Reverse)
UNITED STATES POSTAL SERVICE
$17
j `/g,5 -"O
OFFICIAL BUSINESS
EP -186
e,4 Cly licee#.e2e
/041 e 434
le�
PENALTY FOR PRIVATE
USE TO AVOID PAYMENT
OF POSTAGE, $300
y_,
5
sz-
MEMO
TO: Chuck Guttman
FROM: Tim Roulan
DATE: July 29, 1992
RE: NYSCCT: a) Factfinder b) ACCESS
At the meeting with the Ithaca Cable Commission Wednesday, July
22, 1992, it was decided to contact NYSCCT to inquire about a
"Factfinder" should we need to resort to one (522.1). In addition,
the ICC was interested in other Franchise Agreements in this area
and their provisions dealing with ACCESS.
I spoke to John Grow, Counsel for NYSCCT, (518-474-1359) and
discussed approaches to "Factfinder" that the City could take if
ACC does not respond to our Notice of Default and demands:
1. if there is a need to rely on a factfinder as set forth in 522.1
then one possible approach would be to have ACC stipulate to the
facts, thereby doing away with this need. Stipulating to the facts
would also hasten the process.
2. the City can appoint a factfinder after recommending the person
or persons to ACC for their responses/challenges. This efficiently
addresses concerns with impartiality and estops later protests.
3. the City can ask ACC to recommend a factfinder.
Impartiality shoudn't pose a problem since the role of a factfinder
is limited to gathering facts that are; pretty much clear. In
addition, Dominick will be able to interpret the accounting
practices results. There is little, if any, substantive decision-
making for the factfinder. Payment for the factfinder should not
be a factor of any great impact on impartiality.
I then requested copies of other Franchise Agreements written in
the Tompkins County Service Area. He entered a work order for these
copies today. These copies will point out Access provisions as
well as provisions for Rates and Fees.
Tim
1
Response to Allegation Regarding Notice of Default 524.10
Your letter directs that "ACC is to cease and desist from
acting or performing in any agency capacity on behalf of the City
of Ithaca." Since reference is made to the letter of J. Fogarty to
C. Guttman of May 12, 1992, we assume that the agency capacity
referred to is ACC's role in collecting franchise fees from its
customers and remitting those fees to the City. We believe that
the payment of franchise fees is a specific requirement of Section
XX of the Franchise Agreement and that ACC is in compliance with
this section. We believe that what is essentially at issue here is
whether the money paid as franchise fees is revenue to ACC, the
question discussed with respect to §20.1.
Response to Allegation Regarding Notice of Default 520.1
Your letter states that "The City hereby demands accurate
receipt of the total Franchise Fee due from ACC." We believe
there are essentially two issues raised by your letter with respect
to §20.1. One has to do with the question of whether the portion
of a subscriber's bill which is attributable to franchise fee
payments is gross revenue to ACC. Our position in this regard is
set forth in the letter of May 12, 1992, J. Fogarty to C. Guttman,
a copy of which is attached and made a part of this response. We
believe that the position taken in that letter is consistent with
the applicable provisions of the Franchise Agreement and Federal
law.
You also raise in the discussion of §20.1 the issue of payment
of franchise fees on advertising revenues and revenues from
affiliates using the ACC system. The Franchise Agreement at
Section 1.18 defines the Gross City Revenues on which franchise
fees are calculated as "all revenues derived directly or indirectly
by Grantee and by Grantee's affiliates for services provided within
the City by the cable communications system." We do not believe
that revenue received from the sale of advertising time on the
system is revenue derived for "services provided within the City by
the cable communications system."
We are not aware of any revenues from affiliates utilizing the
ACC system.
Documentation supplying the information requested in your
discussion of §20.1 is enclosed.
Response to Allegation Regarding Notice of Default 519.1
Your letter alleges that "ACC adjusted its Basic rate of
service to more than the $14.64 amount set forth in §19.1 of the
Franchise Agreement." Of course, the allegation of default with
respect to §19.1 is related to the allegation set forth in respect
to §20.1 regarding the subscriber's payment attributable to
2
franchise fee. Given our belief that the money paid as franchise
fees is in addition to and not a part of the payment that the
subscriber makes for cable service, ACC is clearly in compliance
with the provisions of §19.1.
