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HomeMy WebLinkAbout1992 Negotiations ACCCORNELL UNIV ER SI T' Y JAMES A. FERWERDA Research Staff Program of Computer Graphics 580 Theory Center Building Ithaca, NY 14853 jaf@graphics.cornell.edu Office: 607-255-7365 FAX: 607-255-0806 f • MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding is, made this day of October, 1993 between "the City" which is the City of Ithaca, New York and "the Franchisee" which . is the party which is the cable television franchisee under the terms of that certain Franchise Agreement effective January 20, 1988 between American Television and Communications Corporation, d/b/a American Community Cablevision. WHEREAS, disagreements have arisen between the City, and Franchisee concerning the interpretation of certain terms of the Franchise Agreement; AND WHEREAS the parties hereto desire to settle those disagreements and clarify the terms of the Franchise Agreement; AND WHEREAS the parties have conductedextensive negotiations in order to reach agreement regarding clarification of the terms of the Agreement; NOW THEREFORE, the City and the Franchisee have agreed as follows: 1. (a) "Gross City Revenues" as defined in Section 1.18 of the Franchise Agreement do not include money collected by Franchisee attributable to franchise fees for the period of the franchise term prior to January 1, 1992. (b) "Gross City Revenues" as defined in Section 1.18 of the Franchise Agreement do include money collected by Franchisee and attributable to franchise fees for the period commencing January 1, 1992 until the termination of the franchise. (c) For the period on and after January 1, 1992 the payments made by Franchisee to the City under the provisions of Article 20 of the Franchise Agreement shall be calculated based on Gross City Revenues which include payments attributable to franchise fees. Any amounts owing to the City based on the clarification of the Franchise Agreement set forth in this Memorandum of Understanding shall be paid to the City at the time of its execution. (d) For the period on and after January 1, 1992 the money provided for capital PEG access.. equipment replacement and expansion under the provisions of Article 14.1(c)(3) of the Franchise Agreement shall be calculated based on Gross City Revenues which include payments attributable to franchise fees. Franchisee shall make any necessary adjustments with respect to the amount of such money at the time of execution of this Memorandum of Understanding. 2. (a) "Gross City Revenues" as defined in Section 1.18 of the Franchise Agreement do not include revenue received by 7y L_J Franchisee from the sale of advertising -time on its cable television system for the period of the franchise term prior to January 1, 1992. (b) .Gross City Revenues Franchise Agreement do include the sale of advertising time on period, commencing January 1, franchise. as defined in Section 1.18 of the revenue received by Franchisee from its cable television system for the. 1992 until the termination of the (c) For the period on and after January 1, 1992 the payments made by Franchisee to the City under the provisions of Article 20 of the Franchise Agreement shall be calculated based on Gross City Revenues which include revenue received by Franchisee from the sale of advertising time on its cable television system. Any amounts owing to the City based on the, clarification of the Franchise Agreement set forth in this Memorandum of Understandingshall be paid to the City at the time of its execution. (d) For the period on and after January 1, 1992 the money provided for capital PEG access equipment replacement and expansion under the provisions of Article 14.1(c)(3) of the Franchise Agreement shallbe ,calculated based on Gross City Revenues which include payments attributable to the sale of advertising time. Franchisee shall make any necessary adjustments with respect to the amount of such money at the time of execution of this Memorandum of Understanding. (e) To determine the advertising revenues which shall be deemedGrossCity Revenues under this Memorandum of Understanding,. the total advertising revenues from Franchisee -'s cable television systemserving the City of Ithaca and neighboring jurisdictions shall be multiplied by 'a fraction, the numerator of which is the number of subscribers within the City of Ithaca and the denominator of which is the total number of subscribers served by the cable television system. 3. If the. City seeks certification to regulate the rates for basic service pursuant to the rules of the Federal Communications Commission ("FCC"), rates for basic cable service will be regulated pursuant to those rules. If the City determines not to seek certification to regulate the rates for basic cable service pursuant to the rules of the FCC, then the rates for basic cable service will be regulated pursuant to Article 19 of the Franchise Agreement and, from the effective date of this Memorandum of Understanding, the maximum rate permitted under Article 19 will be inclusive of the amount attributable to franchise fees. The City waives and will not at any time in the future assert any claim that Franchisee's rates forbasic cable service in effect at any time prior to the date of this Memorandum of Understanding were not in compliance with Section 19 or any applicable law or regulation. 2 4. The need -based Senior Citizen's discount for basic cable service provided in Article 19.1 shall within 60 days after the execution of this Memorandum of Understanding be extended to the most popular non -basic tier of cable service. 5. Franchisee will complete the installation and activation of its 450 Mhz mid -split institutional network (I -Net). This will include the following: 1) extending the network to the current locations of the Southside Community Center, the Cooperative Extension Building, and the Sciencenter, all located within the City of Ithaca; 2) installing drops to all I -Net sites at locations to be specified by each; and 3) testing the network and installing any equipment necessary to assure standard signal levels and quality at the sites and at the hub. At completion the network will allow the technical capability to transmit programming from any I -Net site to the Franchisee's hub and then distribute this programming to other sites on the network and to any selected existing PEG channels. Franchisee will provide a total of ten additional modulators, of which at least 5 are frequency agile, five additional demodulators, and sufficient combining amplifiers for use in transmitting programming 'from any five institutional network locations simultaneously. Franchisee will also provide sufficient baseband audio and video routing equipment, and remote control and telephone equipment at the hub to allow demodulated upstream signals to be directed to any selected downstream modulators and to any selected PEG channel modulators. This equipment will be of similar specifications or better than the Scientific Atlanta 6350 modulator with the model FAOC frequency agile output converter option, the Scientific Atlanta 6250 demodulator, the Scientific Atlanta model 6110A combining amplifier, the Sierra Video Systems model 16 audio/video routing switcher, and the Lee-tronics remote controller. Upon completion of the above mentioned work, Franchisee shall be deemed in compliance with all requirements of the Franchise Agreement concerning the institutional network and Franchisee shall have no further obligations under the Franchise Agreement with respect to the institutional network other than to maintain and operate the institutional network as it exists at the date of completion of the above mentioned work. 6. In addition to the requirements of Article 14.7 of the Franchise Agreement, Franchisee will cablecast one additional Common Council Committee meeting monthly. Franchisee will be provided with at least seven business days' notice of the meeting. 7. The cost of the equipment used toactivate channels 53 and 54 (both previously activated) and any channels activated after the date of this Memorandum of Understanding for public, 3 educational and governmental access shall not be deducted or credited against funds expended by Franchisee pursuant to section 14.1(C)(3) of the Franchise Agreement. Franchisee shall make any. necessary account adjustments with. respect to the amounts of money expended and available underSection 14.1 (C)(3) as required by this paragraph. All other expenses deducted from or credited against the amount to be expended by Franchisee pursuant to Section 14.1(C)(3) prior to January 1, 1993 are agreed to be appropriate. The equipment subject to this paragraph will be as set forth in the letter of November 20, 1991 from Peter Hess to Barbara Lukens which is annexed hereto as Exhibit A. 8. There are presently four channels used for public, educational and governmental access purposes on Franchisee's cable television system in the City of Ithaca. Channels 13, 53, 54 and 55. Upon execution of this Memorandum of Understanding, Franchisee will designate and activate an additional public access channel as soon as reasonably practicable. Franchisee may, pursuant to Section 14.1(A)(1) of the Franchise Agreement, designate up to five additional channels for public, educational and governmental access. Franchisee shall designate and activate an additional public access channel if there is cablecast more than 30 hours of original programming per week per channel on the channels used for public access purposes over a continuous four-month period. Franchisee shall designate and activate an additional educational and governmental access channel if there is cablecast more than 30 hours of original programming per week per channel on the channels used for educational and governmental access purposes over a continuous four-month period. Franchisee shall designate such channels as provided herein up to a total of nine PEG access channels. Franchisee shall activate any channel as required hereunder within three months of the end of the continuous four- month period giving rise to the obligation. Original programming shall be defined for purposes of this Memorandum of Understanding as the first showing and the first repeat of original shows and the first showing of syndicated shows. The showing of a program which has beenpreviously cablecast on a public, educational and governmental access station shall be deemed a first showing if there has been no prior showing on these channels within the past year. 9. The City consents to the extent necessary or advisable under the Franchise Agreement to the transfer of •the cable television franchise from American Television and Communications Corporation to Time Warner Entertainment Company, L.P. ("TWE".) (including any necessary transfers through one or more subsidiaries of Time Warner) and the granting of a limited partnership interest in TWE to U.S. West Inc. The City hereby consents to all actions previously or subsequently taken to effectuate the ownership changes described herein. 4 10. The City and Franchisee agree that, except for any actionsrequired under the terms .of this Memorandum of Understanding, Franchisee is in compliance with the terms and. conditions of its Franchise Agreement with the City .except that the City reserves the right to dispute any financial information previously submitted by Franchisee. CITY OF THACA By: ' AMERICAN TELEVISION AND COMMUNICATIONS CORPORATION By: TIME WARNER ENTERTAINMENT COMPANY, L.P. By: ithaca 5 • A MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding is made this day of September, 1993 between "the City" which is the City of Ithaca, New York and "the Franchisee" which is the party which is the cable television franchisee under the terms of that certain Franchise Agreement effective January 20, 1988 between American Television and Communications Corporation, d/b/a American Community Cablevision. WHEREAS, disagreements have arisen between the City, and Franchisee concerning the interpretation of certain terms of the Franchise Agreement; AND WHEREAS the parties hereto desire to settle those disagreements and clarify the terms of the Franchise Agreement; AND WHEREAS the parties have conducted extensive negotiations in order to reach agreement regarding clarification of the terms of the Agreement; NOW THEREFORE, the City and the Franchisee have agreed as follows: 1. (a) "Gross City Revenues" as defined in Section 1.18 of the Franchise Agreement do not include money collected by Franchisee attributable to franchise fees for the period of the franchise term prior to January 1, 1992. (b) "Gross City Revenues" as defined in Section 1.18 of the Franchise Agreement do include money collected by Franchisee and attributable to franchise fees for the period commencing January 1, 1992 until the termination of the franchise. (c) For the period on and after January 1, 1992 the payments made by Franchisee to the City under the provisions of Article 20 of the Franchise Agreement shall be calculated based on Gross City Revenues which include payments attributable to franchise fees. Any amounts owing to the City based on the clarification of the Franchise Agreement set forth in this Memorandum of Understanding shall be paid to the City at the time of its execution. (d) [In] For the period on and after January 1, 1992 the money provided for capital PEG access equipment replacement and expansion under the provisions of Article 14.1(c)(3) of the Franchise Agreement shall be calculated based on Gross City Revenues which include payments attributable to franchise fees. Franchisee shall make any necessary adjustments with respect to the amount of such money at the time of execution of this Memorandum of Understanding. 1 2. (a) "Gross City Revenues" as defined in Section 1.18 of the Franchise Agreement do not include revenue received by Franchisee from the sale of advertising time on its cable television system for the period of the franchise term prior to January 1, 1992. (b) Gross City Revenues as defined in Section 1.18 of the Franchise Agreement do include revenue received by Franchisee from the sale of advertising time on its cable television system for the period commencing January 1, 1992 until the termination of the franchise. (c) For the period on and after January 1, 1992 the payments made by Franchisee to the City under the provisions of Article 20 of the Franchise Agreement shall be calculated based on Gross City Revenues which include revenue received by Franchisee from the sale of advertising time on its cable television system. Any amounts owing to the City based on the clarification of the Franchise Agreement set forth in this Memorandum of Understanding shall be paid to the City at the time of its execution. (d) [In] For the period on and after January 1, 1992 the money provided for capital PEG access equipment replacement and expansion under the provisions of Article 14.1(c)(3) of the Franchise Agreement shall be calculated based on Gross City Revenues which include payments attributable to the sale of advertising time. Franchisee shall make any necessary adjustments with respect to the amount of such money at the time of execution of this Memorandum of Understanding. (e) To determine the advertising revenues which shall be deemed Gross City Revenues under this Memorandum of Understanding, the total advertising revenues from Franchisee's cable television system serving the City of Ithaca and neighboring jurisdictions shall be multiplied by a fraction, the numerator of which is the number of subscribers within the City of Ithaca and the denominator of which is the total number of subscribers served by the cable television system. 3. If the City seeks certification to regulate the rates for basic service pursuant to the rules of the Federal Communications Commission ("FCC"), rates for basic cable service will be regulated pursuant to those rules. If the City determines not to seek certification to regulate the rates for basic cable service pursuant to the rules of the FCC, then the rates for basic cable service will be regulated pursuant to Article 19 of the Franchise Agreement and, from the effective date of this Memorandum of Understanding, the maximum rate permitted under Article 19 will be inclusive of the amount attributable to franchise fees. The City waives and will not at any time in the future assert any claim that Franchisee's rates for basic cable service in effect at any time prior to the date of this Memorandum of Understanding were not in 2 compliance with Section 19 or any applicable law or regulation. 4. The need -based Senior Citizen's discount for basic cable service provided in Article 19.1 shall within 60 days after the execution of this Memorandum of Understanding be extended to the most popular non -basic tier of cable service. 5. Franchisee will complete the installation and activation of its 450 Mhz mid -split institutional network (I -Net). This will include the following: 1) extending the network to the current locations of the Southside Community Center, the Cooperative Extension Building, and the Sciencenter, all located within the City of Ithaca; 2) installing drops to all I -Net sites at locations to be specified by each; and 3) testing the network and installing any equipment necessary to assure standard signal levels and quality at the sites and at the hub. At completion the network will allow the technical capability to transmit programming from any I -Net site to the Franchisee's hub and then distribute this programming to other sites on the network and to any selected existing PEG channels. Franchisee will provide a total of ten additional modulators, of which at least 5 are frequency agile, five additional demodulators, and sufficient combining amplifiers for use in transmitting programming from any five institutional network locations simultaneously. Franchisee will also provide sufficient baseband audio and video routing equipment, and remote control and telephone equipment at the hub to allow demodulated upstream signals to be directed to any selected downstream modulators and to any selected PEG channel modulators. This equipment will be of similar specifications or better than the Scientific Atlanta 6350 modulator with the model FAOC frequency agile output converter option, the Scientific Atlanta 6250 demodulator, the Scientific Atlanta model 6110A combining amplifier, the Sierra Video Systems model 16 audio/video routing switcher, and the Lee-tronics remote controller. Upon completion of the above mentioned work, Franchisee shall be deemed in compliance with all requirements of the Franchise Agreement concerning the institutional network and Franchisee shall have no further obligations under the Franchise Agreement with respect to the institutional network other than to maintain and operate the institutional network as it exists at the date of completion of the above mentioned work. 6. In addition to the requirements of Article 14.7 of the Franchise Agreement, Franchisee will cablecast one additional Common Council Committee meeting monthly. Franchisee will be provided with at least seven business days' notice of the meeting. [monthly meeting of the Common Council Committee of the Whole.] 7. The cost of the equipment used to activate channels 53 3 and 54 (both previously activated) and any channels activated after the date of this Memorandum of Understanding for public, educational and governmental access shall not be deducted or credited against funds expended by Franchisee pursuant to section 14.1(C)(3) of the Franchise Agreement. Franchisee shall make any necessary account adjustments with respect to the amounts of money expended and available under Section 14.1 (C)(3) as required by this paragraph. All other expenses deducted from or credited against the amount to be expended by Franchisee pursuant to Section 14.1(C) (3) prior to [September] January 1, 1993 are agreed to be appropriate. The equipment subject to this paragraph will be as set forth in the letter of November 20, 1991 from Peter Hess to Barbara Lukens which is annexed hereto as Exhibit A. 8. There are presently four channels used for public, educational and governmental access purposes on Franchisee's cable television system in the City of Ithaca. Channels [list]. Upon execution of this Memorandum of Understanding, Franchisee will designate and activate an additional public access channel as soon as reasonably practicable. Franchisee may, pursuant to Section 14.1(A)(1) of the Franchise Agreement, designate up to five additional channels for public, educational and governmental access. Franchisee shall designate and activate an additional public access channel if there is cablecast more than 30 hours of original programming per week per channel on the channels used for public access purposes over a continuous four-month period. Franchisee shall designate and activate an additional educational and governmental access channel if there is cablecast more than 30 hours of original programming per week per channel on the channels used for educational and governmental access purposes over a continuous four-month period. Franchisee shall designate such channels as provided herein up to a total of nine PEG access channels. Franchisee shall activate any channel as required hereunder within three months of the end of the continuous four- month period giving rise to the obligation. Original programming shall be defined for purposes of this Memorandum of Understanding as the first showing and the first repeat of original shows and the first showing of syndicated shows. The showing of a program which has been previously cablecast on a public, educational and governmental access station shall be deemed a first showing if there has been no prior showing on these channels within the past year. 9. The City consents to the extent necessary or advisable under the Franchise Agreement to the transfer of the cable television franchise from American Television and Communications Corporation to Time Warner Entertainment Company, L.P. ("TWE") (including any necessary transfers through one or more subsidiaries of Time Warner) and the granting of a limited partnership interest in TWE to U.S. West Inc. The City hereby consents to all actions previously or subsequently taken to effectuate the ownership 4 changes described herein. 10. The City and Franchisee agree that, except for any actions required under the terms of this Memorandum of Understanding, Franchisee is in compliance with the terms and conditions of its Franchise Agreement with the City except that the City reserves the right to dispute any financial information ( previously submitted by Franchisee. CITY OF ITHACA By: AMERICAN TELEVISION AND COMMUNICATIONS CORPORATION By: TIME WARNER ENTERTAINMENT COMPANY, L.P. By: ithaca 5 National Division TIMEWARN CABLE City of Ithaca Ithaca, New York Dear Sir or Madam: January 25, 1994 g I 111 [:1 °,1 01994 CITY CLERK'S OFFICE Below is a report showing Gross Revenues for January, 1993 through December, 1993_ The report is in compliance with Section 18.5 C. (4) of the franchise agreement, approved by the City Council June 8, 1988, with American Community Cablevision. Gross Revenues $2,983,338.01 I, Ivy W. Parish, Controller of Time Warner Cable, National Division, certify that the above schedule summariezes the Gross Revenues, as defined in the franchising agreement, for the period indicated for the CATV operations in the City of Ithaca_ (/0 • / tick, Signed: IWP/lmr Ivy Parish, Controller National Division 160 Inverness Drire West Suite .300 b.nglem•ood CO 80112 Tel 303.799.9599 Fax 303.649.8090/303.799.1744 Mailing Address: P.O. Box 6929 Englewood CO 80155-6929 A Division of Time Warner Entertainment Company, L.P. WHEREAS, the City of Ithaca entered into a Franchise Agreement effective January 20, 1988 with American Television and Communication Corporation, d/b/a American Community Cablevision; and WHEREAS, disagreements have arisen between the City and the Franchisee concerning the interpretation of certain terms of the Franchise Agreement; and WHEREAS, negotiations and discussions have taken place between the parties in an attempt to settle those disagreements and clarify the terms of the Franchise Agreement; and WHEREAS, the result of those extensive negotiations has been incorporated in a Memorandum of Understanding. NOW THEREFORE, the Mayor is hereby authorized to execute, on behalf of the City of Ithaca, the attached Memorandum of Understanding between the City of Ithaca and American Television and Communications Corporations, and its parent corporation Timewarner Entertainment Company, L.P. Tine Warner Cable 300 Fire Stamford Placa Stamford CT 06802-6732 72 as 203,928.0629 300.930.£:06 Fax 203.328.0640 A bivieion airtime tcarn.r &atenainmone Company. l.P. 286 P02 GUTTMAN AND HELLER CLINTON HOUSE- 10-06-93 10:14 • SENT BY:Xerox Telecopier 7021 ;10- 5-93 ;11:25AM ; 20332806924 607 272 2350;# 3 %_/ Thia Memorandum of understanding is made this day of v G 9 September9.993 between "the City" which is the City of Ithaca, Kew York and -*the Franchisee" which i8 the party which is the cable television frenohisee under the terms of that certain Franchise Agreement effective January 20, 1988 between American Television and communications Corporation, d/b/a American Community Cablevision. • ey disagreements erpbetween. arisen the and Franchissee coning the ntretation ofcertain terms city, the Franchise Agreements AND WHEREAS the parties hereto desire to nettle those disagreements and clarify the terms of the Franchiss Agreement; AND WHEREAS the parties have conducted extenelve negotiations in order to reach agreement regarding clarification of the terms of the Agraement= NOW THEREF+oRE, the City and the Franchisee have agreed as followat 1. (a) "cross City Revenues"' as defined in Section 1.18 of the Franchise Agreement do not include money Collected by Franchisee attributable to franchise fees for_the period of the franchise term prior to January 1, 1992. (b) "Groats City Revenues" as defined in Section 1.18 of the Franchise Agreement do include money collected by Franahieee and attributable to franchise. fees for the period commencing January 1, 1992 until the termination of the franchise. (c) For the period -on and after January .1, 1892 the payments made by Franchises to the City under the provisions of Article 20 of the Franchise Agreement shall be calculated based on Gross City Revenues which include payments attributable to franchise fees.' Any amounts owing to the City based on the clarification of the Franahi*e Agreement set forth in. this Memorandum of understanding shall be paid to the City at the time of its execution. (d) (in3 rat the period on and after January 1, 1992 the money provided for capital PEG access equipment replacement and expansion under the provisions of Article 14.1(o)(3) of the Franchise Agreement shall be calculated basad on Cross City Revenues which include payments attributable to franchise fees. Franchiaaa shall make any necessary adjustments with respect tc the amount of ouch money at the time of execution of this Memorandum of Understanding. 1 10-0S-93 10:14 .t •.M% U.4 10xau44i.Wn Oi LGla MCMO dnaUM o Understanding. 1 .r 286 P03 GUTTMAN AND HELLER CLINTON HOUSE 10-08-93 10:14 SENT BY:Xerox Telecopier 7021 ;10— 5-93 ;11:25AM ; 20332806924 607 272 2350;# 4 2. (a) "Gross City Revenues" as defined in Section 1.18 of the Franohise Agreement do not include revenue received by Franchisee from the sale of advertising time on its cable television system for the period of the franchise term prior to January 11 1992.. (b) Groes City Revenues as defined in Section 1.18 of the Franchise Agreement do include revenue received by Franchisee from the sale of advertising time on its cable television system for the period commencing January 1, 1992 untilthe termination of the franchise. Co) For the period on and after January 1, 1999 the payments made by Franchises to the City under the provisions of Article 20 of the Franchise Agreement shall be calculated based on Gross City Revenues whish include revenue received. by Franchisee from the sale of advertising time on its cable television system. Any amounts owing to tha City based on the clarification of the Franchise Agreement ■et forth in this Memorandum of Understanding shall be paid to the City at the time of its execution. (d) (In] Z2X the period on and aftsr January 1, 1992 the money provided for capital PEG access equipment replacement and expansion under the provisions of Article 14.1(c)(3) of the Franchise Agreement shall be calculated based on Gross City Revenues which include payments attributable to the gale of advertising time. Franchisee shall make any necessary adjustments with respect to the amount of such money at the time of execution of this Memorandum of Understanding. (e) To determine the advertising revenues which shall ba deemed Gross City Revenues under this Memorandum of Understanding, the total advertising revenues from Franchisee's cable television system serving the City of Ithaca and neighboring jurisdictions shall be multiplied by a fraction, the numerator of which is the number of subscribers within the City of Ithaca and the denominator of whish is the total number of subscribers served by the cAble talevision system. 3. If the city seem certification to regulate the rates for basic service pursuant to the rules of the Federal Communications Commission ("FCC"), rates for basic cable service will ba regulated pursuant to those rules. If the City determinate not to seek certification to regulate the rates for basic cable service pursuant to the rules of the FCC, then the rates for basin cable service will be regulated pursuant to Article 19 of the Franchise Agreement and, from the effective data of this Memorandum of understanding, the maximum rate permitted. under Article 19 will be i inclusive of the amount attributable to franchise fees-. The City waives and will not at any time in the future aesart any claim that Franchisee's rates for basic cable service in effect at any time prior to the date of this Memorandum of Understanding were not in 2 .! • 2 236 PO4 GUTTMAN AND HELLER CLINTON HOUSE 10-0S-93 10:15 SENT BY:Xerox Telecopier 7021 ;10- 5-93 ;11:26AM ; 20332806924 607 272 2350# 5 compliance with section 19 or any applicebl• law or regulation. 4. The need -based Senior Citizen's discount for basic cable service provided in Article 19.1 shall within 60 days after tha execution of this Memorandum of Understanding be extended to the most popular non -basic tier of cable service. 5. Franchisee will complete the installation and activation of its 450 Mhz midwaplit institutional network (I -Net). This will include the following: 1) extending the network to the current locations of the Southside Community Canter, the Cooperative Extension Building, and tha 9eieneenter, all located within the City Of Ithaca; 2) installing drops to all I -Net sites at locations to be specified by each; and 3) testing the network and installing arty equipment necessary to assure standard signal levels and quality at the mites and at the huh. At completion the network Will allow the technical capability to transmit programming from any I -Nat site to the Franohieee,s hub and then distribute this programming to other elites on -the network and to any selected existing PEG oharsnels. Franchisee will provide a total of ten additional modulators, of whish at least 5 are frequency, agile five additional demodulators, and sufficient combining amplifiers for use in • locations smultaneoualy, Franchisee will also provide sufficient baseband audio and video routing equipment, and remote control and telephone equipment at the hub to allow demodulated upstream signals to be directed to any selected downstream modulators and to any selected PEG channel modulators. This equipment will be of similar specifications or better than the scientific Atlanta 6330 modulator with tha modal FAOC frequency agile output converter option, the Scientific Atlanta 6250 demodulator, the scientific Atlanta modal 6110A combining amplifier, the sierra .video Systems modal 16 audio/video routing switcher, and the Lee-troniee remote controller. Upon completion of the above mentioned work, Franchises shall ba deemed in compliance with all requirements of the Franchise Agreement concerning the institutional network and Franchisee shall have no further obligations under the Franchise Agreement with respect to the inetitutional•network other than to maintain and operate the institutional network as it exists at the data of completion or the above mentioned work. 6. In addition to the requirements of Article 14.7 of the Franchise Agreement, Franchisee will cab1eaaat one addiHona .".. 0 t -„,, . __ _ • :... =ae will ba [monthly meeting of the common councile . ie meetings, Committee of the Whole.) 7. The cost of the equipment used to activate channels 53 GLJ 3 10 -0E -93110:1:q 286 P0S GUTTMAN AND HELLER CLINTON HOUSE 10-05-93 10:16 SENT BY:Xerox Telecopier 7021 ;10— 5-93 ;11:27AM ; 20332806924 607 272 2350;# 6 and 'i4 (both previously activated) and any channels activated after the data of this Memorandum of understanding for public, educational and governmental aeoeee shall not be deducted or credited against funds expended by Franchisee pursuant to section 14.1(C)(3) of the Franahiee Agreement. Franchisee shall make any necessary account adjustments with respect to the amounts of money expended and available under Section 14.1 (C)(3) as required by this paragraph. All other expenses deducted from or credited against the amount to be a tpended by Franchisee pursuant to Section 14.1(C) (3) prior to [September] ,3angary 1, 1993 are agreed to be appropriate. The equipment subject to this paragraph will be as set forth in the letter of November 20, 1491 from Peter Hese to Barbara Lukens which is annexed hereto as Exhibit A. 8. There are presently four channels used for public,' educational and governmental access purposes on Prancshisee's Labia talaVieion system in the City of Ethaaa. channels [list] Jyy Upon execution of this Mermerandum of Understanding, Pranohieee will designate and activate an additional public access; Channel as soon as reasonably practicable. Franchisee may, pursuant to Section 14.1(A)(1) of the Franchise Agreement, designate up to five additional channels for public, educational and governmental access. Franchisee shell designate and activate an additional public access channel if there in oablecast more than 30 hours of original programming par week per channel on the channels need for public access purp0aeae over a continuous four-month period. Franchises shall designate and activate an additional educational and governmental access Channel if there is cableeast more than 30 hours of original programming per week par channel on the channels used for educational and governmental access purposes over a continuous four.month period. Pranahiees •hail designate such channels as provided herein up to a total of nine PEG access channels. Franchisee shall activate any channel as required hereunder within three months of the end of the continuous four- month period giving rise to the obligation. Original programming shall ba defined for purpoteee of this Memorandum of Understanding as the first showing and the f ir't repeat of original ahow* and the first showing of syndicated shows. The showing of a program which has been previously cablecast on a public, educational and governmentalaccess station shall be deemed a first showing if there has been no prior showing on these channels within the past year. 9'. The city consents to the extent necessary or advisable under the Franchise Agreement to the transfer of the cable television franchise from Amsriaan Television and Communications corporation to Time Warner Entertainment Company, L.P. OM") (including any necessary transfers through one or more subsidiaries of Time Warner) and the granting of a limited partnership interest in TAPE to G.B. West Inc. The City hereby consents to all actions previously or subsequently taken to effectuate the ownership - ..--- 286 P06 4 GUTTMAN AND HELLER CLINTON HOUSE 10-0S-93 10:16 4 266 P06 GUTTMAN AND HELLER CLINTON HOUSE 10-05-93 10:16 SENT BY:Xerox Telecopier 7021 ;10— 5-93 ;11:27AM ; 2033290692-► 607 272 2350;# 7 changes described herein. 10. The City and Franchisee agree that, except for any actions required under the terms o2 this Memorandum of Understanding, Franchisee is in compliance with the terms and conditions of ita Tranahise Agreement with the City except that the City reserves the right to disputa any financial information previously submitted by Franahisoa. ithsai CITY OP ITHACA Sy= AMERICAN TELEVISION AND COMmUlacATIONS CORPORATION Sy: TIME WARNER ENTERTAINMENT COMPANY, L.P. sy• 5 286 PO`1 GUTTMAN AND HELLER CLINT John E. Fogarty Associate General Counsel, TIMEWARNER CABLE October 6, 1993 Charles Guttman, Esq. Office of the City Attorney City of Ithaca 108 East Green Street Ithaca, New York 14850 Dear Charles: I enclose what is hopefully the execution copy of the Memorandum of Understanding. Please let me know when the City has taken the necessary action for final approval so we can arrange execution. Thanks again for your cooperation in this matter. Sincerely, 67) J�hn E. Fogarty JEF:pg Time Warner Cable 300 First Stamford Place Stamford CT 06902-6732 Tel 203.328.0629 800.950.2266 Fax 203.328.0690 A Division of Time Warner Entertainment Company, L.P. \ -f OFFICE OF CITY ATTORNEY CITY OF ITHACA 108 EAST GREEN STREET ITHACA. NEW YORK 14850 October 14, 1993 John E. Fogarty, Esq. Associate General Counsel Time Warner Cable 300 First Stanford Place Stanford, CT 06902-6732 Dear John: TELEPHONE: (607) 274-6504 FAX: (607) 272-7348 Enclosed please find three copies of the Memorandum of Understanding between the City and Time Warner Cable. I would appreciate you having all three copies signed by American Television and Communications Corporation and also by Time Warner Entertainment Company, L.P. and return to me an executed copy of the Memorandum of Understanding. Pursuant to paragraphs 1 and 2, certain payments are to be made to the City of Ithaca simultaneously with the execution of this agreement. I assume you will be forwarding to me, as soon as possible, the appropriate check with an explanation of how this amount has been calculated. Also pursuant to paragraphs 1, 2 and 7, there are to be adjustments in the funds for the capital PEG access equipment, replacement and expansion fund. Please also send me appropriate calculations advising me what adjustments have been made to this fund and what the present balance of this fund is. ACC is also required, pursuant to paragraph 4, to extend the senior citizens discount for basic cable service to the most popular non -basic tier. It is also responsible for completing the installation activation of the I -NET. Please provide me with a time -table for these activities. ACC is also now obligated, upon execution of Memorandum of Understanding, to designate and activate an additional public access channel as soon as reasonably practicable. Please provide me a timetable for this. The Memorandum of Understanding also provides a formula for determining when future channels need to be 'An Equal Opportunity Employer with an Affirmative Action Program' if:A• Recycled Paper r John E. Fogarty, Esq. -2- October 14, 1993 designated and activated. Please advise the appropriate individual at ACC that, at least for the first few months, they should forward to me sufficient information so that the City can determine whether we are close to having enough programming to require the designation, activation of another channel. If it appears, after a few months, that we are not close to the required programming the City will, in all probability, not require monthly reporting of that information. If there is anything further that you feel needs to be done in this matter, please let me know. Thank you again .for your cooperation in this matter. CG/ cw Enclosure Very tru City Guttman ttorney John E. Fogarty Associate General Counsel 7' 1 M E W A R N E R CABLE October 5, 1993 Charles Guttman, Esq. Office of the City Attorney City of Ithaca 108 East Green Street Ithaca, New York 14850 Dear Mr. Guttman: Following up on our conversation yesterday, I enclose a further revised draft Memorandum of Understanding which will hopefully be satisfactory and lead to a mutually acceptable conclusion of this matter. I thank you for your cooperation and look forward to your advising that the Council has agreed to the terms settling these issues. Sincerely, /04 John E. Fogarty JEF:pg encl. cc: Ray McCabe PS - As in previous drafts, the deletions are in brackets and the additions are underscored. Time Warner Cable 300 First Stamford Place Stamford CT 06902-6732 Tel 203.328.0629 800.950.2266 Fax 203.328.0690 A Division of Time Warner Entertainment Company, L.P. .r ether* thea Off est ypalm: with the tremsmtssto r VW: doeNnhefic please Cpl! am 328. . 286 P01 GUTTMAN AND HELLER CLINTON HOUSE 10-05-93 10:13 SENT BY:Xerox Telecopier 7021 ;10— 5-93 ;11:24AM 20332606924 607 272 2350;# 2 Aaeooiu. Gonerul Counsel OpT 1 M 1 W A 8 N. 1 R CARLE October 5, 1993 Charles Guttman,- Esq. Office of the city Attorney City o; Ithaca 108 East Green Street Ithaca, New York 14850 Dear Mr. Guttman: mellowing up on our conversation_ yesterday, _- enclose a further revised draft memorandum of Understanding which will hopefully be satisfactory and load to a mutually aaaeptabls conclusion of this matter. I thank you for your cooperation and look forward to your advising that the Council, has agreed to the terata settling these issues. JEF : pg enol. cat Ray McCabe Sincerely, P9 - As in previous drafts, the deletions are in brackets and the additional are underscored.' Time Warner Gels 800 Seantfnrd Placa &milliand CT 06908-6782 791203,328.0629 800,930.2:06 Fax 203„3228.0620 A Mullion of Dna marnor Eradnainrugni Company. l..P. 288 P02 GUTTMAN AND HELLER CLINTON HOUSE 10-05-93 10:14 SENT BY:Xerox Telecopier 7021 ;10— 5-93 ;11:25AM 20332806924 607 272 2350# 3 MEMORANDUM OF UNDZRSTANDING Thio Memorandum of Understanding is made this day of September, 1993 between "the City” which is the City of :Ithaca, New York and 'the Franchisee" which ie the party which is the cable television franchisee under the terms of that certain Franchise Agreement effective.Januery 20, 1988 between American Television and communications Corporation, d/b/a American Community Cablevision. WHEREAS, disagreements have arisen between the city, and Franchisee concerning the interpretation of certain terms of the Franchise Agreement; AND WHEREAS the parties hereto desire to settle those disagreements and clarify the terms of the Franchise Agreement) AND WHEREAO the parties have conducted extensive negotiations in order to reach agreement regarding clarification of the terms of the Agraementi. NOW THEREFORE, the City and the Franchisee have agreed as follows= - 1. (a) "Grass City Revenues" as defined in Section 1.18 of the Franchise Agreement do not include money collected by Franchisee attributable to franchise fees for the period of the franchise term prior to aanuary 1, 1992. (b) "Gross C1ty Revenues" as defined in Section 1.18 of the Franchise Agreement do include money collected by Franahisee and attributable to franchise fees for the period commencing January 1, 1992 until the termination of the franchise. (c) For the period on and after January 1, 1992 the payments made by Franchisee to the City under the provisions of Article 20 of the Franchise Agreement shall be calculated based on Groes City Revenues which include payments attributable to franchise fees. Any amounts owing to the City based on the clarification of the Franchise Agreement set forth in this Memorandum of Understanding shall be paid to the City at the time of its execution. (d) (In] nit the period on and after aanuary 1, 1992 the money provided for capital PEG acCeae equipment replacement and expansion under the provisions of Article 14,1(0)(3) of the Franchise Agreement Shall be calculated based on Groom City Revenues which include payments attributable to franchise Pass. Franchisee shall maks any necessary adjustments with respect to the amount of Such money at the time or execution of thio Memorandum of Understanding. 1 10-00-03 10:14 .r Understanding. 1 ESE P03 GUTTMAN AND HELLER CLINTON HOUSE SENT BY:Xerox Telecopier 7021 ;10— 5-93 ;11:25AM ; 10-0S-93 10:14 2033260692-0 607 272 2350;# 4 3. (a) "Gross city Revenues„ as defined in Section 1.18 of the Franchisee Agreement do not include revenue received by Franchises from the .sale of advertising time on its cable teievision system for the period of the franchise term prior to January 1, 1992. (b) Gross City Revenues as defined in Section 1.18 of the Franchise Agreement do include revenue received by Franchisee from the sale of advertising time on its•cable television system for the period commencing January 1, 1992 until the termination of the franchise. (o) For the_poriod on and after January 1, 1992 the payments made by Franchises -to the City under_ the proviaione of. Article 20 of the Franchise Agreement shall be calculated basad on Gross City Revenue$ which.includa=rsysnue.rscoived by Franchisee from this sale of advertising time on its cable television system. Any amounts owing to the City `b*ssd on the clarification of • the Franchise Agreement set forth'in this Memorandum of Underetandifg shall be paid to the City at the time of its execution. (d) (In] zac the :peariod on and atter January 1, 1992 the money provided for coital PEG aca8Be equipment replacement and expansion under the provision of Article 14.1(c)(3) of the Franchise Agreement -shall be calculated based on Gross City Revenues which include -payments attributable to the sale of advertising time. Franchisee shall make any necessary adjustments with respect to ths'amount of such money at the time of execution of this Memorandum of Understanding. (e) To determine the advertising revenues which shall be deemed Gross City Revenues under this Memorandum of Understanding, the total advertising ravvnuea from Franchisee's cable television system serving the City of Itheoa and neighboring jurisdictions shall be multiplied by a fraction, the numerator of which is the number of subscribers within the City of Ithaca and the denominator of which ie the total number of subscribers served by the cable television system. 3. If the city seaxa certification to regulate the rates for basic service pursuant to the rules of the Federal Communications Commission ("FCC"), rates for basis cable service will ba regulated pursuant to those Tulse. If the City determined& not to seek certification to regulate the rates for basic cable service pursuant to the rules of the FCC, then the rates for basic cable service will be regulated pursuant to Article 19 of tha:Franahise Agreement and, from the effective data of this Memorandum of understanding, the maximum .rate permitted.under Article 19"will be inclusive of the amount attributable to franchiaa fees. The city waives and will not at any time in the future aaaart any claim that Franohieeo'b rates for basic cable service in effect at any time prior to the date of this Memorandum of understanding were net in 2 .121-05-93 10:1 we 2 286 PO4 GUTTMAN AND HELLER CLINTON HOUSE -- v nowaso avoak. lil 10-05-93 10:15 SENT BY:Xerox Telecopier 7021 ;10- 5-93 ;11:26AM ; 20332806924 607 272 2350;# 5 Y compliance with Section 19 or any applicable law or regulation. 4. The need -based Senior Citizen's discount for basic cable service provided in Article 19.1 shall within SO days after the execution of this Memorandum of Understanding be extended to the most popular non -basic tier of cable service. 5. Franchisee will complete the installation and activation of its 45c Mhz mid»split institutional network (I -Net). This Drill include the followings 1) extending the network to the current locations of the Southaide Community Canter, the Cooperative Extension Building, and the Sciencenter, all located within the City of Ithaca; 2) installing drops to all I -Net sites at locations to be speoifiad by each; and 3) testing the network and installing any equipment_neceaaary to assure standard signal levels and .quality at the mites and at the hub. At completion the network Will allow the technical capability to transmit programming from any I -Nat site to the Franchisee's hub and then distribute this programmimg to other sites on the network and to any *elected existing PEG channels. - Franchisee will provide a total of ten additional modulators, of which at least '5 are frequency agile five additional demodulators, and snufficient combining amplifiers for use in locations a muitaneously. Franchisee will also provide aufficient baseband audio and video routing equipment, and remote control and telephone equipment at the hub to allow demodulated upatreem signals to be directed to any selected downstream modulator, and to any selected PEG channel modulators. This equipment will,be of similar apeeifications or better than the Scientific Atlanta 6350 modulator with the model FAOC frequency agile output converter option, the Scientific Atlanta 5250 demodulator, the scientific Atlanta model 6110A combining amplifier, the sierra Video Systems modal 16 audio/video routing switahar, and the Lee-tronics remote controller. Upon completion of the above mentioned work, Franchisee shall be deemed in compliance with all requirements of the Franchise Agreement concerning the institutional network and Franchisee shall have ro further obligations under the Franchise Agreement with respect to the institutional•network other than to Maintain and operate the institutional network as it exists at the data of. completion of the above mentioned work. 6. in addition to the requirements of Article 14.7 of the rranohise Agreement, Franchisee will cablecaat one additional =de wall kis [monthly meeting of the Common Council Committed of the whol10 jg' 7. The cost of the equipment used to activate channels 53 -11.1 3 `P 6S GUT �?!_L '-�r }:'-, �.. ;•i ! 1!...! , _, .o .Y 3 286 P05 GUTTMAN AND HELLER CLINTON HOUSE 10-05-93 10:16 SENT BY:Xerox Telecopier 7021 ;10- 5-93 ;11:27AM 2033280692-+ 607 272 2350;# 6 and $4 (both previously activated) and any channels activated after the data of this Memorandum of Understanding for publio, educational and governmental aeoeos shall not be deducted or credited against funds expended by Franchisee pursuant to section 14.1(C)(3) of the Tranohise Agreement. Franchise■ shall make any necessary account adjustments with respect to the amounts of money expended and available under Section 14.1 (C)(3) as required by this paragraph. All other expenses deducted from or credited against the amount to be expended by Franchisee purauant to Section 14.1(C)(3), prior to [September] January 1, 1993 ars agreed to be appropriate. The equipment subject to this paragraph will be aa set forth in tha letter of November 20, 1491 from Peter Hese to Barbara Lukens whichis annexed hereto as Exhibit A. 8. There are presently four channels used tor public, educational and .governmental access purposes on Franchisee's la television television system in the City of Ithaca. channels [list],(_// Upon execution of this Memorandum of Understanding, Franchisee will designate and activate an additional public accesschannelas soon as reasonably practicable. Franchises may, pursuant to Section 14.1(A)(1) et. the Franchise Agreement/ designate up to five additional channels for public, educational and governmental access. Franchisee shall designate and activate an additional public access channel if there is oablecast more than 30 hours of original programming per week per channel on the channels used for public access purposes over a continuous four-month period. Franchises shall designate and activate an additional educational and governmental access Channel it there is cablecast more than 30 hours of original programming per week par channel on the channels used for educational and governmental access purposes over a continuous !cure -month period. Franchises shall designate such Channels as provided herein up to a total of. nine PEG access. channels. Franchisee shall activate any channel as required hereunder within three months of the end of the continuous four- month period giving rise to the obligation, :.h Original programming shall be defined for purpoasa of thie Memorandum of Understanding as tha first showing and the first repeat of original shoran and the first showing of syndicated shows. -. The showing of a program which has been previously cablecast on a public, educational and governmental access station shall be deemed a first °hewing if there has been no,prior showing on these channels within the past year. 9. The city consents to the extent necessary or.adviaable under the Franchise Agreement to the transfer of the stable television franchies from American Television and Communioatiens corporation to Time Warner Entertainment Company, L.P. ("TWE") (inoluding any necessary transfers through one or more subsidiaries of Time warner) and the granting of a limited partnership interest in TWE to U.B. West Inc. The City hereby consents to all action previously or subsequently taken to effectuate the ownership 4 286 P06 GUTTMAN AND HELLER CLINTON HOUSE 10-05-93 10:.16 2S6 P06 GUTTMAN AND HELLER CLINTON HOUSE 10-0S-93 10:16 SENT BY:Xerox Telecopier 7021 ;10— 5-93 X11:27AM 20332906924 607 272 2350;# 7 - changes described herein. 10. The City and -Franchisee agree .that, except for any actions required under ' the terms of this Memorandum of Understanding, Franchisee -is in compliance with the terms and conditions of its Tranchise Agreement with the City except that the City reserves the right to dispute any financial information previously 2Ubauittsd by Franchisee. CITY OF ITHACA AMERICAN TELEVISION AND COMMUNICATIONS CORPORATION By: TIME WARNER ENTERTAINMENT COMPANY, L.P. $y. ithava 5 _266 POq GUTTMAN AND HELLER CLINTO WHEREAS, the City of Ithaca entered into a Franchise Agreement effective January 20, 1988 with American Television and Communication. Corporation, d/b/a American Community Cablevision; and WHEREAS, disagreements have arisen between the City and the Franchisee concerning the interpretation of certain terms of the Franchise Agreement; and WHEREAS, negotiations and discussions have taken place between the parties in an attempt to settle those disagreements and clarify the terms of the Franchise Agreement; and WHEREAS, the result of those extensive negotiations has been incorporated in a Memorandum of Understanding. NOW THEREFORE, the Mayor is hereby authorized to execute, on behalf of the City of Ithaca, the attached Memorandum of Understanding between the City of Ithaca and American Television and Communications Corporations, and its parent corporation Timewarner Entertainment Company, L.P. CFR= CF CITY ATTORNEY • CITY OF ITHACA . las EAST GREEN .STREET tT!-tAGA, New YORK 14aSC FAX T�2 Nsminz- u%i smarm T TELEPEONE: FROM: (ArkS ()1 C( v)_) tet' 1:Q6 -/q3 • YOUR FAX NO : 9 3 - a 0 - atoPPA • $yb NOTES: S USJ'ECT TELEPHONE: 607-274-6504 OUR FAX NO : 607-272-7348 TOTAL PAGES ( INCLUDING TRANSMITTAL .$.rel`) : 3 OFFICE OF CITY ATTORNEY CITY OF ITHACA 108 EAST GREEN STREET ITHACA. NEW YORK 14850 September 28, 1993 John E. Fogarty, Esq. Associate General Counsel Time Warner Cable 300 First Stanford Place Stanford, CT 06902-6732 203-328-0690 Dear John: TELEPHONE: (607) 274-6504 FAX: (607) 272-7348 VIA FAX AND REGULAR MAIL I am in receipt of your letter of September 24, 1993, in whic you enclosed a revised draft of the Memorandum of Understanding I have reviewed this and have a couple of very minor issues. In the first paragraph you date the Memorandum of Understanding as of the blank day of September, 1993. I expect that this will be signed in October, please change that accordingly. For grammar purposes, I would request that the first word in paragraph 1(d) and 2(d) be changed from "In" to "For". A little more substantively, in paragraph 5 I believe you left out a line in the second paragraph. In particular, after the word "sufficient combining amplifiers for use in" the words "transmitting, programming from any five institutional networks" should be added. In paragraph 7 you have added two sentences. The first sentence, I believe, covered what I was requesting. I am not sure as to whether a second sentence is agreeable, particularly, when you use the September 1, 1993 date, I am not sure if the City and in particular, the Access Advisory Board which reviews these issues are even aware of what has been credited or deducted from this account as of September 1, 1993. I do not believe there are any major issues involved here, but there could be some minor disputes. With regard to this, at least as to things which are fairly old, the City will not be contesting credits or deductions from this "An Equal Opportunity Employer with an Affirmative Action Program" to, Recycled Paper John E. Fogarty, Esq. -2- September 28, 1993 account. However, I do not believe the City wants to agree that all prior deductions have been proper and that therefore, establish a precedent in the future that all these deductions were proper and could be taken not only in the past but also in the future. I do not believe that the City can agree to the second sentence until the City has an opportunity to review these deductions with the Access Advisory Board to see if this is acceptable. I would hate to hold up the signing of this agreement based on this one sentence and would suggest that it be deleted, if this is an important to you, please call me as soon as possible. Lastly, I. appreciate your providing me with a copy of the agreement which is underlined showing the changes from the last draft. It made my review of this much easier. I would, at this time, request that you send me a copy of the agreement with the changes suggested in this letter in final form, so that it could be signed by the City, immediately after the Council meeting on October 6th. I would request that you forward to me at your earliest convenience, the proposed calculations for what amount of money will be owing to the City pursuant to paragraphs 1(c) and 2(c). Also please provide the proposed calculations for how the money provided for PEG access equipment will be adjusted pursuant to paragraphs 1(d), 2(d) and 7. I realize that it may take some time to get those calculations, please do not delay forwarding to me the final draft of the Memorandum of Understanding while you are getting the figures. Of course, if you wish to discuss any of these issues, please give me a call right away. Thank you for your assistance. Best regards. CG/cw Very truly your ries Guttman City Attorney OFFICE OF CITY ATTORNEY CITY OF ITHACA 108 EAST GREEN STREET ITHACA, NEW YORK 14850 MEMORANDUM TO: Benjamin Nichols, Mayor Common Council Members FROM: Chuck Guttman, City Attorney Clio- DATE: September 28, 1993 RE: ACC TELEPHONE: (607) 274-6504 FAX: (607) 272-7348 Enclosed please find a revised draft of the proposed Memorandum of Understanding between the City of Ithaca and ACC. This will be on the September 29 COW and October 6 Council agendas. In particular, there is a resolution on the Council agenda authorizing the Mayor to sign this agreement. Please note that the underlined items were underlined only to show that they are different from the prior draft. In the final draft which will be signed, nothing will be underlined. I have requested a few minor changes still to be made in this agreement. In particular, for grammar purposes, I am requesting that the first work in paragraphs 1(d) and 2(d) be changed from "in" to "For". In addition, in the second paragraph of section 5, a line has been left out after the words "sufficient combining amplifiers for use in" the words "transmitting programming from any five institutional network" will be added. I have also questioned the second sentence which is added in paragraph 7. This is a new issue and I advised Mr. Fogarty, the attorney for Timewarner Cable, that I am not sure that the City can agree to this second sentence and have requested that that be deleted. If any of you have any questions regarding this proposed Memorandum of Understanding, please let me know right away. A "An Equal Opportunity Employer with an Affirmative Action Program" tot Recycled Paper CFrtC= CF CITY ATTORNEY • CITY OF ITHACA 1 CE EAST GREEN STREET 111• ACA, NEW YORK 1 4850 • FAX SM E3= TO: Ji. r co erd a TELEPHONE : • YOUR FAX NO: NOTES: FROM : ektr(ps SUBJECT: TELEPHONE: 607-274-6504 OUR FAX NO: 607-272-7345 TOTAL PAGES ( INCLUDING TRANSMITTAL 'AL S.BEET OFFICE OF CITY ATTORNEY CITY OF ITHACA 108 EAST GREEN STREET ITHACA. NEW YORK 14850 MEMORANDUM TO: Jim Ferwerda, Chair, Cable Commission VIA FAX: 255-7365 FROM: Chuck Guttman, City Attorney tAle DATE: September 28, 1993 RE: ACC TELEPHONE: (607) 274-6504 FAX: (607) 272-7348 Enclosed pease find a copy of a memo which I sent to the Mayor and members of Common Council to which is attached is a copy of the revised proposed Memorandum of Understanding with ATC and Timewarner. Please review this and get back to me with any comments that you have. In particular, please note that they are still missing some words in paragraph 5. I would also like your comments on the second added sentence in paragraph 7.. Please get me your comments at your earliest convenience. cc: Peter Hess, w/encl Rick Gray, w/encl Tom Terrizzi, w/encl "An Equal Opportunity Employer with an Affirmative Action Program" ter Recycled Paper MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding is made this day of September, 1993 between "the City" which is the City of Ithaca, New York and "the Franchisee" which is the party which is the cable television franchisee under the terms of that certain Franchise Agreement effective January 20, 1988 between American Television and Communications Corporation, d/b/a American Community Cablevision. WHEREAS, disagreements have arisen between the City, and Franchisee concerning the interpretation of certain terms of the Franchise Agreement; AND WHEREAS the parties hereto desire to settle those disagreements and clarify the terms of the Franchise Agreement; AND WHEREAS the parties have conducted extensive negotiations in order to reach agreement regarding clarification of the terms of the Agreement; NOW THEREFORE, the City and the Franchisee have agreed as follows: 1. (a) "Gross City Revenues" as defined in Section 1.18 of the Franchise Agreement do not include money collected by Franchisee attributable to franchise fees for the period of the franchise term prior to January 1, 1992. (b) "Gross City Revenues" as defined in Section 1.18 of the Franchise Agreement do include money collected by Franchisee and attributable to franchise fees for the period commencing January 1, 1992 until the termination of the franchise. (c) For the period on and after January 1, 1992 the payments made by Franchisee to the City under the provisions of Article 20 of the Franchise Agreement shall be calculated based on Gross City Revenues which include payments attributable to franchise fees. Any amounts owing to the City based on the clarification of the Franchise Agreement set forth in this Memorandum of Understanding shall be paid to the City at the time of its execution. (d) In the period on and after January 1, 1992 the money provided for capital PEG access equipment replacement and expansion under the provisions of Article 14.1(c)(3) of the Franchise Agreement shall be calculated based on Gross City Revenues which include payments attributable to franchise fees. Franchisee shall make any necessary adjustments with respect to the amount of such money at the time of execution of this Memorandum of Understanding. 1 2. (a) "Gross City Revenues" as defined in Section 1.18 of the Franchise Agreement do not include revenue received by Franchisee from the sale of advertising time on its cable television system for the period of the franchise term prior to January 1, 1992. (b) Gross City Revenues as defined in Section 1.18 of the Franchise Agreement do include revenue received by Franchisee from the sale of advertising time on its cable television system for the period commencing January 1, 1992 until the termination of the franchise. (c) For the period on and after January 1, 1992 the payments made by Franchisee to the City under the provisions of Article 20 of the Franchise Agreement shall be calculated based on Gross City Revenues which include revenue received by Franchisee from the sale of advertising time on its cable television system. Any amounts owing to the City based on the clarification of the Franchise Agreement set forth in this Memorandum of Understanding shall be paid to the City at the time of its execution. (d) In the period on and after January 1, 1992 the money provided for capital PEG access equipment replacement and expansion under the provisions of Article 14.1(c)(3) of the Franchise Agreement shall be calculated based on Gross City Revenues which include paymentsattributable to the sale of advertising time. Franchisee shall make any necessary adjustments with respect to the amount of such money at the time of execution of this Memorandum of Understanding. (e) To determine the advertising revenues which shall be deemed Gross City Revenues under this Memorandum of Understanding, the total advertising revenues from Franchisee's cable television system serving the City of Ithaca and neighboring jurisdictions shall be multiplied by a fraction, the numerator of which is the number of subscribers within the City of Ithaca and the denominator of which is the total number of subscribers served by the cable television system. 3. If the City seeks certification to regulate the rates for basic service pursuant to the rules of the Federal Communications Commission ("FCC"), rates for basic cable service will be regulated pursuant to those rules. If the City determines not to seek certification to regulate the rates for basic cable service pursuant to the rules of the FCC, then the rates for basic cable service will be regulated pursuant to Article 19 of the Franchise Agreement and; from the effective date of\this Memorandum of Understanding, the maximum rate permitted under Article 19 will be inclusive of the amount attributable to franchise fees. The City waives and will not at any time in the future assert any claim that Franchisee's rates for basic cable service in effect at any time 2 prior to the date of this Memorandum of Understanding were not in compliance with Section 19 or any applicable law or regulation. 4. The need -based Senior Citizen's discount for basic cable service provided in Article 19.1 shall within 60 days after the execution of this Memorandum of Understanding be extended to the most popular non -basic tier of cable service. 5. Franchise will complete the installation and activation of its 450 Mhz mid -split institutional network (I -Net). This will include the following: 1) extending the network to the current locations of the Southside Community Center, the Cooperative Extension Building, and the Sciencenter, all located within the City of Ithaca; 2) installing drops to all I -Net sites at locations to be specified by each; and 3) testing the network and installing any equipment necessary to assure standard signal levels and quality at the sites and at the hub. At completion the network will allow the technical capability to transmit programming from any I -Net site to the franchisee's hub and then distribute this programming to other sites on the network and to any selected existing PEG channels. Franchisee will provide a total of ten additional modulators, of which at least 5 are frequency agile, five additional demodulators, and sufficient combining amplifiers for use in locations simultaneously. Franchisee will also provide sufficient baseband audio and video routing equipment, and remote control and telephone equipment at the hub to allow demodulated upstream signals to be directed to any selected downstream modulators and to any selected PEG channel modulators. This equipment will be of similar specifications or better than the Scientific Atlanta 6350 modulator with the model FAOC frequency agile output converter option, the Scientific Atlanta 6250 demodulator, the Scientific Atlanta model 6110A combining amplifier, the Sierra Video Systems model 16 audio/video routing switcher, and the Lee-tronics remote controller. Upon completion of the above mentioned work, Franchisee shall be deemed in compliance with all requirements of the Franchise Agreement concerning the institutional network and Franchisee shall have no further obligations under the Franchise Agreement with respect to the institutional network other than to maintain and operate the institutional network as it exists at the date of completion of the above mentioned work. 6. In addition to the requirements of Article 14.7 of the Franchise Agreement, Franchisee will cablecast one monthly meeting of the Common Council Committee of the Whole. 7. The cost of the equipment used to activate channels 53 and 54 (both previously activated) and any channels activated after the date of this Memorandum of Understanding for public, 3 educational and governmental access shall not be deducted or credited against funds expended by Franchisee pursuant to section 14.1(C)(3) of the Franchise Agreement. Franchisee shall make any necessary account adjustments with respect to the amounts of money expended and available under Section 14.1(C)(3) as required by this paractraph. All other expenses deducted from or credited against the amount to be expended by Franchisee pursuant to Section 14.1(C)(3) prior to September 1, 1993 are agreed to be appropriate. The equipment subject to this paragraph will be as set forth in the letter of November 20, 1991 from Peter Hess to Barbara Lukens which is annexed hereto as Exhibit A. 8. There are presently four channels used for public, educational and governmental access purposes on Franchisee's cable television system in the City of Ithaca. Channels [list]. Upon execution of this Memorandum of Understanding, Franchisee will designate and activate an additional public access channel as soon as reasonably practicable. Franchisee may, pursuant to Section 14.1(A)(1) of the Franchise Agreement, designate up to five additional channels for public, educational and governmental access. Franchisee shall designate and activate an additional public access channel if there is cablecast more than 30 hours of original programming per week per channel on the channels used for public access purposes over a continuous four-month period. Franchisee shall designate and activate an additional educational and governmental access channel if there is cablecast more than 30 hours of original programming per week per channel on the channels used for educational and governmental access purposes over a continuous four-month period. Franchisee shall designate such channels as provided herein up to a total of nine PEG access channels. Franchisee shall activate any channel as required hereunder within three months of the end of the continuous four- month period giving rise to the obligation. Original programming shall be defined for purposes of this Memorandum of Understanding as the first showing and the first repeat of original shows and the first showing of syndicated shows. The showing of a program which has been previously cablecast on a public, educational and governmental access station shall be deemed a first showing if there has been no prior showing on these channels within the past year. 9. The City consents to the extent necessary or advisable under the Franchise Agreement to the transfer of the cable television franchise from American Television and Communications Corporation to Time Warner Entertainment Company, L.P. ("TWE") (including any necessary transfers through one or more subsidiaries of Time Warner) and the granting of a limited partnership interest in TWE to U.S. West Inc. The City hereby consents to all actions previously or subsequently taken to effectuate the ownership changes described herein. 