Response to Allegation Regarding Notice of Default, Chapter
XIV
This is, of course, a matter which has been the subject of
much discussion between ACC and the City. As we have made clear
both orally and in writing on several occasions, ACC believes that
the equipment expenses involved in the activation of access
channels should, under the terms of the Franchise Agreement, be
paid from the access equipment fund.
Calculations with respect to the 2% of gross revenues used to
fund access equipment are enclosed.
Response to Allegation Regarding Notice of Default, Chapter
XVIII
ACC is prepared to respond to any inquiries by the City
pursuant to §18.2.
ACC is also prepared to cooperate with the City pursuant to
§18.4(A).
Reports requested by §18.5(A) are enclosed.
Reports pursuant to §18.5(C) are enclosed.
ACC is prepared to furnish the City information and records
pursuant to §18.5(E) upon a specific request.
ACC believes that this response complies fully with the
provisions of Section 22.1 of the Franchise Agreement by
responding to the City's assertion of default and provides the
information and documentation necessary to rebut such assertions.
If the City wishes to discuss any of these matters further, we
are, of course, quite willing to do so and, indeed, believe that
such discussion would be useful in resolving whatever differences
in viewpoints' which may still remain.
ithaca
3
John E. Fogarty
Associate General Counsel
203 328-0629
Charles Guttman, Esq.
City Attorney
City of Ithaca
108 East Green Street
Ithaca, New York 14850
RE: City of Ithaca Franchise Agreement
Dear Mr. Guttman:
i i i
American Television &
Communications Corporation
A Time Warner Inc. Company
Corporate Headquarters
300 First Stamford Place
Stamford, CT 06902-6732
203 328-0600
This will respond to your letter of July 8, 1992 on behalf of
Time Warner Entertainment Company, L. P. ("TWE"). As the City has
been advised, the franchise was transferred to TWE on June 30, 1992
from the previous franchisee, American Television and
Communications Corporation ("ATC"). Given the fact that both TWE
and ATC are under the control of Time Warner Inc., there is no need
for the purposes of this letter to distinguish between the two
franchisees. Both entities will be referred to herein by the name
under which they have done and continue to do business in the City
of Ithaca, American Community Cablevision ("ACC")..
Your letter of July 8, 1992 contains allegations of default by
ACC in its performance under the terms of its franchise agreement
with the City of Ithaca. ACC denies all the allegations and
believes it is in compliance with all the terms and conditions of
the franchise agreement. Pursuant to the provisions of Section
22.1(a) of the franchise agreement, ACC will respond to the
specific allegations of default made in your letter. For ease of
comprehension, we will attempt to organize our responses in the
sequence of allegations and demands made in your letter.
Response to Allegation Regarding Notice of Default §24.1
Your letter alleges that "ACC is not in compliance with all
statutes, rules, and regulations of the New York State Commission
on Cable Television (NYSCCT)." While there is no allegation of
non-compliance with any specific statute, rule or regulation, we
assume from the later discussion in your letter regarding §20.1
that the allegation is that ACC is not in compliance with the
NYSCCT Statement of Policy in Docket #90389. A statement of policy
is not a rule or regulation of the NYSCCT and is, therefore, not
within the provisions of this franchise section. The rules of the
NYSCCT provide at § 590.31 through § 590.39 specific procedures for
the adoption of rules and regulations which need not be followed in
adoption of a more informal statement of policy. Statements of
policy do not have the coercive status of a rule or regulation.
Furthermore, even if a statement of policy were a rule or
regulation (which it clearly is not) it would be, of course,
invalid to the extent that it conflicts with applicable Federal
law.
Providing entertainment and information choices
Jona E. Fogarty
Associate General Counsel
203 328-0629
May 12, 1992
Charles Guttman, Esq.
City Attorney
City of Ithaca
108 East Green Street
Ithaca, New York 14850
RE: City of Ithaca - Franchise Fees
Dear Mr. Guttman:
American Television 8
Communications Corporation
A Time Warner Inc. Company
Corporate Headquarters
300 First Stamford Place
Stamford. CT 06902-6732
203 328-0600
This will respond on behalf of American Television & Communications
Corporation, d/b/a American Community Cablevision ("Cablevision") to your letter
of January 22, 1992. I appreciate your patience in waiting for this response.
In your letter you object that Cablevision's rate for basic service increased
beyond the maximum 5% permissible without regulatory approval. Your calculation,
however, as your letter explains, is based on including within the rate charged for
basic service the amount attributable to the franchise fee paid to the City of Ithaca.
Your position would seem to be that the franchise fees are part of the rate charged
by Cablevision and therefore part of Cablevision's revenues. For the reasons set forth
herein, it is Cablevision's position that monies collected from subscribers and paid as
franchise fees are not revenue to Cablevision and are not part of the rate charged for
Cablevision's services.
Cablevision, as required by the terms of its cable television franchise agreement
with the City of Ithaca, collects and remits to the City of Ithaca five percent of its
"gross City revenues" (as defined in the Franchise) as a franchise fee. Cablevision
lists the appropriate amount of the franchise fee on each customer's bill as a separate
item distinct from the charge for the cable television services the subscriber receives.
On a quarterly basis, Cablevision pays to the City the exact amount it has received
in franchise fee payments from its customers. Thus, Cablevision is, in effect, acting
as agent for the City of Ithaca in collecting the franchise fee from its customers and
remitting it to the City.
In accordance with generally accepted accounting principles, Cablevision
reflects such franchise fees on its books as nonrevenue liabilities collected from the
subscriber and payable to the City. Cablevision does not treat the franchise fees
collected from subscribers as gross revenues of Cablevision and, thus, does not collect
or pay five percent of these monies as franchise fees. Put succinctly, Cablevision does
not pay a fee on the amount it collects as franchise fees.
Providing entertainment and information choices
0,7
The City claims that, contrary to Cablevision's practice, the amount collected
by Cablevision in franchise fees should be treated as part of Cablevision's gross
revenues and subject to the five percent fee.
It is Cablevision's position, as detailed below, that (1) the funds it collects as
franchise fees are not "gross revenues" as defined in the Franchise; (2) Cablevision's
treatment of the franchise fees which it collects as nonrevenue liabilities is in accord
with generally accepted accounting principles; and (3) under the provisions of the
Cable Communication Policy Act of 1984 ("the Cable Act"), monies collected as
franchise fees and paid to the City are not gross revenues and imposing a franchise
fee on these monies would violate the franchise fee limitation set in Section 622(b) of
the Cable Act.
I. Monies collected as franchise fees are not gross revenues as defined in the
Franchise.
The Franchise at Section 1.18 defines "gross City revenues" as follows:
"Gross city revenues means all revenue derived directly or indirectly by the
Grantee and by Grantee's affiliates from services provided within the City via
the Cable Communications System."
The definition of "gross City revenues" is limited expressly to revenue derived
from services provided on the cable system. Under a fair reading of the Franchise,
money collected as franchise fees should not be included within this definition. A
franchise fee which is simply passed through to the consumer cannot be said to derive
from the services provided by a cable operator to its customers via its cable system.
It is not part of the consideration paid for cable services or for the operation of the
cable system by customers. That consideration is set by Cablevision and is separately
indicated on the bill. Franchise fees should not qualify as revenues derived from
services provided by Cablevision.
II. Cablevision's practice is in accord with generally accepted accounting
principles.
As previously indicated, Cablevision's accounting treatment of the monies it
collects as franchise fees is in accord with its view of the meaning of the Franchise.
Cablevision records these monies as liabilities and does not recognize them as
revenues. In so treating these monies, Cablevision is acting in accord with generally
accepted accounting principles. Attached is a letter of November 9, 1989 from
accountants Ernst & Young so stating.
M. Under the terms of the Cable Act. monies collected as franchise fees are
not "gross revenues."
2
Section 622 of the Cable Act provides, in relevant part, that:
(b) For any twelve-month period, the franchise fees paid by a cable
operator with respect to any cable system shall not exceed 5
percent of such cable operator's gross revenues derived in such
period from the operation of the cable system.
(c) A cable operator may pass through to subscribers the amount of
any increase in a franchise fee, unless the franchising authority
demonstrates that the rate structure specified in the franchise
reflects all costs of franchise fees and so notifies the cable
operator in writing.