4 10. The City and Franchisee agree that, except for any actions required under the terms of this Memorandum of Understanding, Franchisee is in compliance with the terms and conditions of its Franchise Agreement with the City except that the City reserves the right to dispute any financial information previously submitted by Franchisee. ithaca CITY OF ITHACA By: AMERICAN TELEVISION AND COMMUNICATIONS CORPORATION By: TIME WARNER ENTERTAINMENT COMPANY, L.P. By: 5 OFFICE OF CITY ATTORNEY CITY OF ITHACA 108 EAST GREEN STREET ITHACA, NEW YORK 14850 September 2, 1993 John E. Fogarty, Esq. Time Warner Cable 300 First Stamford Place Stamford, CT 06902-6732 Dear Mr. Fogarty: TELEPHONE: (607) 274-6504 FAX: (607) 272-7348 VIA FAX and REGULAR MAIL Dictated but not read Thank you for your letter of August 20, 1993. I have reviewed this and also discussed it with members of the City of Ithaca Cable Commission who have much greater technical expertise in these subjects than I do. I will be discussing it with the appropriate committee of Common Council on Thursday, September 16th and expect to discuss it with the full Council on October 6th. Based on my review of it, I believe we are very close to a final agreement. There are some small wording changes which I believe I will be requesting. I expect that I will be requesting that in paragraphs 1(d) and paragraph 2(d) that it be made clear that there will be a retroactive adjustment into the capital PEG access equipment and expansion account. Section 2(c) has to be reworded. There appear to be some typing mistakes there. With regard to paragraph 8, in the fourth and fifth sentences, it should be clear that the franchisee shall designate and activate additional channels up to a total of nine total channels. In paragraph 7, it should be clear that this should be a retroactive adjustment to the PEG equipment account. I assume that none of the above wording changes give you a problem. I do not believe that they affect the intent of the proposed agreement, but hopefully will clarify this and avoid problems in the future. With regard to paragraph 5, I have discussed this with members of our Cable Commission who have more technical expertise than I. We believe that there should be some wording changes which I do not believe significantly alter theintent of the whole agreement. We would propose that paragraph 5 read as follows: 'An Equal Opportunity Employer with an Affirmative Action Program' rri Recycled Paper John E. Fogarty, Esq. -2- September 2, 1993 "5. Franchisee will complete the installation and activation of its 450 Mhz mid -split institutional network (I -Net). This will include the following: 1) extending the network to the current locations of the Southside Community Center, the Cooperative Extension Building, and the Sciencenter, all located within the City of Ithaca; 2) installing drops to all I -Net sites at locations to be specified by each; and 3) testing the network and installing any equipment necessary to assure standard signal levels and quality at the sites and at the hub. At completion the network will allow the technical capability to transmit programming from any I -Net site to the franchisee's hub and then distribute this programming to other sites on the network and to any selected existing PEG channels. Franchisee will provide a total of ten additional modulators, of which at least 5 are frequency agile, five additional demodulators, and sufficient combining amplifiers for use in transmitting programming from any five institutional network locations simultaneously. Franchisee will also provide sufficient baseband audio and video routing equipment, and remote control and telephone equipment at the hub to allow demodulated upstream signals to be directed to any selected downstream modulators and to any selected PEG channel modulators. This equipment will be of similar specifications or better than the Scientific Atlanta 6350 modulator with the model FAOC frequency agile output converter option, the Scientific Atlanta 6250 demodulator, the Scientific Atlanta model 6110A combining amplifier, the Sierra Video Systems model 16 audio/video routing switcher, and the Lee-tronics remote controller. Upon completion of the above mentioned work, Franchisee shall be deemed in compliance with all requirements of the Franchise Agreement concerning the institutional network and Franchisee shall have no further obligations under the Franchise Agreement with respect to the institutional network other than to maintain and operate the institutional network as it exists at the date of completion of the above mentioned work." The members of the Cable Commission believe these changes are necessary to have the I -Net operating properly. Essentially what we are asking for is that "drops" be installed at all sites. I think this obviously has to be done, if it has not yet been done, and that the network be tested to make sure that it is working properly. I believe you and I previously agreed that there shall be a sufficient number of modulators and demodulators. You proposed five agile modulators and demodulators. We believe that five demodulators will be sufficient, but that actually ten modulators will be needed to serve all of the sites. Of these only 5 need to John E. Fogarty, Esq. -3- September 2, 1993 be frequency agile. Apparently, there will also need to be some other amplifiers and less expensive equipment just to make sure everything works. Since we are having separated modulators and demodulators, we have referred to different base equipment. Please review this with your technical people to make sure that this makes sense. Please get back to me with any comments you have regarding these proposed changes. I expect that after I have discussed this with the entire City Council on October 6, we can talk again and •iron out final language between October 6 and October 21. On October 21st I would like to take the proposed agreement in final form back to the appropriate Council Committee for their final review. I would then take it to the full Council on November 3 for their final approval and we can have this matter concluded at that time. If it is possible for you to review these changes before September 16th, the committee could approve final language at that time and I could take it to our full Council on October 6th and have the matter concluded at that time. Obviously, I would prefer and I would assume that you would prefer, to get this matter out of the way as soon as possible. Very truly yours, Charles Guttman City Attorney CG/cw rV= 1. The City will consent to the transfer of ATC shares to Time Warner and .the transfer o_ f the Franchise for the cable TV. system from ACC to Time Warner Entertainment Co., LP. The City will sign all appropriate documents to indicate its consent. 2. There has been a dispute between the City and ACC as to. whether funds collected by ACC from subscribers and itemized on bills for payment of franchise fees should: be included in the definition of gross revenues. The resolution of this issue affects how much ACC retroactively, currently, and prospectively, should be paying in franchise fees as provided in Article 20 of the franchise agreement and, pursuant to §14.1(C)(3) of the Franchise Agreement for PEG access equipment, replacement and expansion. We would agree to tablethis dispute until after. the FCC has issued regulations under the Cable Television Consumer Protection and Competition Act of 1992, with neither ACC nor the. City waiving any claim that its position on this issue is correct. Once FCC has issued its regulations, I believe both you and I expect that this issue can be easily settled between the City and ACC. 3. Pursuant to § 19.1 of the Franchise Agreement, there are limits on how high ACC can raise basic rates to subscribers. For the period commencing March 1, 1992, the maximum rate was $14.64 per month. If the amount billed to subscribers for payment of franchise fees is included in the definition of basic rate, then it is my understanding that ACC would be in violation of the provisions of §19.1. The City would waive any past violations of this section and ACC would agree that prospectively, for the purpose of §19.1 of the Franchise Agreement, the amount paid by subscribers for basic services would include any amount paid by subscribers for franchise fees and that the combined amount would not exceed the limits set forth in §19.1. 4. Advertising revenues shall be included in the definition of gross revenues. Both prospectively and retroactively this will affect how much ACC is obligated to pay for franchise fees and pursuant to §14.1(C)(3). In calculating advertising revenues, within the City, I suggest that the total advertising revenues collected from the system be multiplied by a fraction, the numerator of which is the number of subscribers within the City and denominator of which is the total number of subscribers within system. 5. Section 19.1 of the Franchise Agreement provides that ACC will give a need -based senior citizen's discount of 10%. This would be expanded prospectively to cover not only the basic tier, but also the expanded tier. The City would take a greater role in administering this program. With regard to senior citizens who own their own homes, administration is simple. We need only look at whether they qualify for the real property tax exemption. With respect to senior citizens who do not own their own homes, the City, or some other mutually agreeable entity such as the Senior Citizens Center, would prepare and review a form to determine who qualifies for this benefit. 6. Article XV of the Franchise Agreement refers to the Institutional Network (I -NET). Some of the requirements of this section have not yet been accomplished. ACC would agree to have available a sufficient number of modulators and demodulators available for check-out to meet demand. The I -NET would also be expanded to three additional sites, namely the South Side Community Center, The Sciencenter and the Cooperative Extension building. The City would agree that all other requirements of Article XV which have not yet been satisfied, such as the requirement for dedicated cables, will be dropped. 7. ACC has agreed to televise the monthly meeting of Common Council and not less than two of the five standing committee meetings on a rotating monthly basis. Since the Franchise Agreement was entered into, Common Council has started holding a monthly _Committee of the Whole meeting. This wouldalso be televised. 8. In §14.1(C)(3) ACC is obligated to provide 2% of gross City revenues for PEG access equipment replacement and expansion. As the definition of gross City revenues is changed both prospectively and retroactively (inclusion of advertising and possibly inclusion of franchise fees paid by subscribers) as discussed above, this amount would be adjusted. In addition, there have been disputes as to the usage of this 2% money. It would be agreed that prospectively and retroactively, with regard to channels 53 and 54 and prospectively for new channels that are activated (but not either retroactively or prospectively for channel 52) expenses for activation of new channels including the cost of modulators and demodulators would not come out of these 2% funds. 9. Section 14.1(A) of the Franchise Agreement provides that ACC is obligated to designate a certain number of channels for PEG access. The agreement refers in §14.1(A)(1) to nine channels. Obviously, neither the City nor ACC wants to have more channels than can effectively be used. Questions'have arisen however, as to new channels should be activated. We would agree to the following: a.) One additional channel would be activated at this time. In determining, in the future, whether there is sufficient need for other channels to be activated, a formula approach would be utilized to determine whether there is sufficient programming to fill up prime time slots. In .using such a formula, we would calculate the total number of hours of programming per week that exists. If more than 30 hours of programming per week per channel exists, a new channel would be activated. For this purpose, public educational and governmental stations would be considered separately. In calculating the number of hours of programming that exists, we would count the first showing and the first repeat of original shows and the first showing of syndicated shows. In determining whether a show is a new show or merely a repeat, any showing of that show within four months of the initial showing would be treated as a repeat showing. In calculating whether the 30 hours of programming per week per channel has been reached, it would be agreed that an average of 30 hours per channel per week would have to exist for a continuous four month period before the obligation to activate a new channel comes into effect. Once the requirement has been met, the new channel would be opened by ACC - within two months. ACC would report to the Ithaca Cable Commission, on a monthly basis, the relevant data to make the above determination. 10. The City would drop and waive any other claimed violations of the Franchise Agreement except, if it was later determined that ACC improperly reported financial information to the City. John E. Fogarty Associate General Counsel,_ T 1 M E W A RNER CABLE August 20, 1993 Charles Guttman, Esq. City of Ithaca 108 East Green Street Ithaca, NY 14850 Dear Mr. Guttman: AUG 2 31993 Following up on your letter of July 26, 1993 and our subsequent conversations, I enclose for your review a draft Memorandum which I believe incorporates the understandings we have reached and, hopefully, provides a basis acceptable to the City for resolving these issues. One of the points in the Memorandum requires further explanation. As I previously mentioned to you, Time Warner Entertainment Company, L.P. ("TWE") has reached an agreement with U.S. West Inc. under the terms of which U.S. West will invest $2.5 Billion and acquire a 25.51 % limited partnership interest in TWE. We believe U.S. West's experience and leadership in the telcommunications industry make it an eminently suitable partner for TWE. This investment by a leading telephone company in TWE will enhance our ability to make the technological innovations which will allow us to provide increased information, entertainment and communications options for our customers. U.S. West's investment will, of course, also strengthen TWE's already formidable financial standing. Through subsidiaries, Time Warner Inc., of course, retains majority ownership of TWE and, as the only general partner in TWE, continues to maintain full management, operational and creative control over TWE's businesses, including its cable operations. Thus, we can assure you that, as at the time of the creation of TWE, the U.S. West investment does not result in a change in control of the cable franchise. Nor will there be any effect on the ongoing local management of the cable system as a result of the investment. The management, personnel, operations and policies of the cable system will not be affected by this investment. There will certainly be no adverse impact on the cable system or its customers as a result of this transaction. Time Warner Cable 300 First Stamford Place Stamford CT 06902-6732 Tel 203.328.0629 800.950.2266 Fax 203.328.0690 A Division of Time Warner Entertainment Company, L.P. Charles Guttman, Esq. August 20, 1993 Page 2 Our present intention is to close the transaction with U.S. West some time in mid- September. Of course, the validity of any transfer of the franchise from American Television and Communications Corporation to TWE is one of those issues about which there has been some disagreement. In paragraph 9 of the proposed Memorandum, we seek to resolve that issue as well as treat the issue of the investment by U.S. West. We are in full agreement with the desire expressed in your letter to conclude this matter as quickly as possible and we are ready to discuss any issue you may have with respect to the Memorandum at your earliest convenience. Thank you for your patience and cooperation. cc: Ray McCabe JEF:pg MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding is made this day of August, 1993 between "the City" which is the City of Ithaca, New York and "the Franchisee" which is the party which is the cable television franchisee under the terms of that certain Franchise Agreement effective January 20, 1988 between American Television and Communications Corporation, d/b/a American Community Cablevision. WHEREAS, disagreements have arisen between the City, and Franchisee concerning the interpretation of certain terms of the Franchise Agreement; AND WHEREAS the parties hereto desire to settle those disagreements and clarify the terms of the Franchise Agreement; AND WHEREAS the parties have conducted extensive negotiations in order to reach agreement regarding clarification of the terms of the Agreement; NOW THEREFORE, the City and the Franchisee have agreed as follows: 1. (a) "Gross City Revenues" as defined in Section 1.18 of the Franchise Agreement do not include money collected by Franchisee attributable to franchise fees for the period of the franchise term prior to January 1, 1992. (b) "Gross City Revenues" as defined in Section 1.18 of the Franchise Agreement do include money collected by Franchisee and attributable to franchise fees for the period commencing January 1, 1992 until the termination of the franchise. (c) For the period on and after January 1, 1992 the payments made by Franchisee to the City under the provisions of Article 20 of the Franchise Agreement shall be calculated based on Gross City Revenues which include payments attributable to franchise fees. Any amounts owing to the City based on the clarification of the Franchise Agreement set forth in this Memorandum of Understanding shall be paid to the City at the time of its execution. (d) In the period on and after January 1, 1992 the money provided for capital PEG access equipment replacement and expansion under the provisions of Article 14.1(c)(3) of the Franchise Agreement shall be calculated based on Gross City Revenues which include payments attributable to franchise fees. 2. (a) "Gross City Revenues" as defined in Section 1.18 of the Franchise Agreement do not include revenue received by Franchisee from the sale of advertising time on its cable television system for the period of the franchise term prior to January 1, 1992. (b) Gross City Revenues as defined in Section 1.18 of the Franchise Agreement do include revenue received by Franchisee from the sale of advertising time on its cable television system for the period commencing January 1, 1992 until the termination of the franchise. (c) For the period on and after January 1, 1992 the payments made by Franchisee to the City under the provisions [at Article 14.1(c)(3)] of Article 20 of the Franchise Agreement shall be calculated based on Gross City Revenues which include payments attributable to the sale of advertising time. Payments made by Franchisee to the City under the provisions of Article 20 of the Franchise Agreement shall be calculated based on Gross City Revenues which include revenue received by Franchisee from the sale of advertising time on its cable television system. Any amounts owing to the City based on the clarification of the Franchise Agreement set forth in this Memorandum of Understanding shall be paid to the City at the time of its execution. (d) In the period on and after January 1, 1992 the money provided for capital PEG access equipment replacement and expansion under the provisions of Article 14.1(c)(3) of the Franchise Agreement shall be calculated based on Gross City Revenues which include payments attributable to the sale of advertising time. (e) To determine the advertising revenues which shall be deemed Gross City Revenues under this Memorandum of Understanding, the total advertising revenues from Franchisee's cable television system serving the City of Ithaca and neighboring jurisdictions shall be multiplied by a fraction, the numerator of which is the number of subscribers within the City of Ithaca and the denominator of which is the total number of subscribers served by the cable television system. 3. If the City seeks certification to regulate the rates for basic service pursuant to the rules of the Federal Communications Commission ("FCC") , rates for basic cable service will be regulated pursuant to those rules. If the City determines not to seek certification to regulate the rates for basic cable service pursuant to the rules of the FCC, then the rates for basic cable service will be regulated pursuant to Article 19 of the Franchise Agreement and, from the effective date of this Memorandum of Understanding, the maximum rate permitted under Article 19 will be inclusive of the amount attributable to franchise fees. The City waives and will not at any time in -the future assert any claim that Franchisee's rates for basic cable service in effect at any time prior to the date of this Memorandum of Understanding were not in compliance with Section 19 or any applicable law or regulation. 4. The need -based Senior Citizen's discount for basic cable service provided in Article 19.1 shall within 60 days after the execution of this Memorandum of Understanding be extended to the most popular non -basic tier of cable service. 5. Franchisee will extend its existing 450 Mhz high split institutional network to the current locations of the Southside Community Center, the Cooperative Extension and the Science Center, all located within the City of Ithaca. The technical capability provided by the extension will allow transmission of programming from these institutions to Franchisee's hub and then distribution on any existing PEG channels. Franchisee will provide a total of five quality Agile Modulators and Demodulators for use in transmitting programming from any five institutional network locations simultaneously. This equipment will be of similar specifications or better as the Scientific Atlanta Model 9270 modulator and Jerrold S890D demodulator. Upon completion of the extension to the above-mentioned locations, Franchisee shall be deemed in compliance with all requirements of the Franchise Agreement concerning the institutional network and Franchisee shall have no further obligations under the Franchise Agreement with respect to the institutional network other than to maintain and operate the institutional network as it exists at the date of the completion of the extensions to the above mentioned three locations. 6. In addition to the requirements of Article 14.7 of the. Franchise Agreement, Franchisee will cablecast one monthly meeting of the Common Council Committee of the Whole. 7. The cost of the equipment used to activate channels 53 and 54 (both previously activated) and any channels activated after the date of this Memorandum of Understanding for public, educational and governmental access shall not be deducted or credited against funds expended by Franchisee pursuant to section 14.1(C)(3) of the Franchise Agreement. The equipment subject to this paragraph will be as set forth in the letter of November 20, 1991 from Peter Hess to Barbara Lukens which is annexed hereto as Exhibit A. 8. There are presently four channels used for public, educational and governmental access purposes on Franchisee's cable television system in the City of Ithaca. Channels [list]. Upon execution of this Memorandum of Understanding, Franchisee will deignate and activate an additional public access channel as soon as reasonably practicable. Franchisee may, pursuant to Section 14.1(A)(1) of the Franchise Agreement, designate up to five additional channels for public, educational and governmental access. Franchisee shall designate and activate an additional public access channel if there is cablecast more than 30 hours of original programming per week per channel on the channels used for public access purposes over a continuous four-month period. Franchisee shall designate and activate an additional educational and governmental access channel if there is cablecast more than 30 hours of original programming per week per channel on the channels used for educational and governmental access purposes over a continuous four-month period. Franchisee shall activate any channel as required hereunder within three months of the end of the continuous four-month period giving rise to the obligation. Original programming shall be defined for purposes of this Memorandum of Understanding as the first showing and the first repeat of original shows and the first showing of syndicated shows. The showing of a program which has been previously cablecast on a public, educational and governmental access station shall be deemed a first showing if there has been no prior showing on these channels within the past year. 9. The City consents to the extent necessary or advisable under the Franchise Agreement to the transfer of the cable television franchise from American Television and Communications Corporation to Time Warner Entertainment Company, L.P. ("TWE") (including any necessary transfers through one or more subsidiaries of Time Warner) and the granting of a limited partnership interest in TWE to U.S. West Inc. The City hereby consents to all actions previously or subsequently taken to effectuate the ownership changes described herein. 10. The City and Franchisee agree that, except for any actions required under the terms of this Memorandum of Understanding, Franchisee is in compliance with the terms and conditions of its Franchise Agreement with the City except that the City reserves the right to dispute any financial information previously submitted by Franchisee. CITY OF ITHACA By: AMERICAN TELEVISION AND COMMUNICATIONS CORPORATION By: TIME WARNER ENTERTAINMENT COMPANY, L.P. By: ithaca 4 Aar Ove a i Ir F -2 „ e ,#)z_ae. / (2) 6) /7/L 403de, 722r. /60 0-- 2_-(oe)7_ EiCEOWE SEP 27 lie T 1 M E W A R N E R CABLE September 24, 1993 Charles Guttman, Esq. City of Ithaca 108 East Green Street Ithaca, NY 14850 Dear Mr. Guttman: Enclosed is a revised draft of the Memorandum of Understanding regarding the several issues we have so often discussed. I believe the revisions incorporate the changes suggested in your letter of September, 1993, as well as our recent conversation. If you wish to discuss any of the items please give me a call. I hope we are close to a conclusion of this. Thanks for your assistance. Best regards. Sincerely, Time Warner Cable 300 First Stamford Place Stamford CT 06902-6732 Tel 203.328.0600 Fax 203.328.0690 A Division of Time Warner Entertainment Company, L.P. OFFICE. OF Cry ATTORNEY CITY OF•ITHACA 1 CS EAST GREEN STREET rrmAca,„ NEW YORK• 1 assa IN Mi1A-1‹ MaR-2511•TSINII=i1"Thr_s SI -TEM M1' TELEPHONE : - YOUR FAX NO: 0703 3aF- n6,5o NOTES: SUBJECT: FROM : cdoll?3. TELEP. HONE : 607-274-6504 OUR FAX NO: 607-272-7348 TOTAL PAGES (INCLUDING TRANSICTrAL SEE= ) OFFICE cF CITY ATTORNEY CONFIDENTIAL TO: -44;14/1 W/AAAM.A1 a • • CITY OF ITHACA . 108 EAST GREEN STREET ITHACA, NEW YORK 1 4ESO TELEPHONE : FROM: t jc.eg TELEPHONE: 607-274-6504 YOUR FAX NO : 0155 ZIO(0 OUR FAX NO : 607-272-7348 NOTES: SUBJECT : L. hto ka 61,1_ ple-66Le, o_ALQ (lot TOTAL PAGES ( INCLUDING TRANSMITTAL CONFIDENTIAL • • •. John E. Fogarty, Esq.. -3- September 2, 1993 be frequency agile. Apparently, there will also need to be some other amplifiers and less expensive equipment just to make sure everything works. Since we are having separated modulators and demodulators, we have referred to different base equipment. Please review this with your technical people to make sure that this makes sense. Please get back to me with any comments you have regarding these proposed changes. I.expect that after I have discussed this with the entire City Council on October 6, we can talk again and iron out final language between October 6 and October 21. On October 21st I would like to take the proposed agreement in final form back to the appropriate Council Committee for their final review. I would then take it to the full Council on November 3 for their final approval and we can have this matter concluded at that time. If it is possible for you to review these changes before September 16th, the committee could approve final language at that time and I could take it to our full Council on October 6th and have the matter concluded at that time. Obviously, I would prefer and I would assume that you would prefer, to get this matter out of the way as soon as possible. Very truly yours, Charles Guttman City Attorney CG/cw bc: Jim Ferwerda, Chair, Cable Commission 4-670G6/0-- OFFICE WV ATTORNEY • CITY OF ITHACA 1 CIS EA sr GREEN STREET r71 -1A CA, NEW YORK 14S0 MaR..2%1•TSM2'="1".Z1.. TELEPHONE: YOUR FAX NO: CZA 3dR-nc,qn NOTES : SUBJECT: FROM: auf s)diajtfryla 9101-f9 3 • .A TELEPHONE : 607-274-6504 OUR FAX NO: 607-272-7348 TOTAL PAGES (INCLUDING TRANSZIITTAL SEE= ) - • • William B. Finneran Chairman Dear Mayor: See Muni' 11 Options "Short Form" 1-2-3 DECEIVED AUG301993 NEW YORK STATE COMMISSION ON CABLE TELEVISION August 27, 1993 The New York State Commission on Cable Television has approved new statewide regulations which will confirm the authority of New York State's cities, towns and villages to regulate basic rates in accordance with the provisions of the new federal law as implemented by the FCC. Our proposed rules do not mandate that New York's local governments must undertake such regulation. A decision not to regulate rates -- forgood and cogent reasons -- will be an acceptable alternative. Our proposed rules allow yet another alternative, and that is to let the State Commission handle the rate regulation responsibility. (The NY Conference of Mayors and the NY Association of Towns both tell us that most local governments will likely choose this option.) Under our proposed rules, then, which are consistent with federal rules, you have three choices: 1. Regulate rates yourself, or 2. Request the State Commission to do it for you, or 3. Decide not to regulate rates at this time for some compelling reason -- an upgrade, line extension, access enhancements, already have reasonable rates, etc. -- reserving the right to regulate at a later time if such is deemed appropriate. Accompanying this letter is a Municipal Advisory from our Legal Division explaining in more detail the ramifications and status of rate regulation, - and the above municipal options. (Consider this letter a kind of "short form" to expedite the process. Attached is a Municipal Option form 1-2-3 by means of which you can easily convey to us which one of the three options is your choice). The complete proposed regulations will be sent to you under separate cover. Any comments or criticism with regard to the proposed rules would be most welcome. Tower Building • Empire State Plaza • Albany, NY 12223 (518) 474-1035 2 There are three important points that you might want to consider. First, once one understands the FCC -rules for calculating rates (admittedly not an easy job), it essentially makes no difference who does the calculating. In other words, - the calculated rate will be the same whether you do it yourself, or have the State Commission do it for you, or pay someone else to do it. Secondly, if you hire outside "expertise" to oversee the calculations, you- will have to pay for it with your franchise fees or other municipal funds. In some cases the costs could exceed the franchise fees itself. The State Commission will undertake the responsibility at no expense to your community, keep you apprised at every step of the way, and will welcome your input throughout the process. Thirdly, except for a rare andunlikely case where cable rates are actually below permitted levels on September 1st, the first day rates .may be regulated, (see page 3 of the Municipal Advisory) nothing is lost in now taking the time required to make a considered, reasoned judgment in this important matter. For .one thing the rate freeze imposed by the FCC extends to November 15, 1993. Further, in most instances, any subsequent refunds or rebates will be calculated back to Septemberlst anyway. Please give us a call if you have further questions or need more information. Again, should your choice be a preference that the State Commission handle the complexities of rate regulation, be assured that you will be kept informed of the proceedings at all. stages. There are 1,536 municipalities in New York State, and Iknow there will be which who, for whatever reasons, will take no action in this matter. The State Commission reserves the right to take appropriate regulatory action in those instances where, by the end of the year, no notice of a local regulatory choice is received. If you need more information before deciding whether or not you have the resources to shoulder the regulatory responsibility yourself, or whether you might want us handle it, please feel free to contact us. Kindest personal regards. WILLIAM B. FINNERAN Chairman Attachments NEW YORK STATE COMMISSION ON CABLE TELEVISION MUNICIPAL ADVISORY August 27, 1993 TO: Municipal Officials of the State of New York FROM: John L. Grow, Counsel SUBJECT: CABLE TELEVISION RATE REGULATIONS: STATUS OF FCC RULES AND PROPOSED COMMISSION RULES The cable television rate regulations, released by the Federal Communications Commission ("FCC") on May 3, 1993, were originally due to become effective June 21. On June 11, the FCC acted to defer the effective date until October 1. By order released July 27, the FCC determined to accelerate the effective date by one month to September 1, 1993. (At the same time, the FCC also continued its rate freeze, first imposed April 5, 1993, until November 15, 1993.) More recently, on August 10, 1993, the FCC denied a request for a universal stay of the regulations but did grant a temporary stay of the regulations as they apply to small cable systems, i.e.. systems with 1,000 subscribers or fewer. Thus, as of this date, the new regulations will become effective on September 1 in all municipalities served by cable television systems with more than 1,000 subscribers. No .effective date has yet been established for small systems. The purpose of this Municipal Advisory is twofold. First, the State Commission has recently approved the issuance of a Notice of Proposed Rulemaking concerning the regulation of cable television rates in New York State under the new federal regulatory scheme. This Advisory will summarize key features of the proposed rules. Second, it is anticipated that cable companies will make adjustments in rates and service offerings on or before September 1 and that such adjustments will generate a substantial number of inquiries from cable subscribers. This Advisory will emphasize certain aspects of the FCC rate regulations and other recent FCC actions that might help you to understand these adjustments and better respond to inquiries. 