(e) Any cable operator shall pass through to subscribers the amount
of any decrease in a franchise fee.
(f) A cable operator may designate that portion of a subscriber's bill
attributable to the franchise fee as a separate item on the bill.
Section 622(b) allows the franchise fee to be assessed only on "gross revenues
derived ... from the operation of the cable system." As argued with respect to similar
language in the Franchise, money collected as franchise fees is not derived by
Cablevision from the operation of the system; rather it is money collected by
Cablevision on behalf of the City. Thus, the terms of the Franchise, which do not
include money collected as franchise fees within gross revenues, are consistent with
Federal law.
Other provisions of Section 622 are consistent with the position that franchise
fees are a pass-through charge assessed by the franchising authority and not part of
the consideration received by the cable operator from operation of the system.
Section 622(0 authorizing cable operators to separately itemize franchise fees
on customer bills evidences the view implicit in the Cable Act that a franchise fee is
a charge passed through to the subscriber which is in addition to and not a part of the
charge a customer pays for cable services. Separate itemization is, of course, the way
sales taxes are generally treated on consumer bills and Section 622(0 indicates that
franchise fees are to be regarded as a similar charge.
Section 622(c) and (e) further indicate that franchise fees are to be directly
passed through to customers by the cable operator and are not to be treated as part
of revenue received in payment for cable services. It should be noted that these
provisions are relevant only in circumstances where there is regulation of the rate
charged for cable services. Section 622(c) would be meaningless where the cable
operator is exempt from rate regulation, since the franchise would not specify a rate
3
structure, or if it did, such language would be preempted. Similarly, the requirement
in subsection (e) that mandates a pass through of any decrease in the franchise fee can
only have meaning in a rate regulated environment since an unregulated operator
would always be free to raise its rates.
Both sections make clear the intent of the Act that the portion of the customer's
bill attributable to franchise fees and the portion attributable to the charges for cable
services are distinct and that the portion attributable to the franchise fee is indeed a
straightforward pass through which directly rises or falls as the franchise fee increases
or decreases. The use of the term "pass through" in the Act itself emphasizes that the
franchise fee revenues collected from customers are the funds of the City and the
cable operator's function is merely to collect these funds on the City's behalf.
Subsection (c) ensures that the rate regulated cable operators can pass through
any subsequent increase in the franchise fees without having to seek permission for
a rate increase from the franchising authority in those limited situations where a rate
regulated cable system has voluntarily chosen not to pass through its franchise fee in
place on the effective date of the Cable Act. In short, in enacting a provision which
allows even a rate regulated cable operator to pass through any franchise fee increases
on top of the fixed rate, subsection (c) evidences Congress' intent to protect the
general right to pass through the entire franchise fee by ensuing the availability of the
pass through in a situation where the practice might be interpreted to conflict with
local rate regulation.
Similarly, the purpose of subsection (e) is to ensure that the franchise fee
reductions are passed on to subscribers, rather than being absorbed by the cable
operator as profit, in those limited situations where a rate regulated cable operator
voluntarily had chosen not to pass through its existing franchise fee.
In sum, Section 622 of the Cable Act strongly supports Cablevision's practice.
The franchise fees are in addition to, distinct from, and not a part of the rate charged
for cable services; the monies paid as franchise fees are not consideration for any
cable service and therefore not revenue to the cable . operator.
To treat the portion of the subscriber's bill attributable to franchise fees as
revenue on which franchise fees must be paid would not only be inconsistent with the
intent of the Cable Act, it would in the case of the Ithaca franchise violate the
prohibition of Section 622(a) on the payments of franchise fees in excess of five
percent of gross revenues. Since the portion of the customer's payment attributable
to franchise fees is not part of Cablevision's gross revenues and Cablevision already
pays five percent of its gross revenues as franchise fees, payment of any percentage
of the money paid as franchise fees would result in a payment in excess of five percent
of gross revenues in violation of Section 622(b).
If, after your review of Cablevision's position, you wish to discuss this issue
further we are, of course, willing to do so. Again, my thanks for your courtesy and
patience.
JF:pg
ithaca.fe
5
Very truly yours,
John E. Fogarty