2 Proposed State Commission Regulations Recently, the Commission voted to approve the issuance of a Notice of Proposed Rulemaking whereby it is proposing rules necessary to implement the new federal cable regulations. The proposed rules will provide that each municipality make an election by a date certain whether (1) to regulate the basic service rates and associated equipment of the local cable television franchisee in accordance with the formal standards and procedures in FCC regulations; or (2) to have the State Commission regulate such rates in accordance with the FCC regulations; or (3) to defer formal regulation, for good cause. No election would be irreversible. The rules also contain standards and procedures applicable to ratemaking proceedings designed to fulfill FCC requirements. (Section 76.910(e) of the FCC rules provides that a franchising authority may not initiate regulation of rates unless it has been certified by the FCC and has adopted regulations that are consistent with the FCC regulations governing basic service and which provide a reasonable opportunity for consideration of .the views of interested parties.) The Commission believes that this approach is consistent with the new federal regulations and existing state statute and will eliminate the need for municipalities that choose to regulate to separately adopt rules. Notably, the FCC regulations do not require regulation by franchising authorities as a matter of law. There is no legal obligation to become certified. It does appear, however, that if certification is obtained the FCC expects that regulation will occur and be conducted in compliance with its rules. Given the potential cost of regulating rates in accordance with the FCC standards and the possibility of many duplicative proceedings concerning essentially the same underlying factors, the proposed rules will permit, but not require, municipalities to regulate rates, and will permit a municipality, in the alternative, to choose to have the State Commission regulate rates. Also, because every rate determination by a franchising authority is subject to appeal and final decision by the FCC, the rules will not require that every municipal rate determination be formally reviewed and approved by the Commission. The rules will propose that a municipal election be made at a public meeting by resolution of the local legislative body. (In the event that some municipalities may seek certification before the effective date of the proposed rules, it is recommended that such action be ratified by the local legislative body if not authorized in advance.) The rules will further provide that if the Commission does not receive notice of a municipality's election by December 31, the Commission will take appropriate regulatory action. September 1 marks the first day that a franchising authority may seek certification from the FCC to regulate rates for basic service and associated equipment (and the first day that a subscriber, franchising authority or other relevant governmental entity may complain to the FCC about rates for non -basic tiers of service). A question often asked is "is it necessary to seek certification on September 1?" It is not. Since there is no 3 mandate under federal rules, or under proposed State rules, to regulate rates, there is no obligation to seek certification. Nor is there any deadline for seeking certification. For a municipality that is inclined to regulate rates, a related question is "will I be prejudiced if I do not seek certification immediately?" As a practical matter, the answer is "no." The FCC rules provide protection for franchising authorities by permitting them to order retroactive refunds of rates for basic service found to be in excess of reasonable amounts for a period up to one year from the date of the order. In other words, if rates are found to be unreasonable any time before August 31, 1994, the company can be ordered to refund excessive amounts to subscribers, plus interest, from September 1, 1993. This would include excessive amounts by reason of a subsequent rate increase. Various factors should be considered in deciding whether or not to regulate initially in accordance with FCC regulations and when to seek certification. • In addition to benchmarks, initial rates can be justified on a cost -of -service basis. The FCC has not yet promulgated regulations that will govern cost -of - service proceedings. Those regulations are expected later this year. Also, multiple petitions for reconsideration of the rate regulations are now pending at the FCC. A decision on those petitions may affect rate regulation. • After September 1, there can be no rate increases without 30 day notice, and, under the rate freeze until November 15, there can be no rate increases that would increase the average monthly subscriber revenues of the cable operator from non -premium or non -pay-per-view services. • As noted, forsystems whose rates are at or above the benchmark as of September 1,. their rates, or any increases after November 15, 1993, can be reduced effective September 1, 1993 with credits or refunds, plus interest, to September 1, 1993, by regulatory action finalized on or before August 30, 1994. • If a system's rates on September 1 are below the benchmark levels, it does appear that a cable operator could increase them. to benchmark levels after November 15, 1993, if regulation has not been initiated by October 15, 1993, without the risk of reduction below the benchmark, provided, that if the increase is from rates below the benchmark to rates above the benchmark then the excess amounts over the benchmark would be subject to later review, reduction and refunds. • There is nothing in the rules to preclude an informal review of rates in effect as of September 1 to determine their relationship to benchmarks or to determine the likelihood that the cable operator is inclined toward cost -of - service. Inasmuch as certification may cause an irreversible step towards 4 formal regulation, it is not unreasonable to informally evaluate the rates of the cable operator before taking the first step; •. The date that regulation is initiated becomes the date on which a cable operator may be able to benefit in the future from increases in external costs, i_e., programming costs and the costs of compliance with franchise requirements. In order that you might make an informal evaluation of whether the rates in effect on September 1 approximate the benchmark method requirements, copies of the tables of benchmark rates as promulgated by the FCC are enclosed. You will find that there are three criteria which determine the applicable per -channel rates for each system. They are: the number of subscribers in the cable television system (not to be confused with the number of subscribers in your municipality); the number of channels provided on all regulated tiers (the number of channels on basic service plus the number of. channels on tiered services); and the number of regulated channels which are delivered via satellite. The applicable rate may be adjusted forward for inflation. While, there are other adjustments to be made to such rates, it may be fairly assumed that if the per -channel rates in effect on September 1 are at the applicable per - channel rate contained in the tables adjusted for inflation, the benefits from formal regulation may be less than if the rates are above the benchmark. As noted, if a per - channel rate is above the applicable rates in the table, it may yet be in conformity with the benchmark method because of an inflation adjustment or because an operator is entitled to a per -channel rate equal to 90% of its per -channel rate in effect on September 30, 1992 if the effective rate on such date was higher than the rate in the tables. In addition to an examination of the per -channel rates for each tier, it is important to focus on the charges for additional outlets and for equipment. Under the new rules, it is to be expected that these charges will be reduced substantially from earlier levels. Rate Adjustments by September 1, 1993 The effective date of the FCC rules is important for a number of reasons but, most significantly, it is the date for determining the rates that are subject to regulation under the new rules. In other words, it is the rates that are in effect on September 1 -- not the rates as of May 3, June 21 or August 31 -- that must be reasonable under the substantive rate standards in FCC rules. The new regulations are designed to induce cable operators to voluntarily adjust their rates on or before the effective date. In fact, some companies in the state have given notice of rate changes in the past few weeks. The same companies may yet make additional changes. It is expected that other -- probably most -- companies will also be making adjustments on or before September 1. The main factors that are likely to influence the adjustments are: 5 • Under the FCC regulations, the primary method for determining the reasonableness of rates is a system of benchmarks and price caps. As noted, the benchmark rates are contained on separate tables issued by the FCC and will vary from system to system depending on three factors. It is expected that the majority of cable companies will attempt to comply with the benchmark methodology. If a cable company does not conform its rates to the benchmarks, it must be prepared to justify its rates .by a cost -of -service showing. • The benchmark rates are PER CHANNEL rates. This means that the permissible rate for each regulated tier will depend on the number of channels on each tier. Although it has been reported that benchmark rates are, on average, 10% lower than rates for cable service in effect on September 30, 1992, this does not mean that the rate for each tier of service will necessarily be reduced by 10%. It is entirely possible that rates for a particular tier of service will be increased consistent with the new benchmark method of regulation. In fact, the rates for many individual subscribers will increase. • The FCC is permitting cable operators to retier services prior to the effective date. This means that rate adjustments may coincide with changes in the number of tiers or the number of channels on existing tiers. A cable operator may also remove channels from existing tiers and offer them as a single per - channel purchase option (like HBO). • Rates for equipment must be unbundled. If a cable operator offers a converter and/or remote control, it must specify a separate charge for each. • There are no benchmark rates for equipment or additional outlets. Reasonable charges are to be determined based on the cost of equipment plus a reasonable profit. As a general rule, charges for equipment and additional outlets should be expected to be significantly lower. • The RATE FREEZE continues in effect through November 15, 1983. It is important to understand, however, that the rate freeze does not apply to each individual rate but only to the average monthly subscriber bill. In other words, an increase in the rate for a regulated tier does not violate the rate freeze if the average monthly subscriber bill after the change is the same or less than the average monthly subscriber bill before the change. The average monthly subscriber bill is the total amount billed to all subscribers for regulated services divided by the total number of subscribers. Thus, if a rate increase for a particular tier is offset by a reduction in charges for another tier or by a reduction in charges for equipment or additional outlets, the increase will not violate the rate freeze. 6 Because of the short period of time between the decision to change the effective date and September 1, the FCC has taken certain actions to facilitate rate adjustments by cable companies: • The FCC has waived its own rules that require 30 day advance notice as a condition to the effectiveness of a rate increase or programming change implemented on or before September 1. It has also preempted state law and regulations and franchise requirements that would require advance notice of a rate increase or other changes. In other words, rates can be placed in effect as of 12:01 a.m., September 1 without specific advance notice to each subscriber or to each franchising authority. In order that subscribers have some reasonable opportunity to learn of the changes, the FCC has urged cable companies to give public notice of new rates in local newspapers and on the cable system itself. • The FCC has also determined that the new rates need not appear in the subscriber's bill prior to September 1. Rather, the cable operator must provide the actual rates in subscriber bills on or before October 1. The effect of the foregoing waivers or preemptions is that on September 1 subscribers may experience either a change in rates or a change in the programming coming into their homes, or both, without a specific advance written notice advising them of the new rates or service offerings. It is also possible that bills mailed in August, for September, may not reflect the actual charges for September. In addition, because of retiering, subscribers may be billed for new service tiers. Under ordinary circumstances, such abrupt changes would violate federal and state notice requirements and other consumer protection regulations. In the special circumstances here -- a one-time consequence of the FCC's decision to accelerate rate regulation -- the relief available to subscribers who experience a rate increase or new service offering should include the opportunity to terminate or downgrade service within a reasonable period, e.g., 30 days from receipt of a current and accurate billing statement, and to receive pro rata credits or refunds back to the date of the change. * * * * * * * * * * The State Commission will be distributing its proposed rules shortly under separate cover. Your comments are invited. Staff is also available to discuss any of the matters raised herein. You may contact the Office of Municipal Assistance at (518) 474- 2212 or Counsel's Office. at (518) 474-1359. Enc. Municipal Options El City The ❑ Town of ❑ Village in County is familiar with the requirements of the Cable Act of 1992 concerning cable television rates, and, on (date) resolved to undertake rate regulation itself in compliance with federal law as implemented by the Federal Communications Commission. (Date) Signed: City, Town, Village Clerk Forward to the NYS Commission on Cable Television, Empire State Plaza, Corning Tower, Albany, NY 12223 ❑ City The ❑ Town of ❑ Village in County is familiar with the requirements of the Cable Act of 1992 concerning cable television rates, and, on (date), resolved to have the NY State Commission on Cable Television undertake rate regulation for said municipality in compliance with federal law as implemented by the Federal Communications Commission. Signed: (Date) City, Town, Village Clerk Forward to the NYS Commission on Cable Television, Empire State Plaza, Corning Tower, Albany, NY 12223 ❑ City The ❑ Town of Village in County is familiar with the requirements of the Cable Act of 1992, concerning cable television rates, and, on (date), resolved not to regulate rates at this time for reasons set forth in the attached statement. Signed: (Date) City, Town, Village Clerk Forward to the NYS Commission on Cable Television, Empire State Plaza, Corning Tower, Albany, NY 12223 PRICE PEr CHANNEL for systems with 1,F00 subscrbers and 25 or more channels Weighted and Adjusted for French se Fees and Equipment Total channels on regulated tiers: Satellite 25 30 35 40 45 50 55 60 85 70 75 80 85 90 95 100 ' Satellite Channels Channels v _ v 0 50.605 $0.515 $0.449 50.399 50.359 $0.327 50.301 50.278 50.259 50.243 50.228 $0.216 50.204 $0.194 50.185 50.177 0 5 $0.712 $0.605 $0.528 $0.469 50.422 50.385 $0.353 50.327 50.305 50.285 $0.268 50.253 $0.240 50.228 $0.218 50.208 5 10 $0.763 $0.649 $0.566 50.503 50.453 50.412 $0.379 50.351 50.327 50.306 $0.288 50.272 50.257 50.245 $0.233 $0.223 10 15 $0.795 $0.676 50.590 50.524 50.472 50.430 50.395 ' $0.365 $0.340 50.319 $0.300 50.283 50.268 $0.255 $0.243 50.232 15 20 50.818 $0.696 50.607 $0.539 50.486 $0.442 50.406 $0.376 50.350 $0.328 50.309 $0.291 50.276 50.262 50.250 50.239 20 25 50.837 $0.712 $0.621 $0.551 50.497 50.452 $0.416 50.385 50.358 50.335 50.316 50.298 $0.282 $0.268 $0.256 50.244 25 30 $0.725 50.632 50.562 $0.506 50.461 $0.423 50.392 50.365 50.342 $0.321 $0.303 50.288 50.273 50.261 50.249 30 35 $0.642 $0.570 50.514 50.468 $0.430 50.398 50.371 50.347 50.326 50.308 50.292 $0.278 50.265 $0.253 35 40 $0.578 50.521 $0.474 50.436 50.403 50.376 50.352 50.331 50.312 50.296 50281 50.268 50.256 40 45 $0.527 $0.480 ' 50.441 50.408 50.380 50.356 50.335 50.316 $0.300 $0.285 50.271 50.259 45 50 50.485 50.446 50.412 50.384 $0.360 ' 50.338 50.319 50.303 50.288 50.274 $0.262 50 55 50.450 50.416 50.388 50.363 $0.342 50.323 50.306 50.291 $0.277 $0.265 55 80 $0.420 $0.391 50.366 50.345 50.325 $0.308 $0.293 50.279 50.267 60 65 50.394 50.369 $0.347 $0.328 50.311 $0.295 50.282 $0.269 85 70 50.372 50.350 $0.330 50.313 50.298 $0.284 $0.271 70 75 50.352 50.333 $0.315 50.300 $0.286 $0.273 75 80 $0.335 $0.317 50.302 $0.288 $0.275 80 85 $0.319 50.304 $0.289 50.276 85 90 50.305 $0.291 $0.278 90 95 50.293 50.280 95 100 $0.281 100 • PRICE PER CHANNEL for systems with 10 000 subscribers and 25 or more channels Weighted a td Adjusted for Franch se Fees ar d Equipment • Total channels on regulated tiers: Satellite 25 30 35 40 45 - 50 55 60 85 70 75 80 85 90 95 100 Satellite Channels Channels v v 0 50.603 50.513 $0.447 50.397 $0.358 $0.326 $0.299 50.277 50.258 $0.242 50227 50.215 50.203 50.193 $0.184 50.176 0 5 50.709 50.603 50.526 50.467 50.421 50.383 50.352 50.326 50.303 50.284 50.267 $0.252 50239 50.227 50.217 50.207 5 10 50.760 $0.646 50.564 50.501 50.451 50.411 $0.377 50.349 50.325 50.305 50.287 50271 50.256 50.244 $0.232 50.222 10 15 50.792 50.673 50.587 50.522 50.470 $0.428 $0.393 50.364 50.339 $0.317 $0.298 50282 50.267 50.254 50.242 $0.231 15 20 50.815 50.693 50.604 $0.537 50.484 $0.440 50.405 50.375 50.349 50.327 50.307 50.290 50.275 $0.261 $0.249 $0.238 20 25 $0.833 50.709 50.618 50.549 50.495 50.450 - 50.414 50.383 50.357 50.334 50.314 50.297 50.281 50.267 50.255 50.243 25 30 $0.722 50.630 50.559 50.504 50.459 50.422 50.390 50.363 50.340 50.320 50.302 50286 50272 50.259 50.248 30 35 50.639 $0.568 50.512 50.466 $0.428 $0.396 $0.369 . $0.346 $0.325 50.307 $0.291 50.276 50.264 $0.252 35 40 $0.576 $0.518 50.472 50.434 50.402 50.374 $0.350 50.329 50.311 $0295 50.280 50.267 50.255 40 45 $0.525 50.478 $0.439 50.406 50.379 50.354 50.333 $0.315 50.298 50284 50.270 50.258 45 50 $0.483 50.444 $0.411 50.383 $0.358 $0.337 50.318 50.301 $0287 $0.273 50.261 50 55 $0.448 50.415 $0.386 50.362 50.340 $0.321 $0.304 50.289 50.276 $0.264 55 60 50.418 50.390 $0.365 $0.343 50.324 $0.307 50.292 $0.278 50.266 60 65 $0.393 50.368 $0.346 50.327 50.310 50.294 50.280 $0.268 85 70 50.371 50.349 50.329 $0.312 50.296 50.283 $0.270 70 75 - $0.351 50.331 50.314 50.299 $0.285 $0.272 75 80 $0.334 $0.316 $0.300 $0.286 $0.274 80 85 50.318 50.302 $0.288 $0.275 85 90 50.304 50.290 50.277 90 95 $0.291 $0.278 95 100 $0.280 100 PRICE PEK CHANNEL for systems with 1 6100 subscri>ers ,Weighted aid Adjusted for Franchse Fees and Equipment Total channels on r*yu ated tiers: Satellite 6 6 7 6 9. 10 11 12 19 14 16 18 17 18 19 20 21 22 23 24 Satellite Channels .- Channels v v 0 52.527 52.149 51.874 51.665 51.499 $1.366 $1.255 51.161 51.082 51.013 50.953 50.900 50.853 50.810 50,772 $0.738 50.707 50.678 50.652 50.628 0 1 52.527 52.149 $1.874 52.010 ;1.665 51.785 $1.499 51.608 51.366 51.464 51.255 51.345 51.161 ;1.245 51.082 51.160 ;1.013 51.086 50.953 51.022 $0.900 50.965 50.853 50.914 50.810 50.869 50.772 50.828 50.738 ;0.791 50.707 50.758 50.678 50.727 50.652 50.699 50.628 50.673 1 2 2 52.709 52.304- 3 52.822 $2.400 $2.093 51.859 51.675 ;1.525 51.401 ;1.297 51.208 ;1.131 51.064 51.005 50.952 $0.905 50.863 50.824 50.789 50.757 50.728 50.701 9 4 52.905 52.471 52.155 .51.914 51.724 51.570 51.443 51.335 51.244 51.165 51.095 51.034 50.980 50.932 50.888 ;0.848 50.812 $0.780 50.749 50.722 4 6 52.971 52.527 52.574 52.204 52.244 52.280 51.957 ;1.994 52.025 51.763 51.796 51.824 51.606 51.635 51.661 ;1.475 ;1.503 51.526 51.366 $1.391 51.413 51.272 51.295 51.316 51.191 51.213 $1.232 51.120 51.141 51.159 51.058 ;1.077 ;1.094 51.002 51.021 51.037 50.953 50.970 $0.986 50.908 50.925 50.939 50.868 50.884 50.898 ;0.831 50.846 50.860 ;0.797 ;0.812 50.825 $0.766 50.781 50.793 $0.738 50.752 50,763 6 6 7 6 7 8 52.052 51.848 51.683 51.547 ;1.432 51.334 ;1.249 51.174 51.109 51.051 50.999 50.952 50.910 50.871 $0.836 50.804 50.774 8 9 51.870 51.703 51.565 ;1.449 ;1.349 51.263 51.188 51.122 ;1.063 ;1.011 50.963 50.921 50.882 50.846 50.813 50.783 9 10 51.722 51.582 51.597 51.464 51.478 51.364 51.377 ;1.277 51.289 51.301 51.201 51.213 51.223 51.134 ;1.145 51.155 51.075 51.085 51.095 51.022 ;1.031 51.041 $0.974 50.983 50.992 10.930 10.939 50.948 50.891 ;0.900 50.907 50.855 50.863 50.871 50.822 50.830 50.837 50.791 50.799 ;0.806 10 11 12 11 12 ;1.491 51.389 13 51.400 51.311 ;1.321 51.233 ;1.242 ;1.165 51.173 51.104 51.112 51.049 51.057 51.000 $1.007 50.955 ;0.962 50.915 50.922 ;0.878 50.884 50.844 50.850 $0.812 50.819 13 14 14 15 • 51.251 ;1.181 51.189 51.120 51.127 ;1.064 51.071 51.014 51.021 50.969 50.975 $0.928 50.934 50.890 50.896 50.856 ;0.862 50.824 ;0.830 15 18 18 17 . 51.134 51.078 51.084 51.027 51.033 51.039 50.981 50.987 50.998 50.940 ;0.945 50.950 50.955 ;0.902 50.907 50.912 50.917 $0.867 50.872 50.877 50.881 $0.835 50.840 50.844 50.848 17 18 19 20 18 19 20;0.992 21 ;0.960 50.921 50.925 50.885 ;0.890 50.894 50.853 ;0.857 50.860 $0.864 21 22 23 24 22 23 24 PRICE PER CHANNEL for systems with 101300 subscriber* Weighted aid Adjusted for Franchse Fees and Equipment Total chennols on regu ated tier*: Satellite 6 6 7 8 9 10 11 12 19 14 16 18 17 18 19 20 21 22 23 24 Satellite Channels Channels v v 052.516 52.140 51.866 51.658 51.493 51.360 51.250 50.157 '51.077 51.009 50.949 50.896 50.849 50.807 50.769 50.735 50.704 50.675 50.649 ;0.625 0 1 52.516 52.140 51.866 $1.658 ;1.493 51.360 $1.250 51.157 51.077 51.009 50.949 ;0.896 50.849 ;0.807 ;0.769 50.735 $0.704 50.675 50.649 50.625 1 2 52.698 52.810 52.295 52.390 52.001 $2.085 51.778 51.852 51.601 ;1.668 51.458 51.519 51.340 51.396 ;1.240 51.292 ;1.155 51.203 51.082 51.127 51.017 51.060 $0.961 51.001 50.910 50.948 ;0.865 50.901 50.825 50.859 50.788 50.821 50.755 50.786 $0.724 50.754 50.696 50.725 50.670 50.698 2 3 3 4 " ;2.893 52.959 52.461 ;2.516 52.146 52.195 51.906 ;1.949 ;1.717 51.756 ;1.563 ;1.599 51.437 51.469 51.330 51.360 51.239 51.267 $1.160- 51.186 ;1.091 51.116 51.030- 51.053 50.976 50.998 ;0.928 50.949 50.884 50.904 50.845 50.864 50.809 50.827 50.776 50.794 $0.746 50.763 $0.719 50.735 4 6 6 6 52.563 52.235 52.270 51.985 $2.016 51.788 51.816 51.628 $1.654 51.496 51.520 51.385 51.407 51.290 $1.310 51.208 51.227 51.136 ;1.154 51.073 51.090 51.017 51.033 50.966 50.981 50.921 $0.935 50.880 $0.894 50.843 50.856 50.809 50.821 50.777 $0.790 50.749 $0.760 6 7 7 8 52.044 51.841 51.676 51.540 51.426 51.328 ;1.243 51.170 51.104 51.047 50.995 50.948 50.906 50.868 50.832 50.800 50.771 8 9 51.863 51.696 51.559 51.443 51.344 51.258 ;1.272 51.284 51.295 ;1.306 51.315 51.183 ;1.196 51.208 51.218 ;1.228 51.237 51.118 51.129 51.140 51.150 51.160 51.168 ;1.059 51.070 51.081 51.090 ;1.099 51.107 51.007 51.017 51.027 51.036 51.045 51.052 50.959 50.970 50.979 50.988 $0.996 51.003 50.917 ;0.927 50.935 50.944 ;0.951 $0.958 50.878 50.887 50.896 50.904 $0.911 50.918 50.842 50.851 50.860 50.867 50.874 $0.881 $0.810 50.818 50.826 $0.834 50.840 50.847 50.780 50.788 50.796 50.803 50.809 50.615 9 10 11 12 13 14 10 51.714 ;1.575 51.590 ;1.458 51.472 $1.485 51.358 51.371 51.383 11 12 13 • 51.394 14 15 51.246 51.177 51.184 51.115 $1.122 51.060 51.067 $1.010 ;1.017 50.965 50.971 $0.924 $0.930 50.887 50.893 50.852 50.858 50.821 50.826 16 18 16 17 51.129 51.073 51.023 50.977 ;0.936 50.898 50.863 50.831 17 18 51.079 51.029 50.983 50.941 50.903 50.868 50.836 18 19 51.034 50.988 50.946 50.908 50.873 50.841 19 20 50.993 50.951 50.913 50.877 50.845 20 21 ;0.956 50.917 50.882 50.849 21 22 50.886 50.853 22 2350.922 $0.890 $0.857 23 24 50.861 24 PRICE PER CHANNEL for systema with 750 subscribers and 25 or more channels Weighted aid Adjusted for Franch se Fees and Equipme t Total channels on regulated tiers: Satellite 25 30 35 40 45 50 55 80 65 70 75 80 85 90 95 100 Satellite Channels Channels v v 0 $0.608 $0.517 $0.451 $0.401 $0.361 $0.329 $0.302 $0.280 $0.260 $0.244 $0.229 $0.217 $0.205 $0.195 $0.186 $0.178 0 5 $0.715 $0.608 $0.531 $0.471 $0.424 $0.387 $0.355 $0.329 $0.306 $0.287 $0.270 $0.255 $0.241 $0.229 $0.219 $0.209 5 10 $0.767 $0.652 $0.569 $0.505 $0.455 $0.414 $0.381 $0.353 $0.328. $0.307 $0.289 $0.273 $0.259. $0.246 $0.234 $0.224 10 15 $0.799 $0.679 $0.593 $0.526 $0.474. $0.432 $0.397 $0.367 $0.342 $0.320 $0.301 $0.284 $0.270 $0.256 $0.244 $0.233 15 20 $0.822 $0.699 $0.610 $0.542 $0.488 $0.444 $0.408 $0.378 $0.352 $0.330 $0.310 $0.293 $0.277 $0.264 $0.251 $0.240 20 25 $0.841 $0.715 $0.624 $0.554 $0.499 $0.454 $0.418 $0.387 $0.360 $0.337 $0.317 $0.299 $0.284 $0.270 $0.257 $0.246 25 30 $0.729 $0.635 $0.564 $0.508 $0.463 $0.425 $0.394 $0.367 $0.343 $0.323 $0.305 $0.289 $0.275 $0.262 $0.250 30 35 $0.645 $0.573 $0.516 $0.470 $0.432 $0.400 $0.372 $0.349 $0.328 $0.310 $0.294 $0.279 $0.266 $0.254 35 40 $0.581 $0.523 $0.476 $0.438 $0.405 $0.377 $0.353 $0.332 $0.314 $0.297 $0.283 $0.270 $0258 40 45 $0.529 $0.482 $0.443 $0.410 $0.382 $0.358 $0.336 $0.318 $0.301 $0.286 $0.273 $0.261 45 50 $0.487 $0.448 $0.414 $0.386 $0.361 $0.340 $0.321 $0.304 $0.289 $0.276 $0.263 50 55 $0.452 $0.418 ' $0.390 $0.365 $0.343 $0.324 $0.307 $0.292 $0.278 $0.266 55 60 $0.422 $0.393 $0.368 $0.346 $0.327 $0.310 $0.295 $0.281 $0.268 80 85 $0.396 $0.371 $0.349 $0.330 $0.312 $0.297 $0.283 $0.270 85 70 $0.374 $0.352 $0.332 $0.315 $0.299 $0.285 $0272 70 75 $0.354 $0.334 $0.317.. $0.301 $0.287 $0.274 75 80 $0.337 $0.319 $0.303. $0.289 $0.276 80 85 $0.321 $0.305 $0.291 $0.278 85 90 $0.307 $0.292 $0.279 90 95 $0.294 $0.281 95 100 $0.282 100 • PRICE PER CHANNEL for systems with 1,000 subscrbers and 25 or more channela Weighted aid Adjusted for Franch se Fees and Equipment Total channels on regu ated tiers: Satellite 25 30 35 40 45 50 55 80 85 70 75 80 85 • 90 95 100 Satellite Channels Channels v v 0 $0.607 $0.516 $0.450 $0.400 $0.360 $0.328 $0.301 $0.279 $0.260 $0.243 $0.229 $0216 $0.205 $0.195 $0.186 $0.177 0 5 $0.714 $0.607 $0.529 $0.470 $0.423 $0.386 $0.354 $0.328 $0.305 $0.286 $0.269 $0254 $0.241 $0.229 $0.218 $0.208 5 10 $0.765 $0.651 $0.567 $0.504 $0.454 $0.413 $0.380 $0.352. $0.328 $0.307 $0.288 $0272 $0.258 $0.245 $0.234 $0.223 10 15 $0.797 $0.678 $0.591 $0.525 $0.473 $0.431 $0.396 $0.366 $0.341 $0.319 $0.300 $0.284 $0.269 $0.256 $0.244 $0.233 15 20 $0.820 $0.698 $0.608 $0.540 $0.487 $0.443 $0.407 $0.377 $0.351 $0.329 $0.309 $0.292 $0.277 $0263 $0.251 $0.240 20 25 $0.839 $0.714 $0.622 $0.553 $0.498 $0.453 $0.417 $0.386 $0.359 $0.336 $0.316 $0.299 $0.283 $0.269 $0.256 $0.245 25 30 50.727 $0.634 $0.563 50.507 50.462 50.424 50.393 $0.366 50.343 $0.322 50.304 $0.288 $0274 50.261 50.250 30 35 $0.644 $0.572 50.515 50.469 50.431 50.399 $0.372 50.348 $0.327 50.309 $0.293 50.278 $0.265 $0.253 35 40 $0.579 $0.522 50.475 50.437 $0.404 $0.377 50.353 50.332 $0.313 50.297 50.282 50.269 50.257 40 45 50.528 $0.481 $0.442 $0.409 50.381 50.357 50.336 $0.317 $0.300 50.285 $0.272 50.260 45 50 $0.486 $0.447 $0.413 $0.385 50.361 50.339 50.320 50.303 50.288 $0.275 $0263 50 55 50.451 50.417 50.389 50.364 $0.342 50.323 $0.306 50.291 $0.278 50.265 55 60 $0.421 50.392 $0.367 $0.345 $0.326 50.309 50.294 $0.280 $0.268 60 65 $0.395 $0.370 $0.348 50.329 $0.312 $0.296 $0.282 50.270 65 70 50.373 $0.351 50.331 $0.314 $0.298 $0.284 50.272 70 75 $0.353 $0.334 $0.316 50.300 $0.286 50.274 75 BO $0.336 $0.318 $0.302 $0.288 50.275 80 85 $0.320 50.304 50.290 50.277 85 90 50.306 50.292 50.279 90 95 50.293 $0.280 95 100 50.282 100 PRICE PE F CHANNEL for systems with 760 subscribers end los IP then 26 :hamlets Weighted end Adjusted for French se Fees and Equipment total chenrwis on refiu ated tiers: Satellite 6 8 7 8 9 10 11 12 13 14 16 18 17 18 19 20 21 22 23 24 Satellite Channels Channels v v 0 52.539 52.160 31.883 51.673 51.507 31.372 51.261 51.167 51.087 51.018 30.957 50.904 50.857 50.814 50.776 50.742 50.710 50.681 50.655 30.631 0 1 ;2.539 52.160 51.883 51.673 51.507 51.372 51.261 51.167 51.087 ;1.018 50.957 50.904 50.857 50.814 50.776 50.742 50.710 50.681 50.655 50.631 1 2 ;2.723 52.316 52.019 51.794 51.616 ;1.471 51.352 ;1.251 51.166 51.091 51.027 ;0.969 $0.919 50.873 ;0.832 50.795 50.761 50.731 50.702 50.676 2 3 52.836 52.412 52.104 51.868 51.683 ;1.533 51.408 51.304 51.214 ;1.137 51.069 51.010 50.957 50.910 50.867 50.828 50.793 50.761 50.732 50.705 3 4 ;2.919 32.483 52.165 51.923 51.732 ;1.578 51.450 51.342 51.250 51.170 51.101 ;1.039 50.985 50.936 50.892 50.853 50.816 50.783 50.753 50.725 4 6 52.985 ;2.539 ;2.214 ;1.967 51.772 51.613 51.483 51.372 51.278 51.197 51.126 51.063 51.007 50.957 50.913 50.872 50.835 50.801 50.770 50.742 6 8 52.586 52.255 52.003 51.804 51.643 51.510 . 51.398 ;1.302 51.219 51.147 ;1.083 ;1.026 50.975 ;0.929 50.888 50.850 50.816 ;0.784 50.755 8 7 52.291 52.035 ;1.833 ;1.669 51.534 51.420 51.322 51.238 51.164 51.100 51.042 50.990 50.944 50.902 50.864 50.829 ;0.797 50.767 7 8 52.062 51.857 51.692 51.554 51.439 51.340 51.255 51.180 51.114 51.056 51.004 50.957 50.914 50.875 50.840 50.808 50.778 8 9 51.880 51.712 51.573 51.456 51.356 51.270 51.194 ;1.128 51.069 ;1.016 $0.968 50.925 50.886 50.850 50.817 ;0.787 9 10 31.730 51.590 51.471 51.370 51.283 51.207 51.140 51.080 ;1.027 50.978 50.935 $0.895 50.859 50.826 50.795 10 11 51.605 51.486 51.384 51.296 51.219 51.151 51.090 51.037 50.988 50.944 50.904 50.867 ;0.834 50.803 11 12 51.499 ;1.396 ;1.307 51.229 51.161 51.100 ;1.046 50.997 50.952 ;0.912 ;0.875 50.841 50.810 12 13 51.407 51.318 51.239 51.170 51.109 51.054 51.005 50.960 50.919 50.882 50.848 50.816 13 14 51.327 51.249 51.179 51.117 51.062 51.012 50.967 50.926 50.889 50.854 50.823 14 16 51.257 51.187 51.125 51.069 51.019 50.974 50.933 50.895 50.860 50.828 16 16 51.195 51.132 51.076 51.026 50.980 50.939 50.901 ;0.866 50.834 16 17 ;1.139 ;1.083 51.032 ;0.986 50.944 50.906 50.871 50.839 17 18 51.089 51.038 50.992 50.950 50.911 50.876 50.844 18 19 • 51.044 50.997 50.955 50.916 50.881 50.848 19 20 51.002 50.960 50.921 50.885 50.853 20 21 ;0.965 50.926 30.890 50.857 21 22 50.930 50.894 ;0.861 22 23 50.898 50.865 23 24 $0.868 24 PRICE PER CHANNEL for systema with 1.000 subscrt)ors and Was than 26 channel • Weighted aid Adjusted for Franch se Fees and Equipment Total channels an repo aced tiers: Satellite 6 8 7 8 9 10 11 12 13 14 16 18 17 18 19 20 21 22 23 24 Satellite Channel Channel v v 0 ;2.533 52.154 51.879 ;1.669 51.503 51.369 51.258 51.164 51.084 51.015 50.955 30.902 50.855 50.812 50.774 50.740 50.708 50.680 50.653 50.629 0 1 ' 52.533 52.154 51.879 51.669 51.503 51.369 51.258 51.164 51.084 51.015 50.955 50.902 50.855 50.812 50.774 $0.740 50.708 50.680 50.653 50.629. 1 2 52.716 52.310 52.015 51.789 51.612 51.468 51.349 31.248 51.163 51.089 51.024 50.967 50.916 50.871 50.830 50.793 50.760 50.729 50.701 50.675 2 3 32.829 52.406 52.098 51.864 51.679 51.529 51.405 51.300 51.211 51.134 51.067 51.007 50.955 50.907 50.865 50.828 50.791 50.759 50.730 50.703 3 4 52.912 52.477 52.160 51.919 51.728 51.574 51.446 51.339 51.247 51.167 51.098 51.037 50.983 50.934 50.890 50.851 50.814 50.782 50.751 50.723 4 5 52.978 52.533 52.209 51.962 51.767 51.609 51.479 51.369 51.275 51.194 51.123 51.060 51.005 50.965 50.910 50.870 50.833 50.799 50.768 50.740 6 6 52.580 52.250 51.998 51.800 51.639 51.506 51.394 51.299 ;1.216 51.144 51.080 ;1.023 50.973 50.927 50.886 ;0.848 50.814 50.783 50.754 • 8 7 52.285 52.030 51.828 51.665 51.530 51.416 51.319 51.235 51.162 51.097 51.039 50.988 50.942 50.900 50.862 50.827 50.795 50.765 7 8 52.057 51.853 51.687 51.551 51.435 51.337 51.252. 51.177 51.112 51.053 51.001 50.954 50.912 50.873 50.838 50.806 50.776 8 9 51.875 51.708 51.569 51.452 51.353 51.267 51.191 51.125 51.066 51.013 50.966 50.923 50.884 50.848 50.815 50.785 9 10 51.726 51.586 51.468 51.367 51.280 51.204 51.137 51.077 51.024 50.976 50.933 50.893 50.857 50.824 50.793 10 11 51.601 51.482 51.380 51.292 51.216 51.148 51.088 51.034 50.986 50.942 . $0.902 50.865 50.832 50.801 11 12 51.495 51.392 51.304 51.226 31.158 51.097 51.043 50.994 50.950 50.910 50.873 50.639 30.808 12 13 51.404 51.314 51.236 51.167 51.106 51.051 51.002 50.958 50.917 50.880 50.846 50.814 13 14 51.324 51.245 51.176 51.115 51.059 51.010 50.965 50.924 50.886 $0.852 50.821 14 16 51.254 51.184 51.122 51.067 51.017 $0.971 50.930 50.893 50.858 50.826 16 16 • 51.192 51.130 51.074 51.023 50.978 50.936 50.898 50.864 50.832 18 17 51.136 51.080 51.030 50.984 $0.942 50.904 50.869 50.837 17 18 51.086 51.036 50.989 50.948 50.909 30.874 50.842 18 19 51.041 30.995 50.953 50.914 50.879 50.846 19 20 51.000 50.958 50.919 50.883 30.851 20 21 $0.962 30.923 50.888 $0.855 21 22 50.928 30.892 30.859 22 23 50.896 50.863 23 24 ;0.866 24 PRICE PER CHANNEL for systems with 25) subscribers and 25 or more channels Weighted and Adjusted for Franch se Fees and Equipment Total channels on reguated tiers: Satellite 25 30 35 40 45 50 55 80 85 70 75 80 85 90 95 100 Satellite Channels Channels v v 0 $0.620 $0.528 $0.460 $0.409 $0.368 $0.335 $0.308 $0.285 $0.266 $0.249 $0.234 $0.221 $0.209 $0.199 $0.190 $0.181 0 5 $0.729 $0.620 $0.541 $0.481 $0.433 $0.394 $0.362 $0.335 $0.312 $0.292 $0.275 $0.260 $0.246 $0.234 $0.223 $0.213 5 10 $0.782 $0.665 50.580 $0.515 50.464 50.423 50.388 50.360 50.335 50.314 50.295 50.278 50.264 50.251 50.239 $0.228 10 15 $0.815 50.693 50.604 50.537 $0.483 50.440 $0A05 50.374 50.349 50.327 50.307 50.290 $0.275 50.261 $0.249 50.238 15 20 $0.839 50.713 50.622 50.552 50.498 50.453 50.416 $0.385 50.359 $0.336 50.316 50.299 50.283 50.269 50.256 50.245 20 25 $0.858 50.729 $0.636 50.565 50.509 $0.463 50.426 50.394 $0.367 50.344 50.323 50.305 50.289 50.275 50.262 50.250 25 30 50.743 $0.648 $0.575 50.518 50.472 50.434 50.402 50.374 50.350 50.329 50.311 50.295 50.280 50.267 50.255 30 3550.658 $0.584 50.526 50.479 50.441 50.408 50.380 50.356 $0.335 $0.316 50.299 50.285 $0.271 50.259 35 40 $0.592 50.534 50.486 $0.446 50.413 50.385 $0.360 50.339 50.320 $0.303 50.288 50.275 50.263 40 45 $0.540 50.492 50.452 50.418 $0.390 50.365 50.343 $0.324 $0.307 $0.292 50.278 50.266 45 50 50.497 50.457 50.423 50.394 50.369 50.347 $0.327 50.310 50.295 50.281 $0.269 50 55 50.461 50.427 50.397 50.372 50.350 50.331 50.313 $0.298 50.284 $0.271 55 80 $0.431 $0.401 $0.375 50.353 $0.333 50.316 50.300, 50.286 50.274 60 65 $0.404 50.378 50.356 $0.336 50.319 $0.303 50.289 50.276 85 70 50.381 50.359 $0.339 50.321 50.305 50.291 50.278 70 75 50.361 50.341 50.323 50.307 50.293 50.280 75 80 $0.343 50.325 50.309 50.295 $0.282 80 85 50.327 $0.311 50.296 $0.283 85 90 50.313 $0.298 $0.285 90 95 $0.300 $0.286 95 100 $0.288 100 • PRICE PER CIiANNEL for systems with 500 subscribe rs end 25 or more channels Weighted and Adjusted for Franch se Fees ar d Equipment Total chanri els on regu eted tiers: Satelifte 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Satellfte Channels Channels v v 0 50.611 • 50.520 $0.453 50.403 50.363 50.330 50.304 50.281 50.262 $0.245 50.231 50.218 $0.206 $0.196 50.187 $0.179 0 5 50.719 50.611 50.533 50.474 50.427 $0.388 50.357 50.330 50.308 50.288• 50.271 50.256 50243 $0.231 50.220 50.210 5 10 50.771 50.656 50.572 50.508 50.457 50.417 50.383 50.354 50.330 50.309 50.291 50.274 50.260 • 50.247 $0.236 $0.225 10 15 50.803 50.683 50.595 50.529 50.476 50.434 50.399 50.369 50.344 50.322 50.303 50286 50271 50.257 50.245 50.234 15 20 50.826 50.703 50.613 50.544 50.490 50.447 $0.410 50.380 50.354 50.331 50.312 50.294 50279 50.265 $0.253 50.241 20 25 $0.845 50.719 50.627 $0.557 50.502 50.457 50.420 50.388 $0.362 50.339 ' 50.319 $0.301 $0.285 50.271 $0.258 $0.247 25 30 50.732 50.638 $0.567 50.511 $0.465 $0.427 50.396 50.369 50.345 50.325 $0.306 50.290 50.276 50.263 50.251 30 35 $0.648 50.576 50.519 $0.472 50.434 50.402 50.374 50.350 50.330 50.311 50.315 $0.295 50299 $0.280 50.284 50.267 50.271 50.255 50.259 35 40, 40 $0.584 $0.526 50.479 50.440 50.407 50.379 50.355 50.334 45 50.532 50.485 50.445 50.412 50.384 50.359 $0.338 $0.319 50.303 50.288 50.274 $0.262 45 50 50.490 50.450 $0.417 50.388 50.363 50.342 50.323 50.308 50.291 50.277 $0.265 50 55 50.454 50.421 50.392 50.367 50.345 50.328 50.309 50.293 50.280 $0.267 55 60 $0.424 $0.395 50.370 50.348 $0.329 50.311 50.296 50.282 $0.270 BO 65 50.398 $0.373 50.351 $0.331 50.314 50.298 50.284 $0.272 65 70 50.376 50.353 50.334 50.316 50.301 50.287 $0.274 70 75 50.356 $0.336 $0.318 $0.303 50.289 $0.276 75 80 $0.338 50.321 $0.305 50.290 $0.277 60 85 _ 50.322 $0.307 50.292 50.279 85 90 $0.308 50.294 $0.281 90 95 50.295 $0.282 95 100 $0.284 100 PRICE PEK CHANNEL for systems with 263 subscribers and Iass than 26 channels .4/eighted aid Adjusted for Franchse Fees and Equipment i otel channels on regu eted tiers: Satellite 6 8 7 8 9 10 11 12 13 14 16 18 17 18 19 20 21 22 23 24 Satellite Channels Channels v .. v 0 52.589 52.202 $1.921 51.706 $1.537 $1.399 51.286 51.190 $1.109 51.038 $0.976 50.922 $0.874 50.830 50.792 50.756 $0.724 $0.695 50.668 50.643 0 1 $2.589 ;2.202 $1.921 ;1.706 ;1.537 $1.399 $1.286 $1.190 ;1.109 $1.038 50.976 $0.922 50.874 50.830 $0.792 $0.756 $0.724 $0.695 50.668 $0.643 1 2 ;2.776 ;2.361 $2.059 ;1.829 ;1.648 ;1.500 ;1.379 $1.276 ;1.189 ;1.113 $1.047 $0.989 50.937 $0.890 50.849 $0.811 $0.777 $0.745 $0.716 50.690 2 3 $2.892 $2.460 ;2.145 51.905 $1.716 $1.563 $1.436 $1.478 $1.329 $1.368 $1.399 $1.425 $1.448 $1.238 $1.275 $1.303 $1.328 51.348 51.367 ;1.383 51.398 51.411 51.423 51.159 $1.193 $1.220 $1.243 51.262 51.280 $1.295 51.309 $1.321 51.333 51.090 51.122 51.148 $1.169 $1.187 51.204 $1.218 51.231 51.243 $1.254 ;1.030 ;1.060 ;1.084 $1.104 $1.121 $1.137 ;1.150 51.162 51.174 ;1.184 50.976 $1.004 $1.027 $1.046 51.063 51.077 ;1.090 51.101 ;1.112 ;1.122 50.927 $0.955 $0.976 $0.994 $1.010 51.024 $1.036 51.047 $1.057 ;1.066 $0.884 $0.910 50.931 $0.948 $0.963 $0.976 $0.987 50.998 51.007 $1.016 $0.845 $0.869 $0.889 $0.906 50.920 50.932 50.943 $0.953 $0.963 $0.971 $0.809 $0.833 $0.852 $0.867 50.881 50.893 $0.903 50.913 $0.922 $0.930 ;0.776 50.799 $0.817 $0.832 ;0.845 50.857 $0.867 $0.876 $0.885 $0.892 $0.746 $0.768 $0.785 50.800 $0.812 50.823- 50.833 $0.842 $0.850 $0.858 50.718 50.740 $0.756 $0.770 ;0.782 50.793 $0.802 $0.811 $0.819 50.826 3 4 6 8 7 8 9 10 11 12 4 52.977 52.532 $2.208 ;1.961 51.767 ;1.609 6 53.044 52.590 $2.258 $2.006 $1.807 $1.645 $1.512 8 $2.637 52.300 52.043 $1.840 ;1.676 ;1.540 7 ;2.336 $2.075 $1.869 $1.702 $1.564 8 52.103 51.894 51.725 51.746 51.764 51.585 51.604 51.621 51.467 $1.485 51.501 9 51.917 10 11 51.637 51.515 51.528 12 13 $1.435 $1.344 51.354 ;1.264 51.273 51.193 51.202 51.131 51.139 ;1.075 51.083 51.025 51.032 $0.979 50.986 $0.937 50.944 $0.900 10.906 $0.865 $0.871 ;0.833 50.839 .19 14 14 15 51.282 $1.211 51.219 51.147 51.155 51.162 $1.091 $1.098 51.104 51.111 51.039 51.046 51.053 51.059 51.064 $0.993 51.000 51.006 51.012 51.017 51.022 $0.951 50.957 50.963 50.969 $0.974 50.979 50.984 $0.913 50.918 $0.924 50.929 ;0.935 50.939 50.944 $0.877 50.883 50.888 $0.893 $0.898 50.903 50.907 $0.845 50.850 50.855 50.860 $0.865 x.870 50.874 16 18 17 18 19 20 21 16 17 18 19 20 21 22 50.948 50.912 50.878 22 23 50.916 50.882 23 24 • 50.886 24 *RICE PER CHANNEL for systems with 600 subscribers end less than 26 :hannels Weighted aid Adjusted for Franchse Fees and Equipment Total chenrlels on repo ated tiers: Satellite 6 6 7 8 9 10 11 12 13 14 16 16 17 18 19 - 20 21 22 23 24 Satellite Channels Channels v v 0 52.552 52.170 51.893 51.681 51.514 51.379 51.267 51.173 $1.092 ;1.023 $0.962 $0.909 10.861 10.818 50.780 50.745 $0.714 $0.685 $0.658 $0.634 0 1 52.552 $2.170 51.893 51.681 51.514 51.379 51.267 51.173 51.092 51.023 50.962 50.909 50.661 50.818 50.780 50.745 $0.714 ;0.685 $0.658 $0.634 1 2 52.736 52.327 52.029 51.803 51.624 ;1.479 $1.359 ;1.415 $1.258 ;1.310 $1.171 51.220 ;1.097 $1.142 $1.032 51.075 50.974 ;1.015 $0.923 $0.962 $0.877 $0.914 $0.836 10.871 $0.799 50.832 50.765 $0.797 50.734 $0.765 50.706 50.735 $0.680 50.708 2 3 3 $2.850 ;2.424 $2.114 $1.878 $1.691 ;1.540 4 52.933 52.495 52.176 51.933 51.741 $1.585 51.457 ;1.348 ;1.256 $1.176 $1.106 ;1.045 $0.990 $0.941 50.897 $0.857 $0.820 $0.787 $0.757 $0.729 4 6 53.000 52.552 52.225 51.977 51.780 51.621 51.490 51.379 51.284 51.203 51.131 51.068 51.012 50.962 50.917 $0.876 50.839 $0.805 50.774 50.745 6 8 52.599 52.267 52.013 51.813 51.651 51.517 51.405 $1.308 $1.225 $1.152 $1.088 $1.031 50.980 $0.934 ;0.892 10.855 $0.820 $0.788 $0.759 8 7 $2.302 52.045 51.842 51.677 51.541 51.427 51.329 51.244 51.170 51.105 51.047 $0.995 50.949 50.906 50.868 $0.833 50.801 50.771 7 8 52.072 51.867 51.700 51.562 51.446 51.347 51.261 51.186 51.120 51.061 51.009 50.961 $0.919 50.880 $0.844 50.811 50.781 8 9 51.889 51.720 51.581 51.463 51.363 51.276 51.200 51.133 51.074 51.021 $0.973 $0.930 $0.890 $0.854 50.821 50.791 9 10 51.738 51.597 51.479 ' 51.377 51.290 51.213 51.145. 51.085 51.032 50.983 50.940 50.900 50.863 50.830 50.799 10 11 51.613 51.493 51.506 51.390 51.403 $1.302 51.313 51.225 51.235 51.156 51.167 51.096 51.105 51.042 51.051 50.993 51.002 50.949 50.957 50.908 $0.916 50.872 50.879 50.838 50.845 50.807 50.814 11 12 12 13 51.414 51.324 51.245 51:176 51.114 51:059 51.010 50.965 50.924 $0.886 $0.852 $0.820 13 14 51.334 51.255 51.185 51.123 51.067 51.017 50.972 $0.931 $0.893 50.858 50.627 14 15 51.263 51.193 51.131 51.075 51.024 50.979 50.937 $0.899 $0.864 50.832 16 18 51.201 51.138 $1.082 51.031 50.985 50.943 50.905 $0.870 50.838 18 17 51.145 51.088 51.037 $0.991 50.949 $0.911 50.875 50.843 17 18 51.094 51.043 $0.997 50.955 $0.916 $0.880 $0.848 18 19 $1.049 51.002 $0.960 $0.921 $0.885 $0.852 19 20 51.007 $0.965 50.926 50.890 50.857 20 21 50.969 $0.930 50.935 50.894 50.698 50.861 50.865 21 22 22 23 50.902 50.869 23 24 50.873 24 PRICE PER CHANNEL for systems with 50 subscribers and 25 or more channels Weighted a id Adjusted for Franch se Fees and Equipme it Total channels on regu ated tiers: Satellite 25 30 35 40 45 50 55 80 65 70 75 80 85 90 95 100 Satellite Channels Channels v v 0 $0.698 $0.593 $0.518 $0.460 $0.414 $0.377 $0.346 $0.321 $0.299 $0.280 $0.263 $0.248 $0.235 $0.224 $0.213 $0.204 0 5 $0.820 $0.698 $0.609 $0.540 $0.487 $0.443 $0.407 $0.377 $0.351 $0.329 $0.309 $0292 $0.277 $0.263 $0.251 $0240 5 10 $0.880 $0.748 $0.652 $0.580 $0.522 $0.475 $0.437 $0.404 $0.377 $0.353 $0.332 $0.313 $0.297 $0.282 $0.269 $0257 10 15 $0.916 $0.779 $0.680 $0.604 $0.544 $0.495 $0.455 $0.421 $0.392 $0.367 $0.345 $0.326 $0.309 $0.294 $0.280. $0.268 15 20 $0.943 $0.802 $0.700 $0.621 $0.560 $0.510 $0.468 $0.434 $0.404 $0.378 $0.356 $0.336 $0.318 $0.302 $0.288 $0275 20 25$0.965 $0.820 $0.715 $0.635 $0.572 $0.521 $0.479 $0.443 $0.413 $0.387 $0.364 $0.343 $0.325 $0.309 $0.295 $0282 25 30 $0.836 $0.729 $0.647 $0.583 $0.531 $0.488 $0.452 $0A21 $0.394 $0.370 $0.350 $0.331 $0.315 $0.300 $0.287 30 35 $0.740 $0.657 $0.592 $0.539 $0.495 $0.459 $0.427 $0.400 $0.376 $0.355 $0.337 $0.320 $0.305 $0.291 35 40 $0.666 $0.600 $0.547 $0.502 $0.465 $0.433 $0.405 $0.381 $0.360 $0.341 $0.324 $0.309 $0.295 40 45 $0.607 $0.553 $0.508 $0.470 $0.438 $0.410 $0.386 $0.364 $0.345 $0.328 $0.313 $0.299 45 50 $0.559 $0.514 $0.475 $0.443 $0.415 $0.390 $0.368 $0.349 $0.332 $0.316 $0.302 50 55 $0.519 $0.480 $0.447 $0.419 $0.394 $0.372 $0.352 $0.335 $0.319 $0.305 55 60 $0.484 $0.451 $0.422 $0.397 $0.375 $0.355 $0.338 $0.322 $0.308 60 65 • $0.455 $0.426 $0.400• $0.378 $0.358 $0.341 $0.325 $0.310 65 70 $0.429 $0.403 $0.381 $0.361 $0.343 $0.327 $0.312 70 75 $0.406 $0.384 $0.363 $0.345 $0.329 $0.315 75 80 $0.386 $0.366 $0.348 $0.331 $0.317 80 85 $0.368 $0.350 $0.333 S0.319 85 90 • $0.352 $0.335 $0.320 90 95 $0.337 $0.322 95 100 $0.324 100 PRICE PER CHANNEL for systems with 100 subsalbers and 25 or more channels Weighted aid Adjusted for Franchise Fees and Equipment Total channels on regu ated tiers: Satellite 25 30 35 40 45 50 55 80 65 70 75 80 85 90 95 100 Satellite Channels channels v v 0 $0.648 $0.551 $0.481 $0.427 $0.385 $0.350 $0.322 $0.298 $0.278 $0.260 $0244 $0.231 $0.219 $0.208 $0.198 $0.189 0 5 $0.762 $0.648 $0.565 $0.502 $0.452 $0.412 $0.379 $0.350 $0.326 $0.306 $0.287 $0.271 $0.257 $0.244 ;0.233 $0.223 5 10 $0.817 $0.695 $0.606 $0.538 $0A85 $0.442 $0.406 $0.376 $0.350 $0.328 $0.308 $0.291 $0.276 $0.262 $0250 $0.239 10 15 $0.851 $0.724 $0.632 $0.561 $0.505 $0.460 $0.423 $0.391 $0.364 $0.341 $0.321 $0.303 $0.287 $0.273 $0.260 $0.249 15 20 $0.876 $0.745 $0.650 $0.577 $0.520 $0A74 $0.435 $0.403 $0.375 $0.351 $0.330 $0.312 $0.296 $0.281 $0.268 $0.256 20 25 $0.896 $0.762 $0.665 $0.590 $0.532 $0.484 $0.445 $0.412 $0.384 $0.359 $0.338 $0.319 $0.302 $0287 $0.274 $0.262 25 30 $0.776 $0.677 $0.601 $0.542 $0.493 $0.453 $0.420 $0.391 $0.366 $0.344 $0.325 $0.308 $0.293 $0.279 $0.267 30 35 $0.688 $0.611 $0.550 $0.501 $0.460 $0.426 $0.397 $0.372 $0.350 $0.330 $0.313 $0.297 $0.283 $0.271 35 40 $0.619 $0.558 $0.508 $0.467 $0.432 $0.402 $0.377 $0.354 $0.335 $0.317 $0.301 $0.287 $0.274 40 45 $0.564 $0.514 $0.472 $0.437 $0.407 $0.381 $0.359 $0.339 $0.321 $0.305 $0.291 $0.278 45 50 $0.519 $0.477 $0.442 $0.411 $0.385 $0.362 $0.342 $0.324 $0.308 $0.294 $0.281 50 55 $0.482 $0.446 $0.415 $0.389 $0.366 $0.345 $0.327 $0.311 $0.297 $0.283 55 80 $0.450 $0.419 $0392 $0369 $0.348 $0.330 $0.314 $0.299 $0.286 80 65 $0.422 $0.396 $0.372 $0.351 $0.333 $0.316 $0.302 $0.288 65 70 $0.398 $0.375 $0.354 $0.335 $0.319 $0.304 $0.290 70 75 $0.377 $0.356 $0.338 $0.321 $0.306 $0.292 75 80 $0.359 $0.340 $0.323 $0.308 $0.294 80 85 $0.342 $0.325 $0.310 $0.296 85 90 ;0.327. $0.312 $0.313 $0.298 $0.299 90 95 95 100 $0.301 100 PRICE PEF CHANNEL, for systems with 60 subscriber; and less then 26 tunnels rlNeighted a id Adjusted for Franch se Fees and Equipment Total chanrneh on reguated tiers: Satellite 6 8 7 8 9 10 11 12 13 14 16 16 17 18 19 20 21 22 23 24 Satellite Channels Channels v v 0 52.912 52.477 52.160 51.919 51.728 51.574 51.446 51.339 51.247 51.167 51.098 51.037 50.983 50.934 50.890 50.851 50.815 50.782 50.751 50.723 0 1 52.912 52.477 52.160 51.919 ;1.728 51.574 51.446 ;1.339 51.247 ;1.167 ;1.098 51.037 50.983 50.934 50.890 50.851 50.815 50.782 50.751 ;0.723 1 2 53.123 52.656 52.316 52.057 51.853 51.688 51.551 51.435 51.337 51.252 51.177 51.112 51.054 51.001 50.955 50.912 50.873 50.838 50.806 50.776 2 3 53.253 ;2.767 52.413 ;2.143 51.930 51.758 51.615 51.495 ;1.393 51.304 51.226 51.158 51.097 51.043 50.994 50.950 50.910 50.873 50.839 50.808 3 4 53.348 ;2.848 52.484 ;2.206 51.987 51.809 51.663 51.539 ;1.433 51.342 ;1.262 51.192 $1.130 51.074 51.023 50.978 50.936 50.899 50.864 50.832 4 6 53.424 52.912 52.540 ;2.256 52.032 51.851 51.700 51.574 51.466 51.373 51.291 51.219 51.155 51.098 51.047 51.000 ;0.958 50.919 ;0.883 50.851 6 8 52.966 52.587 52.298 52.070 51.885 51.732 51.603 51.493 ;1.398 51.315 51.242 ;1.177 51.118 51.066 51.019 50.975 50.936 50.900 ;0.866 8 7 ;2.627 52.334 52.102, ;1.914 51.759 ;1.628 ;1.516 51.420 $1.336 51.261 51.195 51.136 51.083 51.035 50.991 50.951 50.914 50.880 7 8 ;2.365 52.130 51.940 ;1.783 51.650 ;1.537 ;1.439 51.354 51.278 51.211 ;1.161 ;1.097 51.049 51.004 50.963 50.926 50.892 8 9 52.156 ;1.963 ;1.804 51.670 51.555 51.456 51.370 51.293 51.226 51.165 51.110 51.061 $1.016 50.975 ;0.937 ;0.902 9 10 51.984 ;1.823 51.688 ;1.572 51.472 51.384 ;1.307 ;1.239 51.177 51.122 ;1.072 ;1.027 ;0.985 50.947 ;0.912 10 11 $1.841 51.704 51.587 51.486 ;1.398 51.320 ;1.251 51.189 ;1.133 51.083 51.037 50.995 50.956 ;0.921 11 12 51.719 ;1.601 ;1.499 51.410 51.331 ;1.262 51.199 ;1.143 ;1.092 51.046 51.004 50.965 ;0.929 12 13 . 51.614 51.511 ;1.421 51.342 51.272 ;1.209 ;1.152 51.101 51.054 51.012 50.973 50.936 13 14 51.522 51.432 51.352 51.281 51.218 51.161 51.109 ;1.062 51.019 50.980 50.943 14 16 ;1.442 ;1.362 51.290 ;1.226 51.169 51.117 51.070 51.026 50.987 50.950 16 18 51.371 51.299 51.234 ;1.177 ;1.124 ;1.077 ;1.033 50.993 ;0.956 18 17 ;1.307 51.242 ;1.184 ;1.131 ;1.083 ;1.039 ;0.999 50.962 17 18 51.249 ;1.191 51.138 51.089 51.045 51.005 50.968 18 19 ;1.197 ;1.144 ;1.095 ;1.051 51.010 ;0.973 19 20 51.150 ;1.101 51.056 ;1.016 50.978 20 21 51.106 51.062 51.021 50.983 21 22 51.067 ;1.025 ;0.987 22 23 51.030 50.992 23 24 50.996 24 ?RICE PEFt CHANNEL for systems with 109 subscribers and les, then 26 phannels • Weighted aid Adjusted for Franchse Fees and Equipment Total channels on regu ated tiers: Satellite 5 8 7 8 9 10 11 12 13 14 16 18 17 18 19 20 21 22 23 24 Satellite Channels Channels v v 0 52.706 52.302 52.007 51.783 51.606 51.462 51.344 ;1.244 ;1.159 51.085 51.020 ;0.964 ;0.913 50.868 ;0.827 50.790 ;0.757 50.726 50.698 50.672 0 1 52.706 52.302 52.007 ;1.783 51.606 51.462 51.344 51.244 ;1.159 51.085 ;1.020 ;0.964 50.913 50.868 50.827 50.790 50.757 50.726 50.698 ;0.672 1 2 ;2.901 52.468 52.152 51.912 51.722 51.568 51.441 ;1.334 ;1.242 ;1.163 51.094 51.033 50.979 50.931 50.887 50.847 50.812 50.779 50.749 50.721 2 3 53.022 ;2.571 52.242 ;1.991 ;1.794 ;1.633 51.501 ;1.389 51.294 ;1.212 51.140 ;1.076 51.020 50.969 50.924 50.883 50.845 50.811 50.780 50.751 3 4 ;3.111 ;2.646 • 52.308 52.050 ;1.846 51.681 ;1.545 51.430 ;1.332 51.247 ;1.173 51.108 51.050 50.998 ;0.951 50.909 50.870 50.835 50.803 50.773 4 5 53.182 52.706 52.360 52.096 51.888 51.719 51.580 51.463 51.362 51.275 51.200 ;1.133 51.074 51.020 50.973 50.929 50.890 50.854 ;0.821 50.790 6 8 52.756 52.404 52.135 ;1.923 ;1.751 51.609 51.490 51.387 51.299 51.222 51.154 51.093 51.039 50.991 50.946 50.906 50.870 50.836 ' $.805 8 7 52.441 52.168 51.953 ;1.779 51.634 •51.513 51.409 51.319 51.241 51.172 51.110 51.056 51.006 50.961 50.921 50.883 50.849 50.818 7 8 52.198 51.980 ;1.803 ;1.656 ;1.533 51.428 ;1.337 ;1.258 ;1.188 ;1.125 51.070 51.020 50.974 50.933 50.895 50.861 50.829 8 9 52.003 51.824 ;1.676 51.552 ;1.445 51.353, 51.273 51.202 51.139 51.083 51.032 50.986 50.944 50.906 50.871 50.839 9 10 51.844 51.694 51.568 51.461 51.368 51.286 51.215 51.151 ;1.094 51.043 50.996 50.954 ;0.916 50.880 50.847 10 11 51.710 51.583 51.475 51.381 ;1.299 ;1.226 51.162 51.105 51.053 51.006 50.963 50.924 ;0.889 50.856 11 12 51.597 51.488 51.393 ;1.310 ;1.237 51.172 51.114 51.062 51.015 50.972 $0.932 50.896 50.863 12 13 51.500 ;1.404 51.321 51.247 ;1.182 51.123 51.071 51.023 50.980 50.940 50.904 50.870 13 14 ;1.415 51.331 51.257 51.191 51.132 51.079 51.031 ;0.987 50.947 50.910 50.877 14 16 51.340 51.265 51.199 51.140 51.086 51.038 50.994 50.954 50.917 50.883 16 16 51.274 ;1.207 51.147 51.093 51.045 51.000 50.960 50.923 ;0.889 18 17 51.214 51.154 51.100 51.051 51.006 50.966 50.928 50.894 17 18 51.161 ;1.106 51.057 ;1.012 50.971 50.934 50.899 18 19 51.112 51.063 ;1.018 50.977 50.939 50.904 19 20 . _ ;1.068 51.023 50.982 50.944 50.909 20 21 51.028 50.986 50.948 $0.913 21 22 50.991 50.953 50.917 22 23 50.957 50.922 23 24 ;0.926 24 SEF /.v /11 y! •s t _ 6 GOPI`IE COMPUTER GR PP -11-X !` P, 01 ornel University1 0 I'1'+-=?G1'rfli',t (::a' (X)MP1J'1'ER GRAPHICS `moi) ENGINEERING AND 111EO1tY CENTER BUILDING .:RCA, NEW YORK 14853-3801 1'e i .phanc: 607/255-48K ' J OWE I l l — . - CH C) K Cr) ii ) Tfl 4't A. of Pori SEP - 2 1993 CPR) C ,o/Pii 5 , ems'; $ O)L.D tc S -136 SEP CORNr ' COMPUTER Ci f17 TXcur�e.vr S °i r'v P, 02 ,„.74.1e.,/ /0 or.� t /5 ,„.74.1e.,IMA42J roceff . J: will complete the iii :e.1 �ar�ac i .... on of rs A50 mhz i;tiLutional network (I-Net) . Th s will include r C .q: 1) extending t}}',le network_4;:o o t't' e SUlll:.}�ls WC�e Cat1 m11rA Lv l.._.t- er " � A .ivt Extension lid=41. , and Sciencecenter - , 2) installing d.p sites at locations to be specified by e=tch,11) testing the installing any equipment necessary to of ure standard raign . i<c_is and quality at the site_, and at the hub. At comp7e on tJ'E network "I allow the technical capability to transmit progr<:maniJ g from an /-A- 5-'74° =fin to the Franchisee's hub and then distribute this programming to : ,7,ti.t on the network and to any se .PEG channels. se/ecied Q xis, ;,, a. Franchisee will provide a total of ten additional frequency agile n -,:)d.11,: r.;a:: s , five additional demodulators, and sufficient combining amplifiers for use in transmitting programming from any five institutional network locations simultaneously. Franchisee will also provide sufficient baseband audio and video routing equipment, and remote control and telephone equipment at the hub to allow demodulated upstream signals to be directed to any selected downstream modulators and to any selected PEG channel modulators. This equipment will be of similar specifications or better than the Seientlfic Atlanta 6350 modulator with the model F'AOC frequency agile. output cc:n%-t er option, the Scientific Atlanta 6250 demodulator, the Sc:1.er.rif c model 6110A combining amplifier, the Sierra Video Syste.. model = au: :leo routing switcher, and the Lee-tronics remote control i2r. OFFICE OF CITY ATTORNEY TO: CITY OF ITHACA 108 EAST GREEN STREET ITHACA. NEW YORK 14850 MEMORANDUM Charter & Ordinance Committee Members Benjamin Nichols, Mayor Dominick Cafferillo, Controller FROM: Chuck Guttman, City Attorney DATE: September 2, 1993 RE: Disputes with ACC TELEPHONE: (607) 274-6504 FAX: (607) 272-7348 Enclosed please find a copy of a letter from John Fogarty, Associate General Counsel, of Time Warner Cable dated August 20, 1993, to which is attached a draft Memorandum of Understanding. It appears that we are very close to reaching a final agreement with Time Warner Cable and I would request that this matter be put on the September C&O agenda for discussion in executive session. It is my hope to obtain form the Charter & Ordinance Committee comments regarding this proposed agreement, so that I can go back to Time Warner .Cable between the September C&O meeting and the October C&O meeting and get this into a final form. There are certain minor changes which I think need to be made in this agreement which do not affect the general intent of the agreement. For example, section 1(c) and in section 1(d), it should be clarified, as it is in section 2(c) that any amounts owing to the City based on this clarification shall be paid to the City at the time of its execution. In paragraph 1(d), the first word should be changed from "in" to "for". In paragraph 2(c), there are some typing mistakes which need to be clarified. It should be clear that this is referring to section 14.1(c)(3) rather than article 20. I have met with representatives from the Cable Commission regarding this proposed agreement. Their only concerns were with paragraphs 5, 7 and 8 of the agreement. With regard to paragraph 8, there should be some wording changes making it clear that in the fourth sentence that the franchisee shall designate and activate additional channels up to a total of nine channels for public educational and governmental access purposes. -An Equal Opportunity Employer with an Affirmative Action Program' to, Recycled Paper Memorandum -2- September 2, 1993 In paragraph 7, it should also be clearly stated that to the extent there are any amounts which have previously been deducted or credited against funds expended by the franchisee should not have been retroactive adjustments will be made. The most complicated part of the agreement from my point of view, is paragraph 5. Because I do not have the technical expertise, I will be getting specific information from the Commission members prior to the C&O meeting as to technically whether the provisions of this paragraph are correct or whether adjustments have to made. It is my expectation that some technical language will have to be adjusted and other language will have to be added for clarification purposes. If any of you have any questions which you would like to discuss before the C&O meeting, please let me know. While I do not have exact figures, especially for 1993, I would estimate that Time Warner will owe the City approximately $6,500.00 for 1992 for section 1(c) and approximately $7,700.00 for 1992 for paragraph 2(c). I would further estimate that the City will receive in 1993 an additional $6,600.00 pursuant to paragraph 1(c) and an additional approximate $8,000.00 in 1993 for paragraph 2(c). In total, the additional amounts the City will receive in 1992 and 1993 will be approximately $29,000.00. 1994 estimated revenues should also increase accordingly. Enclosure OFFICE OF CITY ATTORNEY CITY OF ITHACA 108 EAST GREEN STREET ITHACA, NEW YORK 14E50 MEMORANDUM TO: Tom Terrizzi Rick Gray' Peter Hess Tom Ferwerda FROM: Chuck Guttman, City Attorney DATE: September 2, 1993 RE: Cable TV Rate Regulation TELEPHONE: (607) 274-6504 FAX: (607) 272-7348 Enclosed please find a copy of a letter from William Finnerin, Chairman of the New York State Commission on Cable Television to Mayor Nichols, to which is attached is a municipal advisory prepared by John Grow. While I am still far from an expert on the field, this appears to be the clearest statement I have yet seen of how rate regulation will affect municipalities. I believe that the City of Ithaca should be making a decision very shortly as *to whether or not we wish to regulate rates ourselves, whether we wish the New York State Commission to regulate rates on our behalf or whether, for some reason we choose not to regulate rates at all. From John Grow's advisory it appears clear that if we want to have rates regulated we should let New York State Commission do the work for us, rather than attempt to do it ourselves and incur the time and expense. We should also, as Mr. Grow points out at the bottom of page three of his advisory, do an informal review of rates to determine their relationship to the benchmarks. While I am not sure of the meaning of the phrase "cable television system" I would assume that the ACC system will, at a minimum, include 1,500 subscribers and may very well be in the 10,000 subscriber range. I also do not know how many of the regulated channels are delivered via satellite, but would assume that most, if not all of them, are: It therefore appears that the fee per channel will be in the .50 to .60 cent range which should represent a significant decrease in the basic tier charge. 'An Equal Opportunity Employer with an Affirmative Action Program' Recycled Paper Memorandum -2- September 2, 1993 I believe that all of you have much greater expertise in the subject than I do, and would.- strongly urge the Cable Commission to make a recommendation to Charter & Ordinance Committee on how the City should address the rate regulation issue. While John Grow says there is no need for urgency, I do not see any advantage in delay and would request that the Cable Commission do this as soon as possible, so that I can take this to the September or October Charter & Ordinance Committee meeting and get something on the Council agenda by the end of this year. Please get back to me with any comments that you may have. OFFICE OF CITY ATTORNEY CITY OF ITHACA 1OB EAST GREEN STREET ITHACA, NEW YORK 14850 August 30, 1993 George D. Patte, Esq. 121 East Buffalo Street P.O. Box 174 Ithaca, NY 14850 RE: Cable Franchise TELEPHONE: (607) 274-6504 FAX: (607) 272-7348 Dear George: Following up our recent conversation enclosed please find a copy of the City of Ithaca franchise agreement with American Community Cablevision. I am also enclosing for your reference a copy of the list of issues which the City sent to ACC alleging that they were in default. With regard to the complaints that we had with ACC, the basic financial issues revolved around the definition of gross revenues. In that regard, ACC was not including advertising revenues and franchise fees collected as part of gross revenues. We believed that they should have been. The other basic issues that we had with ACC primarily had to do with community access channels and an information network, both of which are included in the franchise agreement. The individual I was talking to in Albany was John Grow. He can be reached at 518/474-4992. If I can be of further assistance to you regarding this matter, please let me know. Enclosures Very trul yo r e / uttman City Attorney "An Equal Opportunity Employer with an Affirmative Action Program" t4, Recycled Paper AC n13 CEIVED 'AUG 18 093 AMERICAN COMMUNITY CABLEVISION August 16, 1993 Ms. Callista Paolangeli City Clerk of Ithaca City Hall 108 E. Green Street Ithaca, NY 14850 Dear Ms. Paolangeli: Following enactment of the 1992 Cable Act, the cable television industry- has been working with the Federal Communications Commission (FCC) regarding the regulations to implement this new law. Many of these rules are now in effect, and the regulations governing cable rates will go into effect on September 1. I regret the last minute notification. However, when the FCC recently changed the implementation date from October 1 to September 1, it was impossible to provide our usual notice. In this regard, the FCC waived the notification requirement. To comply with the new FCC regulations, American Community Cablevision will be changing many aspects of our business in the City Clerk of Ithaca. All changes are based upon and in accordance with the new federal guidelines. Virtually every cable subscriber's bill will change in some way during the next two months, and this will create some confusion. I want to assure you that we at American Community Cablevision are working hard to minimize disruptions and keep our customers informed. We recognize you may also receive questions as these changes take place. Enclosed is a"copy of the customer -letter -that win be sent before August 19 outlining some of the revisions including rate revisions that will occur at American Community Cablevision. If you and your staff require any additional information, or would like a more detailed briefing, please don't hesitate to give me a call at 272-7875. rely, aym'ond H. McCabe Area Manager cc: The Honorable Ben Nichols Mr. James Ferwerda, Chair of the Cable Commission 519 West State Street Ithaca, New York 14850 607-272-3456 SCC AMERICAN COMMUNITY CARLEVISION August 16,1993 NEW PRICES.... NEW SERVICES Dear Valued Customer: In response to new federal regulations, American community Cablevision is developing new programserviceselections and new prices for cable services. All prices are based upon and in accordance with these new federal guidelines. Effective September 1, a 28 -channel Basic Service will include broadcast stations, local access channels, and cable programming services. Our Tier Service will include 17 satellite -delivered cable entertainment and information channels. The new channel line-up is enclosed. PRICE CHANGES AND EQUIPMENT CHARGES The new federal regulations require that all charges for cable services and equipment in your home are separated or "unbundled" and identified on your bill. Previously, we charged only for remote controls and additional addressable converters. Non -addressable converters for our basic service, previously offered free, now require a monthly fee. ACC charges are listed on page 3 of this notice. How will this affect your bill? Some charges for services and equipment itemized on your bill will increase; others will decrease. This is due to a redistribution of our rates as required by the new regulations. Overall, the result is that the revenue collected. by ACC from its customers will go down. The price chart included with this letter will help you determine your new monthly charges. BILLING CHANGES All price changes are effective September 1. For those customers on our mid -month billing cycle, the bill you will receive this week will include partial month charges. PERMISSION FROM BROADCAST STATIONS Another provision of the new regulations requires cable companies to obtain permission from broadcast networks in order to continue carrying them. Area broadcast stations are now deciding whether their station will be available on our cable system or whether it will only be available via a home antenna. As of this date, the following stations have granted us permission to continue to carry their signal: 519 West State Street WIXT-9/ABC (Syracuse) WTVH-5/CBS (Syracuse) WCNY-24/PBS (Syracuse) WBNG-12/CBS (Binghamton) WENY-36/ABC (Elmira) WSKG-46/PBS (Binghamton) Ithaca, New York 14850 607-272-2464 If a broadcast station does not grant e, federallaw will not allow us to continue carryinthe station. At this time, the following stations have not granted permission. WSTM-3/NBC (Syracuse) WSYT-68/FOX (Syracuse) WICZ-40/NBC (Binghamton) ACC wishes to continue carrying all the broadcast networks on the current line-up. However, if permission is not received from the broadcast stations by October 6, we will replace the channels with other programming. More detailed information can be found on channel 52 (channel 51 for Basic only customers.) LINE-UP CHANGES Some of the broadcast networks have the option of selecting which channel number they wish to be carried on. This will result in a change in our channel line-up. Since all negotiations with broadcast networks are ongoing, ACC has chosen not to realign its line-up until October. We will send you further details at that. -time. _ FM SERVICE New regulations also require retransmission consent agreements with all FM stations. As a result, ACC does not expect to be able to carry all of the FM services currently being offered, and will discontinue some within the next 30 days. THE SAME GREAT CABLE SERVICE While you will be seeing a lot of changes, and this may result in confusion, you can be assured that we will continue to provide great home entertainment. Thank you for your patience and support of the American Community Cablevision staff as we work to make these changes during this transitional period. We sincerely appreciate your business, The Staff and Management of American Community Cablevision CHANNEL LINE-UP (Starts September 1) BASIC SERVICE 2 ABC-9/WIXT 3 NBC-3/WSTM 4 PBS-24/WCNY 5 CNN 6 FOX-68/WSYT 7 NEWS 7/Marketplace 8 PBS-46/WSKG 9 WWOR-9 10 ESPN 11 WPIX-11 12 CBS-12/WBNG 13 Cable 13(PEG access) 17 CBS-5/WTVH 18 NBC-40/WICZ 19 C -SPAN 20 ABC-36/WENY 35 Fashion -QVC 39 E! 40 The Learning Channel 41 QVC 42 Mind Extension U. 43 Comedy Central 44 Nostalgia 45 Sneak Preview 52 Customer Information 53 Governmental Access 54 Educational Access 55 SCOLA PREMIUM 14 HBO 15 Cinemax 16 Disney 49 Showtime TIER SERVICE 21 MTV 22 USA 23 Weather Channel 24 TNT 25 Nickelodeon 26 A&E 27 CNBC 28 MSG/Travel 29 Bravo/C-SPAN II 30 Discovery 31 AMC 32 Headline News 33 Family Channel 34 TNN 36 VH -1 37 Lifetime 38 BET PAY-PER-VIEW 46 Viewer's Choice 47 Hot Choice 48 Request Rates: City of Ithaca SERVICES: MONTHLY RATE* BASIC CABLE $ 14.64 TIER 9.33 PREMIUM CHANNELS HBO CINEMAX SHOWIIME DISNEY PAY-PER-VIEW MOVIES PAY-PER-VIEW EVENTS REMOTE CONTROL RENTAL PURCHASE UNIVERSAL REMOTE PURCHASE NON -ADDRESSABLE CONVERTER RENTAL PURCHASE ADDRESSABLE CONVERTER RENTAL ADDITIONAL OUTLETS BASIC ONLY (no equipment) no W/NON-ADDRESSABLE CONVERTER DELUXE (w/Premium Channels) INSTALLATIONS & MAINTENANCE: 11.03 11.03 11.03 10.45 3.95 price varies FIRST CONNECTION RECONNECT SERVICE ADDITIONAL OUTLET CONNECTION HOURLY SERVICE CHARGE (For non-standard installations and non -system related service calls) CABLE SERVICE UPGRADES CONNECT CUSTOMER EQUIPMENT COMPUTER TRANSACTION ' Plus applicable Franchise Fees " Plus applicable Tax & Franchise Fees "' Services above Basic require an addressable converter. - Computer transaction fee waived for 30 days - Basic Service required by Federal Law as prerequisite to other services. - Most common prices listed; complete price list is available through the ACC office. .12 1.96** 24. 95** 1.71 5766** 1.19*** charge 1.71 2. 95*** 47.42 21.07 21.07 31.61 /hr. 15.81 1.95 SCC dE CEI' . 1� AUG z 8 1993 AMERICAN COMMUNITY CABLEVISION August 16, 19931 Ms. Callista Paolangeli, Clerk City of Ithaca City Hall 108 E. Green Street Ithaca, NY 14850 Dear Ms. Paolangeli: Enclosed is a check in payment of American Community Cablevision's franchise fee for the second quarter of 1993. A statement outlining the computation of this fee payment has been included. Should you have any questions, please feel free to call. American Community Cablevision takes great pride in serving the residents of the City of Ithaca. erely, RayaUL dic mund H. McCabe Area Manager cc: The Honorable Benjamin Nichols, Mayor Mr. James Ferwerda, Cable Commission enc. RHM/mkk 519 West State Street Ithaca, New York 14850 607-272-3456 Nail o:,uI Dirision T 1 M E W A. R N E R CABLE City of Ithaca Ithaca, New York Dear Sir: August 9, 1993 ZZNY 0040 Enclosed please find a check for $ 31,367.63 which is payment of franchise fees for the second quarter of 1993 for American Community Cablevision_ At this point, we have not deducted the overpayments for the prior periods_ However, in the future, we reserve the right to reduce franchise fee payments by the amount overpaid_ Computation is as follows: Taxable Gross Revenues $656,089.34 Franchise Fee Rate Less NYCC 4.781% Franchise Fee Due $31,367.63 I, Ivy W. Parish, Controller of Time Warner Cable, National Division, certify that the above schedule summarizes the Gross Revenues, as defined in the franchising agreement, for the period indicated for the CATV operations in the City of Ithaca, New York. Signed: IWP/lmf Enclosure Iy W. Parish, Controller SYS iEj MA i li 3Efl Nalionnl Dirisior, 160' Inverness Drire Wes, Suite 300 Englewood CO 80112 Tel 302. 799.9.599 F.,.r 30.3.6.19.8090130.3.799. 1 i .!/ailing address: P.O. Box 6929 Englewood CO 80155-6929 :1 Diririon orTi , ;rrtr:,,r F.19.•r.•r•.',:rti,rt7 ! C 41e- >> yam._ _����..--::_.._ �•s� rex 4fr eeffth I t !,, Z.- ' _ . „ CITY OF ITHACA 108 EAST GREEN STREET ITHACA, NEW YORK 14850 OFFICE OF CITY ATTORNEY John E. Fogarty, Esq. Associate General Counsel Time Warner Cable 300 First Stanford Place Stanford, CT 06902-6732 Dear John: July 26, 1993 Re: American Community Cablevision TELEPHONE: (607) 274-6504 FAX: (607) 272-7348 I wrote to you in March of this year setting forth ten points which I thought represented the basis of an agreement between the City and Time Warner. Based on our discussions since then, it is my understanding that point number one is acceptable to you but, that it may be a little more complicated becausethere are further mergers, etc. that are going on. I would suggest that you get me specific language that you would want included with regard to point one. With regard to points two and four, I understand these are now acceptable to you provided they operate "prospectively", with us still to determine from what date they will operate prospectively. I have discussed these points with the Mayor and members of Common Council. As I previously advised you, my Council feels that the City is correct on both of these points. In the interest of getting this issue resolved, they are willing to not to have this. be retroactive to the beginning of the Franchise Agreement namely, 1988 or 1989. However, they are not willing to have it simply be prospective from the middle of 1993. The City first raised these issues in January of 1992. The City would be willing, in interest of settlement, to agree that points two and four will run prospectively from January 1, 1992. The City is willing to drop its claims on these issues for the years prior to 1992, but feel that these issues should be settled, at least as of the date the City first raised them. Time Warner or ACC should not be paying less simply because negotiations have taken an extended period of time. I do not believe there is any flexibility with the City on that date. 'An Equal Opportunity Employer with an Affirmative Action Program" to: Recycled Paper Letter to John E. Fogarty,•Esq. Page Two July 26, 1993 With regard to point number three, this obviously would be moot if the City sought recertification. However, if the City does not seek certification, it is my understanding that this is agreeable to both parties. With regard to issues five and seven, I understand that this is now agreeable to ACC. With regard to issues six, eight and nine, I understand they are agreed in concept. In regard to issue six, we will need some technical language. I would be willing to take a stab at drafting some first language on this. With regard to issue eight, it is also my understanding that this is acceptable with your client in concept. You need to know exactly what equipment is involved and exactly what the language will be. Again, I will take a first stab at drafting language on this, if everything else is acceptable. With regard to issue nine, again, I understand this is acceptable in concept. In particular, one newchannel would be opened now and we would agree on a formula for the future. The 30 hour per week figure is acceptable. We will have to come up with some language to protect your client against too many syndicated shows forcing a new channel opening. With regard to repeat shows, it is myunderstanding that the four month period seems to be okay. We would revise the time in which ACC would have to open a new channel from two months to three months. Again, assuming that everything else is acceptable, I would take a stab at drafting this language. Issue ten simply provides that we would exchange general releases. Please get back to me at your earliest convenience as to whether the above is now acceptable to your clients. If so, please forward to me proposed language with regard to issue number one. I will then take a stab at drafting a proposed agreement. I think it is important, if what I am proposing is acceptable to your client, that we move fairly rapidly. At present I believe I would be successful in having the Mayor and Council approve a settlement along these lines. Elections will be held this November. The Mayor and all members of Council are up for re-election. While I am fairly certain the Mayor will be re-elected, I am also fairly certain that there will be a very large change in the make-up of Common Council. If we do not have an agreement signed before January lst, we will Letter to John E. Fogarty .Esq. Page Three July 26, 1993 be back to square one and, considering who I expect to be on Common Council, I would not be surprised if I am directed to begin litigation fairly quickly. Considering the technical language that has to be drafted and approved, I expect that the drafting of this agreement will not be particularly easy or quick. I expect that it may take several months to get the technical language drafted in a form that is acceptable to both the City and to your client. In order for the agreement to be signed in 1993, it will have to be approved in its final form by Council at its December meeting at the latest. Since the December Council meeting is devoted almost entirely to next year's budget, I think that we realistically have to have this agreement in final form for approval by my Council,at its November 3rd meeting. I also expect, knowing my Council, that if they have not had the agreement in final form for a couple weeks to review before then, they will simply table the matter to the December meeting and could very easily table the matter again to January. Considering all of the above, I think we need to have the agreement in final form some time in early October. I therefore need to know from you, as soon as possible, whether the basic principles are acceptable to your client. Very truly yours, Charles Guttman City Attorney CG/cv 74/f3. _ _ 4 NEW YORK STATE COMNIISSION ON CABLE TELEVISION CORNING TOWER BLDG.,EMPIRE STATE PLAZA ALBANY, NEW YORK 12223 (518) 474-4992 (518) 486-5727 FAX WILLIAM B. FINNERAN - Chairman June 1, 1993 Dear Mayor: BARBARA T. ROCHMAN Commissioner JOHN A. PASSIDOMO Commissioner GERARD D. DIMARCO Commissioner DAVID E WILBER III Commissioner EDWARD P. KEARSE Executive Director In January, we forwarded to you a complete copy of the Cable Television Consumer Protection and Competition Act of 1992 ("Cable Act of 1992") together with an overview of issues pertinent to state and local franchising authorities as prepared by Commission staff. At that time, I noted that decisions in numerous rulemakings at the FCC designed to implement the new statute would be forthcoming shortly, including new rules concerning cable rate regulation. On May 3, the FCC released the regulations that will govern cable television rates. The primary purpose of this letter is to provide you with information concerning the important features and potential implications of the new rate regulations. The regulations themselves are extensive and complicated, and comprise only a part of many rate related documents released by the FCC on May 3. The documents consist of 549 pages and contain 1,433 footnotes. They include: rules and regulations, an executive summary, a set of proposed forms and worksheets together with instructions, a description of the methodology used to arrive at the benchmark rates which form the basis for the primary method for determining reasonable rates, and the FCC's Report and Order (a written description of the rules and the FCC's rationale for adopting them). These documents related primarily to one of two methods for calculating reasonable cable rates. Standards pertaining to the second method (cost of service) will be contained in more rules to be issued in the months ahead. Because of the sheer bulk of these documents, it has not been possible to send a complete set to every municipality in the state. We are enclosing a copy of the regulations at this time. We have obtained from the FCC a computer disk of the text (exclusive of footnotes and appendices) of the Report and Order which we will endeavor to make available to you on request. I hasten to note, however, that clarification of the rules will be an ongoing process. On May 13, the FCC conducted a tutorial/workshop in Washington, D.C. in an effort to promote a better understanding of the rules by interested parties. On the same date, the FCC also released 11 pages of questions and answers concerning specific provisions of the rules. We expect more of the same in the weeks ahead. In my letter of January 4, I stated that the Cable Act of 1992 is comprehensive; the documentation weighs 5 lbs., 5 oz.! 2 You will find attached to this letter a summary of the important features of the rate regulations. To place the regulations in context, we should review briefly for you the fundamental characteristics of the new statutory framework. The Cable Act of 1992 (1) expands the scope of rate regulation and (2) divides jurisdiction over the rates subject to regulation. The statute expands the scope of rate regulation by redefining "effective competition" so that almost all cable systems are subject to rate regulation. It also includes rates for "cable programming services" (higher tiers of non -premium service) among the rates subject to regulation. Congress divided the regulatory jurisdiction by giving the FCC exclusive authority over cable programming services and by permitting state/local franchising authorities to regulate rates for basic service in accordance with federal standards if they become certified by the FCC. Basic service is the tier of service which must include all local television broadcast stations and all public, educational and governmental (PEG) access channels. It may include more channels at the option of the cable operator. It may not contain less. Congress established the criteria for certification as follows: (1) the franchising authority must adopt and administer regulations with respect to the rates for the basic service tier that are consistent with the regulations prescribed by the Commission for regulation of the basic service tier; (2) the franchising authority must have the legal authority to adopt such regulations; (3) the franchising authority must have the personnel to administer such regulations; and (4) procedural laws and regulations applicable to rate regulation proceedings by such authority must provide a reasonable opportunity for consideration of the views of interested parties. The FCC regulations include provisions which govern the certification process. The regulations require that a franchising authority seek certification on a specific form to be provided by the FCC (not yet available), that a copy of the form must be served upon the cable operator prior to the time it is filed with the FCC and that the form be served on the FCC by certified mail, return receipt requested (or hand delivered and date stamped by the FCC). Unless the FCC notifies a franchising authority to the contrary, certification becomes final 30 days after the form is filed. A franchising authority must also adopt the regulations specified in criteria 1 and 4 above. Such regulations must be adopted no later than 120 days after certification is final. Once certification is final and the necessary regulations have been adopted, the franchising authority may trigger regulation by serving a notice of such actions on the cable operator. The regulations also provide that a cable operator may challenge certification by filing either a petition for reconsideration within 60 days of the date the franchising 3 authority files the form seeking certification or, if certification is granted, by filing a petition for revocation any time thereafter. Many of you have been reading about the new regulations in the media and have questions about certification. You may also be receiving solicitations from various cable consultants concerning the need for technical, accounting or legal expertise in connection with the administration of the new regulations. If you find that you are being urged to seek certification immediately, please understand that the necessary forms have not yet been finally approved or published, and, in any event, that the FCC will not accept certification forms for filing until June 21 -- the effective date of the new rules. Do not feel pressured to make a rushed decision. Moreover -- and this is important -- there is NO DEADLINE for filing for certification. In this regard, it is our judgment at this time that despite some ambiguity in the rules, the FCC does not intend for franchising authorities or cable subscribers to be prejudiced if certification is not sought on the first day possible. We take this position because the rules provide that where a cable operator is forced to reduce its rates to comply with the new standards, it can be required to refund the difference between new reasonable rates and prior excessive rates for a period up to one year or back to June 21, 1993 (the effective date of the rules). Thus, if certification is not requested for a few weeks and rates are not voluntarily reduced by the cable operator as . of June 21, any rate determination made prior to June 21, 1994 could cause a refund of excessive rates back to June 21, 1993. The rules also provide for interest on refunds. As I indicated in my letter of January 4, the Commission suggested to the FCC in comments filed in the rate regulation rulemaking that it be permitted to seek certification on behalf of all municipalities in the state. Such action would save considerable paperwork for the FCC and municipalities alike. In the Report and Order, the FCC stated that it might deprive individual municipalities of the discretion not to seek certification and turned down our proposal. This statement is some evidence that the FCC expects that the decision to seek certification should be preceded by deliberation in light of the requirements of the new rules. It certainly follows that franchising authorities and subscribers should not be prejudiced by reasonable deliberation of the local legislative body. At this time, we recommend (1) that you review this summary and the enclosed regulations carefully, (2) that you consider whether you have the personnel to administer the regulations and the potential impact of the costs of administration on your franchise fee revenue, and (3) that you monitor the action of your local cable operator in the weeks ahead. In respect to the latter, the regulatory scheme is designed to cause cable operators to voluntarily adjust their rates and rate structures to comply with the new standards. Although it is too soon to predict what most cable operators will do, there is substantial incentive for adjustments by June 21 of this year. In this regard, I also point out that the rate freeze imposed by the FCC effective April 5 will continue in effect until August 3 so that cable operators cannot increase their overall rates for basic and tiered services before then. The practical effect of the new regulations is difficult to predict with certainty at this time. Our initial analysis suggests that certain aspects of the rules may prove especially time 4 consuming and expensive to administer. Based upon the Report and Order, it fully appears that the FCC expects state and local governments to use their franchise fees to cover the costs of regulation. We wonder whether, in many cases, the fees will be enough. Surely, any cost of service proceeding will be complex and protracted. (FCC rules recognize this. They permit a franchising authority up to 180 days to review cost of service showings before proposed rates can go into effect. The rules further provide that a franchising authority need not act within such time period.) Even where the cable operator chooses the benchmark method, the manner in which rates for installation, additional sets and equipment must be determined is likely to invite review of, and efforts to verify, the cost factors presented by the cable operator. The amount of profit included in such charges may also be an issue in controversy. On the other hand, if cable operators with rates in excess of the benchmarks make prompt and voluntary adjustments in accordance with the benchmarks, the need for extensive regulatory action during the initial transitional phase may be considerably less. We expect to have sufficient rate information to make preliminary estimates of the extent to which individual system rates exceed applicable benchmarks. We will share these with you. If early rate adjustments are not forthcoming, we will advise you of appropriate action. In sum, we are witnessing a dramatic change in the regulatory landscape affecting cable television rates. While we must ensure that cable subscribers in the state receive cable service at . the lowest reasonable rates consistent with federal standards, we must realize that under.the new complex regulatory scheme, importanvdecisions concerning tiered rates are made solely at the FCC and that even decisions'concerning basic rates are subject to review by the FCC. We will be working with all municipalities to ensure a reasonable allocation of state and local resources within this new environment. Again, we urge you to review the regulations. We will be communicating with you within the next two to three weeks with more information on this important matter. In the meantime, if you have questions, please do not hesitate to contact Donald P. Buckelew, Director of Municipal Assistance (518) 474-2212 or John L. Grow, Counsel (518) 474-1359. Very truly yours, WILLIAM B. FINNERAN Chairman Attachment ddittonal progr•amming_ rvice together with Assoc izum oasts. ,Such tiers usually include cl c ha ;exclusive;_Guthonty to;regulate Tales fo; franchzszng authonty a relevant governme Or :as(Il i asiam in come.,::e ogra s r ........... . mar .,ro imatel XO%:.:lotuer tha�i thtx::avera e. able.::rates:::in.;:.e ect>>:� 3Q19.;..:cable. peatorwho user the benchmark mttt)zod>»itist adjust its rotes sa that the rc r each regulated tier :::,........i -. not exceed>tfe'number of :chanrzels:orc;tle: her multi lied'`b'" rrnatted base service rate per channel, For example, the approach, simplafaed here j ustratcvi purposes, is asfollow$/../ a cable o eratorno ..has vv:: ers a 10 charts s e ser►tccc:tler: or`. SRO.Q'and`a�''20. chWitt i:;her 2 ap $15'DD': nd'tlie »i imgm:: :.117.1 arc :.:.r.,.;.. hannelcha . ....:..g...::::::e::::.:..:emei oz6Qcents' .erchanttel;ih..e::...: ,ro"`izate`ad ustrrieni>wou .:....:..:::.. :�.:::::.:�:::::::�.app.:::.p...................Z....:.::::.:::.::::::::::::::. ::.... ::... . as fOl ows X ar eels x 60 cents >:= :$60 . orhasic sery gee' and 2u channels.x.:60..cents: sere*,ulatioti <>::<:.Y ud note from this example that the rate for ane tier here the basic service her m tuu ty:;;be high rt an before> :: 'his zs acc table because:thebenchmark method is based �:.:;::,:..;:.,:,.; ,;..:<.:,;<,:.:;::..,. .;:.,,,::::: ;:<:<.;:«>:;:::;>>::::: >:<::::::;>:.; :>:�;:;:::::.:::::::::>::>:., e_per channel itis also possible that the cable operator could minimize or offset a rx r e i » >� inc a n ;: m : :: » h ...... y.:.:..::.:.: s...g tlte �tci berof :c::. an►tels, repen ..sen of satellite channels In determining the approi number'of subset`bei to (he erzhre..cable.systertt znrcipal „franchise. area..... Tlre. benchmark;: rate: nutty cnarges; for equrpmenr nna dual cost plus a reasonable profz ?nverier or re ote control device mon thly ervtce rate but must brit separat es applicable to equtpment or addztzonal ou equipment rates on the oasts of the acts �iipment plus a reasonable profit (up, to IY e are no benchmark justify addttzonal set icing and repaanng ca a open or may a ermine res ca cu a zn accord anee>:wtt a, that .4 nsu cenice showtn ranchsn ere s imto osussihl' predict how many operators may choose the cost of service aptcort but any such sho vii uld be detailed artd complicated under any circumstances• It will be partacularly so iri :t, rly months of regulatio as the FCC has not yet adapted specific rules applicable to cost: ryce regutalton One factor that might tend to discou•r•age cost of service showings sstbiltty that evidence presented tri a "cost of service"proceed ng rnrght result.in rates. be_l raie increases lire to be govertleU b a rice: ca sch`emc vhzeh in.the.sim :ai cses, is based on theinflation rate as determined by the brass National Product>Price lnd TNP -P I3' o.wever .;c'` ` czle.opemtors will also be able to seek increases in excess flati. the extent that External Costs increase at a rate higher than inflation Examples of extern fistinclude:.. state<and uzreme local: as s, costs o ranchrse re nts, ro` rammrn s costs a .s0,44„,:::: ,.f:.:.::.;::.ii:.:.qp g tranmission consent fees .after.;October'6, 1994 The:; cablee<>o erator can alwa :s..elect mm . The rated 'Oman- a.: ranchtstn autho .......... . .:..:::... ......:...:......:... cision and made avatlabte to the public whenever the determznahon involves the disappiov. a rate or the approval of a rate oyei theobjection. of.an interested party. :. aaeer ping basic l Irates and associated equipmea ctpant" in the local ratemaking proceeding. o:.:::::;but genera ly; it can assume econte cerhfie t e prospect exists that rate procee. d at the FCC before many ac tun authont egulate bas c service rates . CorrrplatntPro' arding APPENDIX C -- RULES APPENDIX C Parts 0 and 76 of Chapter I of Title 47 of the Code of Federal Regulations are amended as follows: Part 0 COMMISSION ORGANIZATION 1. The authority citation for Part 0 continues to read as follows: Authority: Secs. 5, 48 Stat. 1068, as amended; 47 U.S.C. 155. 2. Section 0.61 is amended by adding paragraphs (j) through (m) to read as follows: MASS MEDIA BUREAU 0.61 Functions of the Bureau. (j) After Commission assumption of jurisdiction to regulate cable television rates for basic service and associated equipment, acts upon cable operator requests for approval of existing or increased rates. (k) Reviews appeals of local franchise authorities rate making decisions involving rates for the basic service tier and associated equipment, except when such appeals raise novel or unusual issues. (1) Acts upon complaints involving cable programming service rates except for final action on complaints raising novel or unusual issues. (m) Evaluates certification requests filed by cable system franchising authorities pursuant to Subpart N, Part 76 of this chapter. (n) Periodically reviews and, when appropriate, revises standard forms used in administering; (1) The Commission's complaint process regarding cable programming service rates; (2) The certification process for wishing to regulate rates, and (3) The --substantive Commission. 3. 'Section 0.455 is to read as follows: local franchising authorities rate regulation standards prescribed by the amended by adding paragraphs (a) (11) and (12) 1 0.455 Other locations at -which records may be inspected (a) * * * (11) All complaints against cable television operators filed under §§ 76.950 and 76.951 of this chapter, all documents filed in connection therewith, and all communications related thereto, unless the cable operator has submitted a request pursuant to § 0.459 that such information not be made routinely available for public inspection. (12) All cable operator requests for approval of existing or increased cable television rates for basic service and associated equipment over which the Commission has assumed jurisdiction pursuant to 47 C.F.R. §§ 76.913, and 76.943, all documents filed in connection therewith, and all communications related thereto, unless the cable operator has submitted a request pursuant to § 0.459 that such information not be made routinely available for public inspection. Part 76 CABLE TELEVISION SERVICE 4. The authority citation for Part 76 is revised to read as follows: AUTHORITY: Secs. 2, 3, 4, 301, 303, 307, 308, 309, 48 Stat., as amended, 1064, 1065, 1066, 1081, 1082, 1083, 1084, 1085, 1101; 47 U.S.C. Secs. 152, 153, 154, 301, 303, 307, 308, 309, 532, 533, 535, 542, 543, 552 as amended, 106 Stat. 1460. 5. Section 6. Section 7. Section 8. Section 76.5 is revised by removing paragraph (gg). 76.10 is removed. 76.33 is removed. 76.900 -is removed and redesignated -as Section 76.986. 9. Sections 76.803 through 76.999 are reserved. 10. Section 76.1090 is removed and renumbered as Section 76.900. 11. Subpart N is added to read as follows: Subpart N -- Cable Rate Regulation Sec. 76.900 Temporary freeze of cab_e rates. 76.901 76.905 76.906 76.910 76.911 76.912 76.913 76.914 76.915 76.916 76.920 76.921 76.922 76.923 76.924 76.925 76.930 76.931 76.932 76.933 76.934 76.935 76.936 76.937 76.938 76.940 76.941 76.942 76.943 76.944 76.945 76.950 76.951 76.952 76.953 76.954 76.955 76.956 76.957 76.960 76.961 76.962: 76.963 76.964 Definitions. • Standards for identification of cable systems subject to effective competition. Presumption of no effective competition. Franchising authority certification. Petition for reconsideration of certification. Joint certification. Assumption of jurisdiction by the Commission. Revocation of certification. Change in status of cable operator. Petition for recertification. Composition of the basic tier. Buy -through of other tiers prohibited. Rates for the basic service tier and cable programming services tiers. Rates for equipment and installation used to receive th' basic service tier. Cost accounting and cost allocation requirements. Costs of franchise requirements. Initiation of review of basic cable service and equipment rates. Notification of basic tier availability. Notification of proposed rate increase. Franchising authority review of basic cable rates and equipment costs. Small system review. Participation of interested parties. Written decision. Burden of proof. Proprietary information. Prospective rate reduction. Rate prescription. Refunds. Fines. Commission review of franchising authority decisions on rates for the basic service tier and associated equipment. Procedures for Commission review of basic service rates. Complaints regarding cable programming service rates. Standard complaint form; other filing requirements. Information to be provided by cable operator on monthly subscriber bills. Limitation on filing a complaint. Initial review of complaint; minimum showing requirement; dismissal of defective complaints. Additional opportunity to file corrected complaint. Cable operator response. Commission adjudication of the complaint. Prospective rate reductions. Refunds. Implementation and certification of compliance. Forfeiture. Advance written notification of rate increases. 3 76.970 76,.971 76.975 76.977 76.980 76.981 76.982 76.983 76.984 76.985 Commercial leased access rates. Commercial leased access terms and conditions. Commercial leased access dispute resolution. Minority and educational programming used in lieu o -f deregulated commercial leased access capacity. Charges for customer changes. Negative option billing. Continuation of rate agreements. Discrimination. Geographically uniform rate structure. Subscriber bill itemization. Subpart N Cable Rate Regulation 5 76.900 Temoorary freeze of cable rates. (a) The average monthly subscriber bill for services provided by cable operators subject to regulation under Section 623 of the Communications Act shall not increase above the average monthly subscriber bill determined under rates in effect on April 5, 1993, for a period of 120 days. (b) The average monthly subscriber bill shall be calculated by determining for a monthly billing cycle the sum of all billed monthly charges for all cable services subject to regulation under Section 623 of the Communications Act and dividing that sum by the number of subscribers receiving any of those services. The average monthly subscriber bill determined under rates in effect on April 5, 1993, shall be calculated based on customer charges for the most 'recent monthly billing cycle ending prior to April 5, 1993. 76.901 Definitions. (a) Basic service. The basic.service tier shall, at a minimum, include all signals of domestic television broadcast stations provided to any subscriber (except a signal secondarily transmitted by'satellite carrier beyond the local service area of such station, regardless of how such signal is ultimately received by the cable system) any public, educational, and governmental programming required by the franchise to be carried on the basic tier, and any additional video programming signals a service added to the basic tier by the cable operator. (b) Cable programming service. Cable programming service includes any video programming provided over a cable system, regardless of service tier, including installation or rental of .equipment used for the receipt of such video programming, other than: (1) Video programming carried on the basic service tier as defined in this section; (2) Video programming offered on a pay -per -channel or• pay -per - program basis; or (3) A combination of multiple'channels of pay -per -channel or pay - per -program video programming offered on a multiplexed or time - shifted basis so long as the combined service: (i) Consists of commonly -identified video programming; and (ii) Is not bundled with any regulated tier of service. (c) Small system. A small system is a cable television system that serves fewer than 1,000 subscribers. The service area of a small system shall be determined by the number of subscribers that are served by a system's principal headend, including any other headends or microwave receive sites that are technically integrated to the system's principal headend. § 76.905 Standards for identification of cable systems subiect to effective competition. (a) Only the rates of. cable systems that are not subject- to effective competition may be regulated. (b) A cable system is subject to effective competition when any one of the following conditions is met: (1) Fewer than 30 percent of the households in its franchise area subscribe to the cable service of a cable system. (2) The franchise area is: (i) Served by at least two unaffiliated multichannel video programming distributors each of which offers comparable programming to at least 50 percent of the households in the franchise area; and (ii) The number of households subscribing to multichannel video programming other than. the largest multichannel video programming distributor exceeds 15 percent of the households in the franchise area. (3) A multichannel video programming distributor, operated by the franchising authority 'for that franchise area; offers video programming to at least 50 percent of the households in the franchise area. (c) Each separately billed or billable customer will count as a household subscribing to or being offered video programming services, with the exception of multiple dwelling buildings billed as a single customer. Individual units of multiple dwelling buildings will count as sepa=ate households. (d) A multichannel video program distributor, for purposes of this section, is an entity such as, but not limited to, a cable operator, a multichannel multipoint distribution service, a direct broadcast satellite service, a television receive -only satellite program distributor, a video dialtone service provider, or a satellite master antenna television service provider that makes available' for purchase, by subscribers or customers, multiple channels of video programming.. (e) Service of a multichannel video programming distributor will be deemed offered: (1) When the multichannel video programming distributor is physically able to deliver service to potential subscribers, with the addition of no or only minimal additional investment by the distributor, in order for an individual subscriber to receive service; and (2) When no regulatory, technical or other impediments to households taking service exist, and potential subscribers in the franchise area are reasonably aware that they may purchase the services of the multichannel video programming.distributor. (f) For purposes of determining the number of households subscribing to the services of a multichannel video programming distributor other than the largest multichannel video programming distributor, under para. (b) (2) (ii) of this section, the number of subscribers of all multichannel video programming distributors that offer service• to at least 50 percent of the households in the franchise area will be aggregated. (g) In order to offer comparable programming within the meaning of para. (b) (2) (i) of this section, a competing multichannel video programming distributor must offer at least 12 channels of video programming, including at least one channel of nonbroadcast service programming. § 76.906 Presumption of no effective competition. In the absence of a demonstration to the contrary, cable systems are presumed not to be subject to effective competition. 76.910 Franchising authority certification. (a) A franchising authority must be certified by the Commission in order to regulate the basic service tier and associated equipment of a cable system within its jurisdiction. (b) To be certified, the franchising authority must file with the Commission a written certification that: (1) The franchising authority will adopt and administer regulations with respect to the rates for the basic service tier that are consistent with the regulations prescribed by the Commission for regulation of the basic service tier; (2) The franchising authority has the legal authority to adopt, and the personnel to administer, such regulations; (3) Procedural laws and regulations applicable to rate regulation proceedings by such authority provide a reasonable opportunity for consideration of the views of interested parties; and (4) The cable system in question is not subject to effective competition. Unless a franchising authority has actual knowledge to the contrary, the franchising authority may rely on the presumption in § 76.906 that the cable operator is not subject to effective competition. (c) The written certification described in para. (b) of this section shall be made by filing the FCC form designated for that purpose. The form must be filed by (1) Registered mail, return receipt requested, or (2) Hand -delivery to the Commission and a date-stamped copy obtained. The date on the return receipt or on the date-stamped copy is the date filed. (d) A copy of the certification form described in para. (c) of this section must be served on the cable operator before or on the same day it is filed with the Commission. (e) Unless the Commission notifies the franchising authority otherwise, the certification will become effective 30 days after the date filed, provided, however, that the franchising authority may not regulate the rates of a cable system unless it: (1) Adopts regulations: (i) Consistent with the Commission's regulations governing the basic tier; and (ii) Providing a reasonable opportunity for consideration of the views of interested parties, within 120 days of the effective date of certification; and (2) Notifies the cable operator that the authority has been certified and has adopted the regulations required by paragraph (e) (1) of this section. (f) If the Commission denies a franchising authority's certification, the Commission will notify the franchising authority of any revisions or modifications necessary to obtain approval. • .s 76.911 Petition for reconsideration of certification. (a) A cable operator (or other interested party) may challenge a franchising authority's certification by filing a petition for reconsideration. The petition may allege either of the following: (1) The cable operator is not subject to rate regulation because effective competition exists as defined in § -76.905. (2) The franchising authority does not meet the certification standards set forth in 47 U.S.C. § 543(a)(3). (b) (1) The cable operator bears the burden -of rebutting the presumption that effective competition does not exist with evidence that effective competition, as defined -in § 76.905, exists in the franchise area. (2) For purposes of paragraph (a) (1) of this section, if -the evidence establishing effective competition is not otherwise available, cable operators may request from a competitor information regarding the competitor's reach and number of subscribers. A competitor must respond to such request within 15 days. Such responses may be limited to numerical totals. (c) Stay of rate regulation. (1) The filing of a petition for reconsideration pursuant to paragraph (a)(.1) of this section will automatically stay the imposition of rate regulation pending the outcome of the reconsideration proceeding. (2) A petitioner filing pursuant to paragraph (a)(2) of this section may request a stay of rate regulation. (3) In any case in which a stay of rate regulation has been granted, if the petition for .reconsideration is denied, the cable operator may be required to refund any rates or portion of rates above the permitted tier charge which were collected from the date the petition was filed. (d) The filing of a petition for reconsideration alleging the presence of effective competition based on frivolous grounds is prohibited, and may be subject to forfeitures. (e) If the Commission upholds a challenge to a certification filed pursuant to paragraph (a) (2) of this section, the Commission will notify the franchising authority of the revisions necessary to secure approval and provide the authority an opportunity to amend its 8 certification however necessary to secure approval. Provided, however, that pending approval of certification, the Commission will assume jurisdiction over basic cable service rates in that franchise area. g 76.912 Join certification. (a) Franchising authorities may apply for joint certification and may engage in joint regulation, including, but not limited to, joint hearings, data collection, and ratemaking. Franchising authorities jointly certified to regulate their cable system(s) may make independent rate decisions. (b) Franchising authorities may apply for joint certification regardless of whether the authorities are served by the same cable system or by different cable systems and regardless of whether the rates in each franchising area are uniform. g 76.913 Assumption of jurisdiction by the Commission. (a) Upon denial or revocation, of the franchising authority's certification, the Commission willregulate rates for cable services and associated equipment of a cable system not subject to effective competition, as defined in § 76.905,, in a franchise area. Such regulation by the Commission will continue until the franchising authority has obtained certification or recertification. (b) A franchising authority unable to meet certification standards may petition the Commission to regulate the rates for basic cable service and associated equipment of its franchisee when: (1) The franchising authority lacks the resources to administer rate regulation; provided, however, that the request must be accompanied by a demonstration that franchise fees are insufficient to fund any additional activities required to administer basic service rate regulation; or (2) The franchising authority lacks the legal authority to regulate basic service rates; provided, however, that the authority must submit with'its request a statement detailing -the nature of the legal infirmity. (c) The Commission will regulate basic service rates pursuant to this Section until the franchising authority qualifies to exercise jurisdiction pursuant to § 76.916. 76.914 Revocation of certification. (a) A franchising authority's certification shall be revoked if: (1) After the franchising' authority has been given a reasonable opportunity to comment, it is determined that state and local laws 9 and regulations do not conform to the Commission's rate regulations governing cable rates, §§ 76.922 through 76.925. (2) After being given an opportunity to cure the defect, a franchising authority fails to fulfill one of the three conditions for certification, set forth in 47 U.S.C. § 543(a) (3), or any of the provisions of §§ 76.910(b). (b) In all cases of revocation, the Commission will assume jurisdiction over basic service rates until an authority becomes recertified. The Commission will also notify the franchising authority regarding the corrective action that may be taken. (c) A petition for revocation must be served on the franchising authority and contain a statement that service was made. The franchising authority may file an opposition within 30 days of filing of the petition. A reply may be filed within 15 days of filing of the opposition. (d) while a petition for revocation is pending, and absent grant of a stay, the franchising authority may continue to regulate the basic service rates of its franchisees. in (a) A cable operator that becomes subject to effective competition, may petition the franchising authority for change in its regulatory status. The operator bears the burden of proving the existence of effective competition. Oppositions may be filed within 15 days of public notice of the filing of the petition, and must be served on the operator. Cable operators may reply within 7 days of filing of oppositions. (b) •Franchising authority decisions on petitions for change in status must be made within 30 days after the pleading cycle set forth in paragraph (a) of this section closes. Franchising authorities must notify the Commission within ten days of any decision changing status. Unless the Commission receives an opposition to such change in status, the decision will become final 30 days after adoption by the franchising authority. (c) After an initial determination of the franchising authority that effective competition exists becomes final, the franchising authority will then cease regulating basic cable service rates, and the Commission's regulatory authority over cable programming services for the system in the franchise area will also cease. (d) A cable operator and a franchising authority may submit a joint statement that effective competition exists. The joint statement must stipulate which of the three statutory tests for effective competition has been met and explain how the test has been satisfied. These joint statements will become final decisions within 30 days of filing with the Commission, unless challenged by an interested party: .. (e) Cable operators denied a change in status by a franchising authority may seek review of that finding at the Commission by filing a petition for revocation. (f) In cases where a local franchising authority has not been certified to regulate rates, a cable operator may petition the Commission for change in its regulatory status. The time periods in paragraph (a) of this section will apply to oppositions and replies concerning these petitions. 76.916 Petition for recertification. (a) After its request for certification has been denied or itr existing certification has been revoked, a franchising authorit wishing to assume jurisdiction to regulate basic service and associated equipment rates must file a "Petition for Recertification" accompanied by a copy of the earlier decision denying or revoking certification. (b) The petition must: (1) Meet the requirements set forth in 47 U.S.C. § 5431a)(3); (2) State that the cable system.is not subject to effective competition;_and (3) Contain a clear showing, supported by either objectively verifiable data such as a state statute, or by affidavit, that the reasons for the earlier denial or revocation no longer pertain. (c) The petition must be served on the cable operator and on any interested party that participated in the proceeding denying or revoking the original certification. (d) Oppositions may be filed within 15 days after the petition is filed, and must be served on the petitioner. Replies may be filed within seven days of filing of oppositions, and must be served on the opposing party(ies). § 76.920 Composition of the basic tier. Every subscriber of a cable system must subscribe to the basic tier in order to subscribe to any other tier of video programming or to purchase any other video programming. § 76.921 Buy -through of other tiers vrohibited. (a) No cable system operator may require the subscription to any tier other than the basic service tier as a condition of subscription 11 to video programming offered on a per channel Or 'pet program charge basis. A cable operator may, however, require the subscription to one or more tiers of cable programming services as a condition of access to one or more tiers of cable programming services. (b) A cable operator may not discriminate between subscribers to the basic service tier and other subscribers with regard to the rates charged for video programming offered on a per -channel or per program charge basis. (c) Prior to October 5, 2002, the provisions of paragraph (a) of this section shall not apply to any cable system that lacks the capacity to offer basic service and all programming distributed on a per channel or per program basis without also providing other intermediate tiers of service: (1) By controlling subscriber access to nonbasic channels of service through addressable equipment electronically controlled from a central control point or (2) Through the installation, noninstallation, or removal of frequency filters (traps). at the premises of subscribers without other alteration in system configuration or design and without causing degradation in the technical quality of service provided. (d) Any retiering of channels or services'that is not undertaken in order to accomplish legitimate regulatory, technical, or customer service objectives and that is intended to frustrate or has the effect of frustrating compliance with paragraphs (a) through (c) of this Section is prohibited. § 76.922 Rates for the basic service tier and cable programming services Tiers. (a) Basic and cable programming service tier rates. Basic service tier and cable programming service rates shall be subject to regulation by the Commission and by state and local authorities, as is appropriate, in order to assure that they are in compliance with the requirements of 47 U.S.C. § 543. Rates that are demonstrated, in accordance with these rules, not to exceed the "Initial Permitted Per Channel Charge" or the "Subsequent Permitted Per Channel Charge" as described below, or the equipment charges as specified in § 76.923, will be accepted as in compliance. The maximum monthly charge per subscriber for a tier of regulated programming services offered by a cable system shall consist of a permitted per channel charge multiplied by the number of channels on the tier, plus a charge for franchise fees. The maximum monthly charges for regulated programming services shall not include any charges for equipment or installations. Charges for equipment and installations are to be calculated separately pursuant to § ''6.923. of these rules. (b) Initia'1 permi d p r hanneJ ,.,, (1) The permitted per channel charge on the initial date of regulation shall be, at the election of the cable operator, either: (1) a charge determined pursuant to a cost -of -service proceeding; or (2) the charge specified in subsection (i), (ii), or (iii) below, as applicable: (i) if the operator's per channel charge for regulated programming services and equipment in effect on the date of initial regulation is equal to or below the benchmark per channel charge, as adjusted forward for inflation from September 30, 1992 t� the date of initial regulation, then the permitted per channel charge shall be the per channel charge in effect on the date of initial regulation, adjusted for equipment. (ii) if (1) the operator's per channel charge for regulated programming services and equipment in effect on the date of initial regulation is above the benchmark per channel charge, as adjusted forward for inflation from September 30, 1992 to the date of initial regulation, and (2) the operator'sper channel charge for regulated programming services and equipment in effect on September 30, I.992 was above the benchmark per channel charge, then the permitted per channel charge is nine -tenths of the per channel charge in effect on September 30, 1992, but no lower than the benchmark per channel charge, additionally adjusted for inflation from September 30, 1992 to the initial date of regulation, for equipment, and for any changes in the number of channels offered on all regulated tiers. (iii) if (1) the operator's per channel charge for regulated programming services and equipment in effect on the date of initial regulation is above the benchmark per channel charge, as adjusted forward for inflation from September 30, 1992 until the initial date of regulation, and (2) the operator's per channel charge for regulated programming services and equipment in effect on September 30, 1992 was below the benchmark per channel charge, then the permitted per channel charge is the benchmark rate per channel adjusted for inflation from September 30, 1992 to the initial date of regulation, for equipment, and for any changes.in the number of channels offered on all regulated tiers. (2) For purposes of this section, the initial date of regulation for the basic service tier shall .be the.date on which local notice is given pursuant to § 76.910 of our rules, that the provision of the basic service tier is subject to regulation. For a cable programming services tier, the initial date of regulation. shall be the first date on which a complaint on the appropriate form is filed with the Commission concerning rates charged for the cable programming services tier. (3) For purposes of this section, rates in effect on the initial date of regulation or on September 30, 1992 shall be the rates charged to subscribers for service received on that date. (c) Subseauent permitted per channel charge. After the initial date of regulation, the permitted per channel charge for regulated programming services shall be, at the election of the cable operator, either: (1) a per channel rate determined pursuant to a cost -of - service showing, or (2) the prior permitted per channel charge previously approved by a regulatory authority, adjusted for inflation and external costs in accordance with the price cap requirements set forth in subsection (d) below. (d) Price can requirements. (1) Inflation adjustments. Permitted per channel charges for regulated programming services may be adjusted periodically on account of inflation. Adjustments to permitted per channel charges on account of inflation shall be based on changes in the Gross National Product Price Index published by the Bureau of Economic Analysis of the United -States Department of Commerce. (2) External costs. Permitted per channel charges for regulated programming services may also be adjusted for changes in external costs measured on a per channel per subscriber basis. To the extent external cost increases are greater or less than the GNP -PI for the relevant period, the per -channel charge will be adjusted accordingly. Per channel charges may not be increased if external costs increase at a rate less than inflation. Permitted per channel charges also shall be decreased on account of external costs to the extent such costs decrease from previous levels. (i) Categories. External Costs shall consist of costs in the following categories: (1) state and ,local, taxes applicable to provision of cable television service; (2) franchise fees; (3) costs of complying with franchise requirements, including costs of providing public, educational, and governmental access channels as required by the franchising authority; (4) retransmission consent fees; and (5) programming costs. (ii) The permitted per channel charge for a tier of regulated programming services shall be adjusted on account of programming costs and retransmission consent fees only for programming or broadcast signals offered on that tier. (iii) The permitted per channel charge shall not be adjusted for costs of retransmission consent fees or changes in those fees incurred prior to October 6, 1994. (iv) The starting date for adjustments on account of external costs for a tier of regulated programming service shall be the initial date of regulation of the tier or 180 days from the effective date of these rules, if the initial date of regulation occurs on or after 180 days from the effective date of these rules. (v) Changes in franchise fees shall not result in an adjustment to permitted per channel charges, but rather shall be calculated separately as part of the maximum monthly charge per subscriber for a tier of regulated programming service. (vi) Adjustments to permitted per channel charges on account of increases in costsof programming obtained from affiliated programmers, as defined in § 76.901 of the rules, shall be the lesser of actual increases or the previous permitted rate level increased by the amount of inflation. (vii) Adjustments to permitted per channel charges on account of increases in costs of programming shall be further adjusted to reflect any revenues received by the operator from the programmer. 76.923 Rates for equipment and instillation used to receive the basic service tier. (a) Scone. The equipment regulated under this section consists of all equipment in a subscriber's home that is used to receive the basic service tier, regardless of whether such equipment is additionally used to receive other tiers of regulated programming service and/or unregulated service. Such equipment shall include, but is not limited to: (1) (2) (3) (4) converter boxes; remote control units; connections for additional television receivers; and other cable home wiring. Subscriber charges for such equipment shall not exceed charges based on actual costs in accordance with the requirements set forth below. (b) Unbundling. A cable operator shall establish rates for remote control units, converter boxes, other customer equipment, installation, and additional connections separate from rates for basic tier service. In addition, the rates for such equipment and installations shall be unbundled one from the other. (c) Equipment basket. -A cable -operator —shall establish an Equipment Basket, which will include all costs associated with providing customer equipment and installation under this section. (1) Equipment Basket costs shall be limited to the direct and indirect material and labor costs of providing, leasing, installing, repairing, and servicing customer equipment, as determined in accordance with the cost accounting and cost allocation requirements of § 76.924. The Equipment Basket shall not include general 15 administrative overhead including general marketing expenses. The Equipment Basket shall include a reasonable profit. (d) Hourly service charge. A cable operator shall establish charges for equipment and installation using the Hourly Service Charge (HSC) methodology. The HSC shall'equal the operator's annual Equipment Basket costs, excluding the purchase cost of customer equipment, divided by the total person hours involved in installing, repairing, and servicing customer equipment during the same period. The HSC is calculated according to the following formula: HSC = EB - CE Where, EB = annual Equipment Basket Costs; CE = annual purchase cost of all customer equipment; and H = person hours involved in installing and repairing equipment per year. The purchase cost of customer equipment shall include the cable operator's invoice price plus all other costs incurred with respect to the equipment until the time it is provided to the customer. (e) Installation charges. Installation charges shall be either: (i) the HSC multiplied by the actual time spent on each individual installation; or (ii) the HSC multiplied by the average time spent on type of installation. a specific (f) Remote charges.Monthly charges for rental of a remote control unit shall consist of the average annual unit purchase cost of the type of remote leased, including acquisition price and incidental costs such as sales tax, financing and storage up to the time it is provided to the customer, added to the product of the HSC times the average- number of hours annually repairing or servicing a remote, divided by 12 to determine the monthly lease rate.for a remote according to the following formula: Monthly Charge = UCE + (HSC x HR) 12 Where, HR = average hours repair per year; and UCE = average annual unit cost of remote. Separate charges shall be established for each significantly different type of remote control unit. (g) Other equipment charges. The monthly charges for rental of converter boxes and other customer equipment shall be calculated in the same manner as for remote control units. Separate charges shall be established for each significantly different type of converter box 1.5 and each significantly different type of other customer equipment. (h) Additional connection charges. The costs of installation and monthly use of additional connections shall be recovered as charges associated with*-the.installation and equipment cost categories, and at rate levels determined by the actual cost methodology presented in the foregoing subsections (e), (f), and (g). An operator may recover additional programming costs and the costs of signal boosters on the customers premises, if any, associated with the additional connection as a separate monthly unbundled charge for additional connections. (i) Charges for equipment sold. A cable operator may sell customer premises equipment to a subscriber. The equipment price shall recover the operator's cost of the equipment, including costs associated with storing and preparing the equipment for sale up to the time it is sold to the customer, plus a reasonable profit. An operator may sell service contracts for the maintenance and repair of equipment sold to subscribers. The charge for a service contract shall be the HSC times the estimated average number of hours for maintenance and repair over the life of the equipment. (j) promotions. A cable operator may offer equipment or installation at charges below those determined under subsections (e) - (g), above, as long as those offerings are reasonable in scope in relation to the operator's overall offerings in the Equipment Basket and not unreasonably discriminatory. Operators may not recover the cost of a promotional offering by increasing charges for other Equipment Basket elements, or by increasing programming service rates above the maximum monthly charge per subscriber prescribed by these rules. As part of a general cost -of -service showing, an operator may include the cost of promotions in its general system overhead costs. (k) Franchise fees. Equipment charges may include a properly allocated portion of franchise fees. § 76.924 - Cost accounting and cost allocation requirements. (a) Applicability. The requirements of this section are applicable to cable operators for which the basic service tier is regulated by local franchising authorities or the Commission, or, with respect to a cable programming services tier, for which a complaint has been filed with the Commission. The requirements of this section are applicable for purposes of rate adjustments on account of external costs and for cost -of -service showings. (b) Generally accepted accounting principles. Cable operators shall maintain their accounts in accordance with generally accepted accounting principles, except as otherwise directed by the Commission. 17 (c) Accounts required. Cable operators shall maintain accounts in a manner that will enable identification of appropriate costs and application of the Commission's cost assignment and allocation procedures, to cost categories necessary for rate adjustments due to changes in external costs and for cost -of -service showings. Such categories shall be sufficiently detailed and supported to permit verification and audit against the company's accounting records. (d) Accounting level. Except to the extent indicated below, cable operators shall aggregate expenses and revenues at either the franchise, system, regional, or company level in a manner consistent with practices of the operator as of April 3, 1992. However, in all events, cable operators shall identify at the franchise level their costs of franchise requirements, franchise fees, local taxes, and local programming. (e) Cost allocation requirements. (1) For purposes of establishing expenses at the franchise level, cable operators shall allocate expenses.and revenues aggregated at higher levels to the franchise level based on the ratio of the total number of subscribers served at the franchise level to the tetal number of subscribers served at the higher level. (2) Except to the extent indicated below, all categories of costs allocated to, or identified at, the franchise level shall,be allocated to the basic service tier based on the ratio of channels in .the basic tier to the total number of channels. offered in the franchise area, including nonregulated and leased commercial access channels. These costs shall be allocated to each tier of cable programming services based on the ratio of channels in that tier to the total number of channels offered in the franchise area. (3) Costs of programming and retransmission consent fees, however, shall be allocated only to the tier on which the programming" or broadcast signal at issue is offered. (4) Costs of franchise fees shall be allocated among equipment and installations, program service tiers and subscribers in a manner that is most consistent with the methodology of assessment of franchise fees by local authorities. (5) Costs of public, educational, and governmental access channels carried on the basic tier shall be directly assigned to the basic tier where possible. (f) Common costs. Expenses which cannot be assigned to any single expense or service category shall be described as common costs. Common costs shall be allocated to expense categories as follows: (1) Wherever possible, common costs are to be allocated to service cost categories based on direct analysis of the origin of the costs themselves. (2) When direct analysis is n,)t possible, common costs shall, if possible, be allocated to service cost categories based on an indirect, cost -causative linkage to other costs directly assigned or allocated to the service cost category. (3) When neither direct nor indirect measures of cost allocation can be found, common costs shall be allocated to each service cost category based on the ratio of all costs directly assigned and attributed to a service cost category over total costs directly assignable and attributable. (g) Unrelated expenses and revenues. Cable operators shall exclude from cost categories used to develop rates for the provisio- of regulated cable service, equipment, and leased commercial access any direct or indirect expenses and revenues not related to the provision of such services. Common costs of providing regulated cable service, equipment, and leased commercial access and unrelated activities shall be allocated between them in accordance with subsection (f) . (h) Part-time channels. In situations where a single channel, is divided on a part-time basis and is used to deliver service associated with different tiers or with pay per channel or pay per view service, a reasonable and documented allocation of that channel between services shall be required along with the associated revenues and. costs. § 76.925 Costs of franchise requirements. (a) The costs of satisfying franchise requirements to support public, educational, and governmental channels shall consist of the sum of: (1) all per channel costs for the number of channels used to meet franchise requirements for public, educational, and governmenta) channels; (2) any direct costs of meeting such franchise requirements; and (3) a reasonable allocation of general and administrative overhead. (b) The costs of satisfying any other requirement under the franchise shall consist of the direct and indirect costs including a reasonable allocation of general and administrative overhead. § 76 930 Initiation of review of basic cable service and equipment rates. (a) A cable operator shall file its schedule of rates for the basic service tier and associated equipment with a franchising authority within 30 days of receiving written notification from the franchising authority that the franchising authority has been 19 certified by the Commission to regulate rates for the basic service tier. 5 76.931 Notification of basic tier availability. A cable operator shall provide written notification to subscribers of the availability of basic tier service by September 19, 1993, or three billing cycles from June 21, 1993, and to new subscribers at the time of installation. This notification shall include the following information: That basic tier service is available; The cost per month for basic tier service; A list of all services included in the basic service tier. 5 76,932 Notification of proposed rate increase. A cable operator shall provide written notice to a subscriber of any increase in the price to be charged for the basic service tier or associated equipment at least 30 days before any proposed increase is effective. The notice should include the name and address of the local franchising authority. § 76.933 Franchising authority revjew eouipmer.t costs. of basic cable rates and (a) After a cable operator has submitted for review its existing rates for the basic service tier and associated equipment costs, or a proposed increase in these rates (including increases in the baseline channel change that results from'reductions in the number of channels in a tier), the existing rates will remain in effect or the proposed rates will become effective after 30 days from the date of submission; provided, however, that the franchising authority may toll this 30 -day deadline for an additional time by issuing a brief written order as described in paragraph (b) within 30 days of the rate submission explaining that it needs additional time to review the rates. (b) If the franchising authority is unable to determine, based upon the material submitted by the cable operator, that the existing or proposed rates are within the ComMission's permitted basic service tier charge or actual cost of equipment as defined in §§ 76.922 and 76.923, or if a cable operator has submitted a cost -of -service showing pursuant to §§ 76.937(c) and 76.924, seeking to justify a rate above the Commission's basic service tier charge as defined in §§ 76.922 and 76.923, the franchising authority may toll the 30 -day deadline in paragraph (a) of this section to request and/or consider additional information or to consider the comments from interested parties as follows: (1) For an additional 90 days in cases not involving cost -of - service showings; or (2) For an additional 150 days in cases involving cost -of -service shcwings . 'c) If a franchising authority has availed itself of the Additional 90 or 150 days permitted in paragraph (b) of this section, and has taken no action within these additional time periods, then the'proposed rates will go into effect at the end of the 90 or 150 day periods, or existing rates will remain in effect at such times, subject to refunds if the franchising authority subsequently issues a written decision disapproving any portion of such rates, provided, however, that in order to order refunds, a franchising authority must have issued a brief written order to the cable operator by the end of the 90 or 150 -day period permitted in paragraph (b) of this section directing the operator to keep an accurate account of all amounts received by reason of the rate.in issue and on whose behalf such amounts were paid. § 76.934 Small systems. A franchising authority that has been certified, pursuant to § 76.910 to regulate rates for basic service and associated'equipment may permit a small system as defined in section 76.901 to certify that the small system's rates for basic service and associated equipment comply with § 76.922, the Commission's substantive rate regulations. § 76.935 Participation of interested parties. In order to regulate basic tier rates or associated equipment costs, a franchising authority must have procedural laws or regulations applicable to rate regulation proceedings that provide a reasonable opportunity for consideration of the views of interested parties. Such rules must take into account the 30, 120, or 180 -day time periods that franchising authorities have to review rates under § 76.933. 7'6.936 Written decision. (a) A franchising authority must issue a written decision in a ratemaking proceeding whenever it disapproves an initial rate for the basic service tier or associated equipment in whole or in part, disapproves a:request for a rate increase in whole or in part, or approves a request for'an increase in whole or in part over the objections of interested parties. A franchising authority is not required to issue a written decision that approves an unopposed existing or proposed rate for the basic service tier or associated equipment. 21 (b) Public notice must be given of any written decision required in paragraph (a), including. releasing the text of any written decision to the public. 1 3 (a) A cable operator has the burden of proving that its existing or proposed rates for basic service and associated equipment comply with 47 U.S.C. § 543, and §§ 76.922 and 76.923. (b) For an existing or a proposed rate for basic tier service or associated equipment that is within the permitted tier charge and actual cost of equipment as set forth in §§ 76.922 and 76.923, the cable operator must submit the appropriate FCC form. (c) For an existing or a proposed rate for basic tier service that exceeds the permitted tier charge as set forth in §§ 76.922 and 76.923, the cable operator must submit a cost -of -service showing to justify the proposed rate. 6 76.938 Proorietary information. A franchising authority may require the production of proprietary information to make a rate determination and in such cases must apply procedures analogous to those set forth in § 0.459 regarding requests for confidentiality. § 76.940 Prospective rate reduction. A franchising authority may order a cable operator to implement a reduction in basic service tier or associated equipment rates where necessary to bring rates into compliance with thestandards set forth in §§ 76.922 .and 76.923. 6 76.941 Rate prescription. A franchising authority may prescribe a reasonable rate for the basic service tier or associated equipment after it determines that a proposed rate is unreasonable. 4 76.942 Refunds. (a) A. franchising authority may order a cable determined refundeto to subscribers that portion of previously paid be in excess of the permitted tier charge or above the actual cost of equipment, unless the operator has submitted a cost -of -service showing which justifies the rate charged as reasonable. Before ordering a cable operator to refund previously paid rates to subscribers, a franchising authority must give the operator notice and opportunity to comment. 22 (b) An operator's liability for refunds is limited to a one-year period, except that an operator that fails to comply with a valid rate order issued by a franchising authority or the Commission shall be liable for refunds commencing from the effective date of such orae- until such time as it complies"with such order. (c) The refund period shall run as follows: (1) From the date the operator implements a prospective rate reduction back in time to June 21, 1993, or one year, whichever is shorter. (2) From the date a franchising authority issues an accounting order pursuant to § 76.933(c), and ending on the date the operator implements a prospective rate reduction ordered by a franchising authority or one year, whichever is shorter. (d) The cable operator, in its discretion, may implement a refur in the following manner: (1) By returning overcharges to those subscribers who actually paid the overcharges, either through direct payment or as a specifically identified credit to those subscribers' bills; or (2) By means of a prospective percentage reduction in the rates for the basic service tier or associated equipment to cover the cumulative overcharge. This shall be reflected as a specifically identified, one-time credit on prospective bills to the class of subscribers that currently subscribe to the cable system. (e) Refunds shall include interest computed at applicable rates published by the "Internal Revenue Service for tax refunds and additional tax payments. 4 76.943 Fines. (a) A franchising authority may impose fines or monetar- forfeitures on a cable operator that does not comply with a rat decision or refund order directed specifically at the cable operator, provided the franchising authority has such power under state or local laws. (b) A cable operator shall.not be subject to forfeiture because its rate for basic service or equipment is .determined to be unreasonable. 4 76,944 Commission review of franchising authority decisions on rates for the basic service tier and associated equipment. (a) The Commission shall be the sole forum for appeals of decisions by franchising authorities on.rates for the basic service tier or associated equipment involving whether or not a franchising 23 authority 'has acted consistently with the Cable Act or §§ 76.922 and -76.923. Appeals of ratemaking decisions by franchising authorities that do not depend upon 'determining whether a franchising authority has acted consistently with theCable Act or §§ 76.922 and 76.923, -may be -heard in state or local courts. (b) Any participant at- the franchising authority level in a ratemaking proceeding may file an appeal of the franchising authority's decision with the Commission within 30, days of release of the t -ext of the franchisingauthority's decision as computed under § 1.4(b) of this chapter. Oppositions may be filed within 15 days after the appeal 'is. filed,. and must be served on the party(ies) appealing the rate decision. Replies may be filed 7 days after the last day for oppositions and shall be -served on the parties to the proceeding. '(a) Opon'assumption of rate regulation authority, the Commission will, notify the cable operator and require the cable operator to file its basic'rate schedule with. the Commission within 30 days, with a copy to the local franchising authority. . (b) Basic service and equipment rate schedule filings for existing rates or proposed rate increases (including increases in the baseline channel change. that results from reductions in the number of channels in a tier) must.use the appropriate FCC: forms. Cable operators with existing or proposed rates -above the permitted tier rate must submit a-cos.t-of-servicesshowing sufficient to support a finding' that the rates are reasonable. (c) . Filings proposing annual adjustments. or rates within the rate regulation standards in -§§ 76.922 and 76.923, must be made 30 days prior to the proposed effective date and can become effective on the proposed effective date unless the Commission issues an order deferring.the effective date or denying the rate proposal. Petitions opposing such filing's must be filed within 15 days of public notice of the filing by the cable operator and be accompanied by a certificate that service was made on the cable operator and the local franchising authority. The .cable operator may, file an opposition within five days of filing of the petition, certifying to service on both' the petitioner and the local franchising authority. (d) Filings proposing a rate not within the rate regulation standards of §§ 76.922 and.76.923., must be made 90 days before the .requested effective date. Petitions opposing such filings must be filed within 30. days of public notice of the filing,. and be accompanied by a certificate that service was made on the cable operator and the local franchising authority. The cable operator may file an opposition within 10 days of the filing of the petition, and certifying that service was made on the petitioner and the local franchising authority. . 24 • 6 76 .950. Complaints 'retrardin_a cable programming service .rates Any subscriber,: franchising authority, or other relevant state or local government entity may file with the Commission a complaint challenging the reasonableness of a cable operator's rate for cable programming service, or the reasonableness of a cable operat:or.'s charges for installation or rental of equipment used for'the receipt of cable programming service. 6 7 .n•. d' •m•. r • 1 1. (a) Any complaint regarding- a cable'operator's rate for cable programming service ,or associated equipment must be filed using standard complaint form,FCC 329. The cable operator must provide a copy of the standard complaint form to any subscriber upon request. (b) The following information must be provided on the standard complaint form: (1) The complainant's name, mailing address; and daytime telephone number; .(2) The name, mailing address, and FCC community unit identifier of the relevant cable operator (Nota: pursuant to § 76.952,.the cable operator must provide its FCC community.unit identifier -on monthly bills to subscribers); (3) The name and address of the relevant.franchising authority (Note: pursuant to § 76.952, the cable operator must provide this information on monthly bills to subscribers); (4) An indication whether the complainant is challenging the reasonableness of: (i) A rate concerning cable programming service or associated equipment in effect on June 21, 1993; or (ii) A rate increase for cable programming service or associated equipment; (5) For subscriber complaints regarding -a rate increase, the date the complainant first. received a bill from the cable operator reflecting the increased rate; (6) A description of the cable programming service or -associated equipment involved and, if applicable, how the service or associated equipment has changed; (7) The current rate for the cable programming service or associated equipment_at issue and, if the complainant is challenging the reasonableness of a rate increase, the'most recent rate for the 25 service or associated equipment immediately prior to the rate increase; (8) An indication whether the corplainant is filing: (i) a complaint regarding this speciric rate for the first time; or (ii) a corrected complaint regarding this specific rate to cure a defect in a prior complaint that was dismissed without prejudice; (9) If the complainant is filing a corrected complaint, an indication of the date the complainant filed the prior complaint and the date the complainant received notification from the Commission that the prior complaint was defective; (10) A certification that a copy of the complaint, including all attachments, is being served contemporaneously via first class mail on the cable operator and, if the complainant is a subscriber, on the relevant franchising authority; (11) An allegation that the rate in question is unreasonable because it violates the Commission's rate regulations; and (12) A certification that, to the best of the complainant's knowledge, the information provided on the form is true and correct. (c) The complainant must attach to the standard complaint form a copy of the most recent bill reflecting the disputed rate or rate increase. (d) A complaining subscriber may, but is not required to, attach to the standard complaint form a statement from the relevant franchising authority presenting its views on the reasonableness of the rate in question. C 76.952 Information to be orovided by cable operator on monthlv subscriber bills. All cable operators must provide the following information to . subscribers on monthly bills: (a) The name and mailing address of the relevant franchising authority; and (b) The FCC community unit identifier for the cable system. C 76,953 Limitation on filing a co-1aint. (a) Complaint retarding a rate ;n effect on June 21, 1993. Notwithstanding paragraph (b) of this section, a complaint regarding 2E a rate for cable programming service or associated equipment in effect on June 21, 1993 must be filed by December 20, 1993. (b) Except as provided in paragraph (a) of this section, a complaint alleging an unreasonable rate for cable programming service or associated equipment may be filed against a cable operator only in the event of a rate increase. A complaint regarding a rate increase for cable programming service or associated equipment must be filed with the Commission within 45 days from the date the complainant receives a bill from the cable operator that reflects the increased rate. (c) Late -filed complaints will be dismissed with prejudice. 76 9c4 Initial review of compIinti minimum showing requirement; dismissal of defective complaints. (a) The Commission will conduct an initial review of a complain_ to determine if it meets the minimum showing required to allow the complaint to go forward. The minimum showing shall be satisfied if the complaint is filed using the standard complaint form described in § 76.951 and includes all information and attachments required by that form. A complainant will not be required, as part of the minimum showing, to provide the underlying information and calculations necessary to judge the cable programming service rate in question against the Commission's rate standards. (b) A complaint that does not meet the minimum showing requirement described in para. (a) of this section will be considered defective. A defective complaint will be dismissed without prejudice to filing a corrected complaint as provided by § 76.955. The Commission will notify the complainant by mail of the dismissal. The filing of a complaint on the applicable form, but which is otherwise defective, will toll the limitation period established by § 76.953. 75,955 Additional opportunity to file corrected complaint. (a) If the Commission dismisses an initial complaint without prejudice pursuant to § 76.954, the complainant shall have one additional opportunity to cure the defect and file a corrected complaint. (b) For a complaint filed on the applicable form but is otherwise defective, the complainant must cure the defect and file a corrected complaint with the Commission -within 30 days -from-the date of the Commission's dismissal notice. Failure to cure the defect and file a corrected complaint within this time period will result in dismissal of the complaint with prejudice. 27 76.956 Cable operator response. (a) Unless' the Commission notifies a cable operator to the contrary, the cable operator must file with the'Commission a response to a complaint filed on the applicable form, within 30 days of the date of service of the complaint. The response shall indicate when service occurred. Service by mail is complete upon mailing. See § 1.47(f). The response shall include the information' required by the 'appropriate FCC form. The cable operator must serve its response on the complainant (and, if the complainant is a subscriber, the relevant franchising authority) via first class mail. (b) The burden shall be on the cable operator to prove that the service rate or equipment charge in question is not unreasonable. The cable operator may carry its burden in the following manner: (1) For a service rate at or below the permitted level, by Providing information and calculations that demonstrate that the rate in question falls at or below the permitted level; (2) For a service rate that exceeds the permitted level; (i) By providing proof that the cable system has reduced the rate for the cable programming service at issue to a level at or below the permitted level; or (1i) By providing detailed cost -based information 'that demonstrates that the rate in question is reasonable despite the fact that it exceeds the permitted level. (3) For a charge for equipment installation, or rental, by providing information that demonstrates that the charge is based on the cable operator's actual cost. (c) In addition to responding to the merits of a complaint, the cable operator may also move for dismissal of the complaint for failure to meet the minimum showing requirement. Any such motion for dismissal must state with particularity the reasons the cable operator believes the complaint is defective and shall not relieve the cable operator of its obligation to respond to the merits of the complaint. (d) A cable operator may file a consolidated response to ititiltiple complaints regarding the identical rate or rate increase. A consolidated response must be filed within 30 days from the. date of service of the first complaint received, unless the Commission notifies the cable operator to the contrary. A cable operator may amend a consolidated response to address new issues raised by complaints received after the cable operator's initial response. (e) A cable operator that fails to file and serve a response to a valid complaint may be deemed_n'default. If the Commission deems a cable operator in default, the Commission may enter an order against the cable operator finding the rate to be...un.r-easonable-and mandating appropriate relief. (f) A cable operator need not respond to any complaint that is: (1) Not filed on the applicable form; or (2) That the Commission has determined ,is defective and has so notified the cable operator. 76,957 Commission adiudication of the complaint. The Commission will consider the complaint and the cable operator's response and then determine by written decision whether the rate for the cable programming service or associated equipment is unreasonable or not. If it determines that the rate in question is unreasonable, the Commission will grant the complaint and may order appropriate relief, including, but not limited to, prospective rate reductions and refunds. If it determines that the rate in question is reasonable, the Commission will deny the complaint. 76.960 Prospective rate reductions. Upon a finding that a rate for cable programming service or associated equipment is unreasonable, the Commission may order the cable operator to implement a prospective rate reduction to the class of customers subscribing to the cable programming service at issue. The Commission's decision regarding a prospective rate reduction shall remain binding on the cable operator for one year unless the Commission specifies otherwise. 76.961 Refunds. (a) Upon a finding that a rate for cable programming service or associated equipment is unreasonable, the Commission may order the cable operator to refund to subscribers that portion of previously paid rates which is deemed unreasonable. (b) The cumulative refund due subscribers shall be calculated from the date a valid complaint is filed until the date a cable operator implements a prospective rate reduction as ordered by the Commission pursuant to §76.960. (c) The cable operator, in its discretion, may implement a refund in the following manner: (i) By returning overcharges to those subscribers who actually paid the overcharges, either through direct payment or as a specifically identified, one-time credit to those subscribers' bills; or 29 (ii) By means of a prospective percentage reduction in the unreasonable cable programming service rate or equipment charge to cover the cumulative overcharge. This shall be reflected as a specifically identified, one-time credit on prospective bills to the class of subscribers that currently subscribe to the cable programming service or associated equipment at issue. (d) Refunds shall include interest computed at applicable rates published by the Internal Revenue Service for tax refunds and additional tax payments. Interest shall accrue from the date a valid complaint is filed until the refund issues. 76.962 Implementation and certification of compliance. (a) Implementation. A cable operator must implement requirements, including prospective rate reductions and within 60 days from the date the Commission releases mandating a remedy. (b) Certification of compliance. A cable operator must certify to the Commission its compliance with any Commission order mandating remedial requirements. Such certification shall: (1) Be filed with the Commission within 90 days from the date the Commission releases an'order mandating a remedy; (2) Reference the applicable Commission order; (3) 'State that the cable operator has complied fully with all provisions of the Commission's order; (4) Include a description of the precise •measures the cable operator has taken to implement the remedies ordered by the Commission; and (5) Be signed by an authorized representative of the cable operator. remedial refunds, an order 76.963 Forfeiture. (a) If any cable operator willfully fails to comply with the terms of any Commission order, including an order mandating remedial requirements after a finding of unreasonable cable programming service or equipment rates, or any Commission rule, the Commission may, in addition to other remedies, impose a forfeiture pursuant to Section 503(b) of the Communications Act of 1934, as amended, 47 U.S.C. § 503(b). (b) A cable operator shall not be subject to forfeiture because its rate for cable programming service or equipment is determined to be unreasonable. 76.964 Advance written notification of r_at_e increases In addition to the requirement of Section 76.309(c) (3) (i) (B) retarding advance notification to customers of any changes in rates, programming services or channel positions, a cable operator shall give the relevant franchising authority a minimum of 30 days advance written notification of any changes in rates for cable programming service or associated equipment. 76 970 Commercial leased access rates. (a) Cable operators shall designate channel capacity for commercial use by persons unaffiliated with the operator in accordance with the requirement of 47 U.S.C. § 532. (b) The maximum commercial leased access rates that a cable operator may charge is the highest implicit net 'fee charged any nonaffiliated programmer (excluding leased access programmers) withi- the same program category. (c) The implicit fee charged an unaffiliated programmer shall be calculated by determining the monthly price per subscriber that_the operator pays to carry the programming of nonaffiliated providers and deducting the monthly price subscribers pay to view the programming of the nonaffiliated provider. This difference is multiplied by the percentage of subscribers able to receive the nonaffiliated provider's programming. The implicit fee for a contracted service may not include fees, stated or implied, for services other than the provision of channel capacity (e.a., billing and collection, marketing, or studio services). (d) For each of the three program categories as defined in para. (f) of this section, the highest implicit net fee charged any nonaffiliated provider in each category shall be the maximum monthly leased access rate per subscriber that the operator could charge a. commercial leased access programmer in that category. The highest implicit net fee shall be based on contracts in effect in the previous calendar year. Maximum rates for shorter periods can b calculated by prorating the monthly maximum rate. (e) Upon request, a schedule of commercial leased access rates shall be provided to prospective leased access programmers. Operators shall maintain, for Commission inspection, sufficient supporting documentation to justify the scheduled rates, including supporting contracts, calculations of't'he net implicit fees, and justifications for all adjustments. (f) For purposes of para. (b) of this section there are three program categories: (1) •Programming for which a per -event or per channel charge is made;' 31 (2) Programming more than fifty percent of the capacity of which is used to sell products directly to customers; and (3) All other programming. § 76 971 Commercial leased access terms and conditions. (a) (1) The cable operator and unaffiliated commercial'leased access user may negotiate channel placement and tier access for leased programming, taking into account: (i) The nature of the service (pay or general' distribution channel, complete channel or individual program); ' (ii) The relationship between the charge. imposed and the desirability of the channel; and (iii) The need to provide competition in program delivery and to afford users a genuine outlet for their programming. (2) Where demand for commercial leased access capacity exceeds available supply, each lessee will be allowed to lease up to one channel's capacity. (b) Cable operators may not apply programming production standards to leased access that are any higher than those applied to public, educational and governmental access channels. (c) Cable operators are required to provide. unaffiliated leased access users the minimal level of technical support necessary for users to present their material on the air, and may not unreasonably refuse to cooperate with a leased access user in order to prevent that provider from obtaining channel capacity, provided however, that leased access providers must reimburse operators for the reasonable cost of any technical support that operators actually provide. (d) Cable operators may require reasonable security deposits or other assurances from users who are unable to prepay in full for access to leased commercial channels. (e) Cable operators may not set terms and conditions for commercial leased access use based on content, except: (1) To the limited extent necessary to establish a reasonable price for the commercial use of designated channel capacity by an unaffiliated person; or (2) To comply with 47 U.S.C. § 532(h), (j) and § 76.701. (f) •(1) A cable operator shall provide billing and collection services for commercial leased access cable users, unless the 32 operator demonstrates the existence of third party billing and collection services which in terms of cost and ac cessi_bil.ity,.offer eased access users an alternative substantially equivalent to that c "erect comparable non -leased programmers. (2) If an operator can make the showing required in Para. (f) (1) o.f this section, it must, to the extent technically feasible, make available data necessary to enable a third party to bill and collect for the teased access user. 6 76 975 Commercial leased access dispute resolution. (a) Any person aggrieved by the failure or refusal of a cable operator to make commercial channel capacity available in accordance with the provisions of Title VI of the Communications Act may bring an action in the district court of the United States for the Judicial district in which the cable system is located to compel that such capacity be made ava_lable. (b) Any person aggrieved by the failure or refusal of a cable operator to make commercial channel capacity available or to charge rates for such capacity in accordance with the provisions of Title VI of the Communications Act, or our implementing regulations, §§ 76.970 and 76.971, may file a petition for relief .with the Commission. (c) A petition must contain a concise statement of the facts constituting a violation of the statute or the Commission's Rules, the specific statute (s) or rule (s) violated, and certify that the petition was served On the cable operator. (d) A petition must be filed within 60 days of the alleged violation: (e) The cable operator or other respondent will have 30 days from the filing of the petition in which to file a response. If a leased access rate is disputed, the response must show that the rate charged is not higher than the highest implicit fee the operator charges for a comparable category of service, and submit the affidavit of a responsible company official in support. If, ,after a -response is submitted, the staff finds a prima facie violation of our rules, the staff may require a respondent to produce additional information, or specify other procedures necessary for resolution of the proceeding. (f) The Commission, after consideration of the pleadings, may grant the relief requested, in whole or in part, including, but not limited to ordering refunds; injunctive measures, or forfeitures pursuant 47 U.S.C. § 503, denying the petition, or issuing a ruling on the petition or dispute. 33 (g) To be afforded relief, the petitioner must show by clear and convincing evidence that the cable operator has violated the Commission's leased access provisions in 47 U.S.C. § 532 or §§ 76.970 and 76.971, or otherwise acted unreasonably or in bad faith in failing or refusing to make capacity available or to charge lawful rates for such capacity to an unaffiliated leased access programmer. (h) During the pendency of a dispute, a party seeking to lease channel capacity for commercial purposes, shall comply with the rates, terms and conditions prescribed by the cable operator, subject to refund or other appropriate remedy. 76.977 Minority and educational proqramminq uS d in lieu of deregulated commercial leased access capacity. (a) A cable operator required by this section to designate channel capacity for commercial use pursuant to 47 U.S.C. § 532, may use any such channel capacity for the provision of programming from a qualified minority programming source or from any qualified educational programming source, whether or not such source is affiliated with cable operator. The channel capacityused to provide programming from a qualified minority programming source or from any qualified educational programming source pursuant to this Section may not exceed 33 percent of the channel capacity -designated pursuant to 47 U.S.C. § 532. (b) For purposes of this section, a qualified minority programming source is a programming source that devotes substantially all of its programming to coverage of minority viewpoints, or t: programming directed at members of minority groups, and which is over 50 percent minority-owned. (c) For purposes of this section, a qualified educational programming source is a programming source that devotes substantially all of its programming to educational or instructional programming that promotes public understanding of mathematics, the sciences, the humanities, or the arts and has a documented annual expenditure on programming exceeding $15 million. The annual expenditure on programming means all annual costs incurred by the programming source to produce or acquire programs which are scheduled to be televised, and specifically excludes marketing, promotion, satellite transmission and operational costs, and general administrative costs. (d) For purposes of paragraphs (b) and (c) of this section, "substantially all" means that 903s or more of the programming offered must be devoted to minority or educational purposes, as defined in paragraphs (b) and (c) of this section, respectively. (e) For purposes of subsection (b), "minority" is defined as in 47 U.S.C. 309(i) (3)(c) (ii) to include Blacks, Hispanics, American Indians, Alaska Natives, Asians and Pacific Islanders. 3-4 76.980. Charoes for customer chances. (a) This Section shall govern charges for any changes in service tiers or equipment provided to the subscriber that are initiated at the request of a subscriber after initial service installation. (b) The charge for customer changes in service tiers effected solely by coded entry on a computer terminal or by other similarly simple methods shall be a nominal amount, not exceeding actual costs, as defined in subsection (c) below. (c) The charge for customer changes in service tiers or equipment that involve more than coded entry on a computer or other similarly simple method shall be based on actual cost. The actual cost charge shall be either the HSC, as defined in Section 76.923 of the rules, multiplied by the number of person hours needed to implement the change, or the HSC multiplied by the average number of person hours involved in implementing customer changes. (d) A cable operator operator may establish a higher charge fo changes effected solely by coded entry on a computer terminal or by other similarly simple methods, subject to approval by ..the franchising authority, for a subscriber changing service tiers more than two times in a twelve month period, except for such changes ordered in response to a change in price or channel line-up. If a cable system adopts such an increased charge, the cable system must notify all subscribers in writing that they may be subject to such a charge for changing service tiers more than the specified number of times in any twelve month period. (e) Downgrade charges that are the same as, or lower than, upgrade charges are evidence of the reasonableness of such downgrade charges. (f) For 30 days after notice of retiering or rate increases, a customer may obtain changes in service tiers at no additional charge. § 76.961 Negative option billing. A cable operator shall not charge a subscriber for any service or equipment that the subscriber has not affirmatively requested by name. This provision, however, shall not preclude the addition or deletion of a specific program from a service offering, the addition or deletion of specific channels from an existing tier of service, or the restructuring or division of existing tiers of service that do not result in a fundamental change in the nature of an existing service or tier of service provided that such change is otherwise consistent with applicable regulations. A subscriber's failure to refuse a cable operator's proposal to provide such service or equipment is not an affirmative request for service or equipment. A subscriber's affirmative request for service or equipment may be made°orally or in writing. 35 n a During the term of an agreement executed before July 1, 1990, by a franchising authority and a cable operator providing for the regulation of basic cable service rates, where there was not effective competition under Commission rules in effect on that date, the franch:.:.ng authority may regulate basic cable rates without following Section 623 of the 1992 Cable Act or §§ 76.910 through 76.942. A franchising authority regulating basic cable rates pursuant to such a rate agreement is not required to file for certification during the remaining term of the agreement but shall notify the Commission of its intent to continue regulating basic cable rates. 6 76,983 Discrimination. (a) No Federal agency, state, or local franchising authority may prohibit a cable operator from offering reasonable discounts to senior citizens or to economically disadvantaged groups. (1) Such discounts must be offered equally to all subscriber& in the franchise area .who qualify as members of these categories, or any reasonable subcategory thereof. (2) For purposes of this section, members of economically disadvantaged groups are those individuals who receive federal, state or local welfare assistance. (b) Nothing herein shall preclude any Federal agency, state, or local franchising authority from requiring and regulating the reception of cable service by hearing impaired individuals. 4 76,984 - Geographically uniform rate structure. (a) The rates charged by cable operators subject to §§ 76.922 and 76.923 shall be provided pursuant to a rate structure that is uniform throughout each franchise area in which cable service is provided. (b) This section does not prohibit the establishment by cable operators of reasonable categories of service and customers with separate rates and terms and conditions of service, within a franchise area. § 76.965 Subscriber bill itemization. (a) Cable operators may identify as a separate line item of each regular subscriber bill the following: (1) The amount of the total bill assessed as a franchise fee and the identity of the franchising authority to which the fee is paid. 36 (2) The amount of the total bill assessed to satisfy any requirements imposed on the cable operator by the franchise agreement to support public, educational, or governmental channels or the use of such channels: (3) The amount of any other fee, tax, assessment, or charge of any kind imposed by any governmental authority on the transaction between the operator and the subscriber. In order for a governmental fee or assessment to be separately identified under this subsection., it must be directly imposed by a governmental body on a transaction between a subscriber and an operator. (b) The charge identified on the subscriber bill as the total charge for cable service should include all fees and costs itemize pursuant to this Section. (c) Local franchising authorities may adopt regulations consistent with this section. 37 CITY .OF ITHACA 108 EAST GREEN STREET ITHACA. NEW YORK 14850 OFFICE OF CITY ATTORNEY John E. Fogarty, Esq. Associate General Counsel Time Warner Cable 300 First Stanford Place Stanford, CT 06902-6732 Dear John: March 23, 1993 Re: American Community Cablevision TELEPHONE: (607) 274-6504 FAX: (607) 272-7348 I apologize for my delay in getting back to you regarding the above matter. I have been tied up on other matters and have not been able to devote adequate time to getting this matter resolved. I have been in contact with the relevant City officials and bodies and believe that the proposal set forth in this letter will be acceptable to the City of Ithaca. As I am sure you can imagine, this proposal does not have unanimous backing from the City Council and especially from certain City bodies and commissions. However, I do believe there are sufficient votes on Common Council to accept the proposal set forth in this letter. In the meantime, by its own inertia, City actions have proceeded and I am enclosing a list of violations which Common Council has endorsed. These simply recite ACC's obligations under the franchise agreement. I wish to reassure you that is still the City's intent to settle this matter through negotiations. The City's position in this regard (while not unanimous) has not changed. Based on our prior discussions and communications with the members of Common Council, I believe there are sufficient votes on Common Council to settle all outstanding disputes between the City and ACC on the following terms: 1. The City will consent tothe transfer of ATC shares to Time Warner and the transfer of the .Franchise for the cable TV system from ACC to Time Warner Entertainment Co., LP. The City will sign all appropriate documents to indicate its consent. 'An Equal Opportunity Employer with an Affirmative Action Program' t, Recycled Paper DSL 6 � L � [L Letter to John E. Fogarty, Esq. :,Page Two March 23, 1993 2. There has been a dispute between the City and ACC as to whether funds collected by ACC from subscribers and itemized on bills for payment of franchise fees should be included in the definition of gross revenues. The resolution of this issue affects how much ACC retroactively, currently, and prospectively, should be paying in franchise fees as provided in Article 20 of the franchise agreement and, pursuant to §14.1(C)(3) of the Franchise Agreement for PEG access equipment, replacement and expansion. We would agree to table this dispute until after the FCC has issued regulations under the Cable Television Consumer Protection and Competition Act of 1992, with neither ACC nor the City waiving any claim that its position on this issue is correct. Once FCC has issued its regulations, I believe both you and I expect that this issue can be easily settled between the City and ACC. 3. Pursuant to § 19.1 of the Franchise Agreement, there are limits on how high ACC can raise basic rates to subscribers. For the period commencing March 1, 1992, the maximum rate was $14.64 per month. If the amount billed to subscribers for payment of franchise fees is included in the definition of basic rate, then it is my understanding that ACC would be in violation of the provisions of §19.1. The City would waive any past violations of, this section and ACC would agree that prospectively, for the purpose of §19.1 of the Franchise Agreement, the amount paid by subscribers for basic services would include any amount paid by subscribers for franchise fees and that the combined amount would not exceed the limits set forth in §19.1. 4. Advertising revenues shall be included in the definition of gross revenues. Both prospectively and retroactively this will affect how much ACC is obligated to pay for franchise fees and pursuant to §14.1(C)(3). In calculating advertising revenues within the City, I suggest that the total advertising revenues collected from the system be multiplied by a fraction, the numerator of which is the number of subscribers within the City and denominator of which is the total number of subscribers within system. 5. Section 19.1 of the Franchise Agreement provides that ACC will give a need -based senior citizen's discount of 10%. This would be expanded prospectively to cover not only the basic tier, but also the expanded tier. The City would take a greater role in administering this program. With regard to senior citizens who own their own homes, administration is simple. We need only look at whether they qualify for the real property tax exemption. With respect to senior citizens who do not own their own homes, the City, or some other mutually agreeable entity such as the Senior Citizens Center, would prepare and review a form to determine who qualifies for this benefit. Letter to John E. Fogarty, Esq. Page Three March 23, 1993 6. Article XV o•f the Franchise Agreement refers to the Institutional Network (I -NET). Some of the requirements of this section have not yet been accomplished. ACC would agree to have available a sufficient number of modulators and demodulators available for check-out to meet demand. The I -NET would also be expanded to three additional sites, namely the South Side Community Center, The Sciencenter and the Cooperative Extension building. The City would agree that all other requirements of Article XV which have not yet been satisfied, such as the requirement for dedicated cables, will be dropped. 7. ACC has agreed to televise the monthly meeting of Common Council and not less than two of the five standing committee meetings on a rotating monthly basis. Since. the Franchise Agreement was entered into, Common Council has started holding a monthly Committee of the Whole meeting. This would also be televised. 8. In §14.1(C)(3) ACC is obligated to provide 2% of gross City revenues for PEG access equipment replacement and expansion. As the definition of gross City revenues is changed both prospectively and retroactively (inclusion of advertising and possibly inclusion of franchise fees paid by subscribers) as discussed above, this amount would be adjusted. In addition, there have been disputes as to the usage of this 2% money. It would be agreed that prospectively and retroactively, with regard to channels 53 and 54 and prospectively for new channels that are activated (butnot either retroactively or prospectively for channel 52) expenses for activation of new channels including the cost of modulators and demodulators would not come out of these 2% funds. 9. Section 14.1(A) of the Franchise Agreement provides that ACC is obligated to designate a certain number of channels for PEG access. The agreement refers in §14.1(A)(1) to nine channels. Obviously, neither the City nor ACC wants to have more channels than can effectively be used. Questions have arisen however, as to new channels should be activated. We would agree to the following: a.) One additional channel would be activated at this time. In determining, in the future, whether there is sufficient need for other channels to be activated, a formula approach would be utilized to determine whether there is sufficient programming to fill up prime time slots. In using such a formula, we would calculate the total number of hours of programming per week that exists. If more than 30 hours of programming per week per channel exists, a new channel would be activated. For this purpose, public Letter to John -E. Fogarty,:Esq. Page Four March 23, 1993 educational and governmental stations would be -considered separately. In calculating the number of hours of programming that exists, we would count the first showing and the first repeat of original shows and the first showing of syndicated shows. In determining whether a show is a new show or merely a repeat, any showing of that show within four monthsof the initial showing. would be treated as a repeat showing. In calculating whether the 30 hours of programming per week per channel has been reached, it would be agreed that an average of 30 hours per channel per week would have to exist for a continuous four month period before the obligation to activate a new channel comes into effect. Once the requirement has been met, the new channel would be opened by ACC within two months. ACC would report to the Ithaca Cable Commission, on amonthly basis, the relevant data to make the above determination. 10. The City would drop and waive any other claimed violations of the Franchise Agreement except, if it was later determined that ACC improperly reported financial information to the City. Please review this and get back to me as to whether this proposal isagreeable to your client and if sowhetheryou want to draw up the proposed agreement'. or me" to do so. Please also get back to me as to what, if any, regulatory approvals you feel need to be obtained for this agreement. Once we have an agreement in principal, I suggest that I take it to my Common Council for approval and get that accomplished while we are drafting the actual agreement. Again, I would like to apologize for taking so long in getting back to you, but hopefully, this proposal provides the basis for an agreement acceptable to both your client and to my Council, and we can wrap this matter up. 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NEW YORK 14850 TELEPHONE: (607) 274-6504 FAX: (607) 272-7348 MEMORAN 7CrUNI All Members of C & 0 Richard Booth, Neil Golder, Daniel Hoffman, Chair, Robert Romanowski and John`ScY.roeder Chuck Guttman, City Attorney C,[�,_� November 12, 1992 Negotiations with ACC In September Peter Hess and I met with. Barbara Lukens and John Fogarty, the attorney for ACC, regarding the allegations that ACC has violated the franchise agreement. At that time we set forth a list of items which we felt ACC was violating and other items where we felt ACC could or should be granting additional concessions to the City. Peter and I met again with Barbara Lukens and John Fogarty on October 22nd and received their response. 1 am attaching hereto a copy of a Confidential Memorandum which I sent to the Mayor summarizing the items which the City raised and the response of ACC. As you will see, they have responded to most of the issues we raised. The issue which at that time we were still farthest from agreement was determining a standard for activation of new access channels. Peter Hess and I and other members of the Cable Commission met with Barbara Lukens again on November 4th and discussed that issue. I will attempt to summarize what I understand to be the position of ACC and the position of the Cable Commission on what a formula would look like to determine when new access channels should be activated. It appears to me that both ACC and the Cable Commission agree that there should be a formula developed to determine when new access channels should be activated. The basic opinion of both sides seems to be that if there is sufficient programming to fill up prime time slots, that a new channel: should be opened. The disagreement arises as to exactly how that determination is made. 'An Equal Opportunity Employer with an Affirmative Action Program' ci Recycled Paper } . Memo to C & 0 November 12, 1992 The first issue .is whether to consider total number of hours f programming per week as opposed to a erc rammi g hours compared to total number of hours the ACC channel is open ACC originally proposed that this be done on a percentage basis. The Cable Commission and I. disagreed with this and would rather have it tied to total number of hours of programming. The reason for this is that ACC could unilaterally decrease that percentage by simply having access channels open more hours per day and therefore avoid opening up a new channel. The next question is what number of hours of new programming should be sufficient to require the opening of a new channel.. ACCs position is that 36 hours of programming is sufficient. This is approximately 5 hours per day which would cover the 6:00 p.m. to 11:00 p.m. slo By comparison, the Cable Commission's position is that 28 t. 30 ours per week is the appropriate -range of new programming t should be considered sufficient to require the opening of a new channel. The 28 hour figure comes from calculating four hours per. day being the approximate prime time period. The 30 hour figure comes from the. New York State.Cable Commission's calculation that an access day is 8.5 hours long and.. that if 50% of that is used for new programming -it is considered full. Thissue is what' shows are counted as new programming. It i ACCs ?osition that for original shows the first showing and the fir - epeat would be considered as new programming. For syndicated shows (shows which are produced otherwise and acquired and shown here) only the first showing would count as new programming. The Cable Commission's position is that for both original and syndicated shows both the first showing and the first repeat would count as new programming. The next issue to be decided arises out the agreement of ACC and the Cable Commission that if a show is shown and an extended period of time passes before it is shown again, that it again would fall into category of a new show. For example, if a local producer .produces a show which is shown in January two times, it would be 4 ft agreed by both ACC and the Cable Commission that both the original �� show and the first repeat count as new programming. If that show. is then put on the shelf and shown again the following year, both - ACC' and the Cable Commission agree that it would again be considered as new programming. The only issue is how much time must expire before it would again be considered new programming. ACC believes a one-year period is reasonable. The Cable Commission believes that somewhere in a one to four month period was a reasonable period. 'The next issue to be decided is, assuming a formula approach can be agreed upon, to determine how much new programming there must Memo to C & 0 -3- November 12, 1992 be to open up a new channel. Then, it must be determined over what period of time the programming must reach the standard before the new channel is opened. Everyone agrees that if in one week there is a glut of programming that is not grounds for a new channel. Everyone further agrees that you do not need to demonstrate this glut of programming for years before the new channel is opened. ACC believes that a four to six month period is a reasonable period of time. The Cable Commission that a three month period was a reasonable period of time.. The other issues that tie into this are a request by the Cable Commission that if the City wants a channel to be opened before the formula would require it, that the City would have the right to have the channel opened if the City is willing to pay the infrastructure costs of opening that channel. It is unclear whether this would come out of the City's general funds or out of the 2% money. It will also have to be determined who makes the decision as to opening a new channel -- whether it is Common Council or the Cable. Commission or some other group. It would have to also be some clear definition of what "infrastructure costs" are. Another point is how long ACC has to open a channel- formula requires it. I believe there is fairly general that a 60 -day period would work on this. The Cable Commission would also want ACC to report on basis to the Cable Commission the relevant information calculations required by this formula. • Enclosure cc: Mayor Benjamin Nichols. Dominick Cafferillo, City Controller Peter Hess, Chair, Cable Commission Dictated by. CG but not read once the consensus a monthly to do the 1992 USE OF CABLE 13 CABLECASTING HOURS: CABLE 13 is available for cablecasting 60 hours per week, or approximately ? hours per: month. Below is a record of channel usage for the year\to date,, broken down by program category. )-5-41 Key Call numbers refer to hours of programming]: 1 O = Original: first play of locally -produced S = Syndicated: first ;play of non-locally-produced Cbut locally -provided], programming OT = Original Total: total 0 + S programming OT% = Original Total Percentage Percentage of 0.t S programming cablecast COT/TOT] R = Second or additional play of local & syndicated programs TOT = Total hours cablecast CO + S + R] I CHANNEL 13 0 S IRS OT OT% TOT . JAN 52.75 26.25 65.4 79.0 54.7% 144.5 FEB 61.75 22.25 613.45 84.0 56.9% 147.5 MAR 92.25 20.25 98.0 112.5 53.4. 210.5 APRIL 75.5 32.5 126.5 108.0 46.0% 234.5 MAY 78.5 24.75 101.0 103.25 48.27. 214.25 JUNE 89.75 27.75 124.5 117.5 48.4. 242.5 JULY 64.5 16.0 1413.75 :80.5 35.9% 224.25 AUGUST 70.5 19.5 159.25 90.0 36.1% 249.25 SEPT 67.4 15.2512I;3.51 82.65 40.17. 206.16 * NOTE: Starting in May, wee started breaking down "reruns" into second play of local programs CL2], second play of syndicated programs CS2], and third or ;greater play of either CR]. Below is a further breakdown of the "R" or Rerun category listed above: i L2 S2' R MAY 34.5 14.0 62.5 JUNE 53.5 18.0 53.0 JULY 45.5 22.25 76.0 AUGUST 58.75 17.25 83.25 SEPT 42.75 15.25 65.51 TOTAL RERUNS CR, above] 111.0 124.5 143.75 159.25 123.51 ********************************* FRANCHISE FEE BASIS ********************************* Basic Service Revenue (1) Tier Revenue Equipment Rental Revenue (2) Installation Revenue . Pay Service Revenue (3) Pay Per View Revenue Service Upgrade Revenue. Home Shopping Service Revenue NOTES BASIS OF FRANCHISE FEE PAYMENTS. **.******************************* 1991 ********************************* . $1,200,601.47 459,043.45 183,819.09 134,013.79 391,381.86 36,314.09 3,042.02 4,001.27 TOTAL REVENUES (4) $2,412,217.04 Basic Service includes commercial/bulk accounts. Equipment Rental reflects remotes and (additional outlet) converters. Pay service includes pay services for commercial/bulk accounts. - A rate of 5% is applied to the total revenues to -- determine franchise fees due. (Less NYSCCT Rate .359% for period 1/91-3/91 and .277% for period 4/91-12/91). Revenues as shown above are taken directly from the billing reports for City of Ithaca addresses. 76 e — ACG ke-r7,77- / . • ‘g, 7- - ) <%.t-7" - . , a ', > A e •O'''te_ y<12*P '1'.•' _.....--, -,•.',7 5----, eAs•7 ---'"-- 73,4/_,X rit7/ ' ---'4-5—.2-5— /9.72- ---d4/ -.7‘-7 21; .224' 6./2-‘,7<4,•>-17zy 7r--- Ae- 0777, J'1•/& Ct,tfivew ,A,7---- ___ --'5' —I /40.-lr' e.?_ --___e? -"--- ,0"/A7 ,&• 6vSlo.,04- ---- 2— kg,:*=-?-.) .._--a) 14:2,--- ---e•i4#';____#-' --- 1/1-- ,-- i service,., • . _ ♦r an; o Sentmal ' e port. don't'have much of a reac_ Moriartyand Reek .contributed • to -'this: 're . • !,'AJC•. _ 150` 0asestamated 'jobs,00 c U,S:;;,manufact±iii ould be`lost touft free-trad e agreement,,:..,"`° ty iofirst such grogram ofits d.In`the country'has:officials ocal `cable companies tied, aril News Serv,ce'Reports wew York . Telephone: Co G, said onday�,it would become the;;hrst z.telephone company in,,the test ther`` ideo"dial ton "narvneo rej�tly,autho ' e :services razed by the -,Federal 7 nurucations Commission The ,company `said' it ' iey�fiber-o � , would': pro- � th test in`� Pt c cables: to allow; the two slarge,Manhattan ° apart- menf"buildings,in :conjunction ,:with I'1bertyCableTelevision.; . ' c •The' cables will „ transmit televi- sion 'programming :,to about 2,000 residents. without the'"need :for standard:+cable-television, lines. to' the buildings , `Eiber;optjc, cables can 'transmit `vastly .more `phone ,:calls, 'and other data than; traditional; copper, phone lines But' it 'is extremely: expensive to rewire the nation,with these. lines. ` . ' To �ustify'the'cost, some phone• compan1es say`they must be a11ow- ed;'to offer ::,other, em.•: services .over such as 'television and video ' • phone, calls. P niers N • Starting in January, Libert Cable said it will:conduct.;the Ma hattah: 'test 'at"the ' two 'apartmen buildings, which alreadyreceive ca ble-TV -service •from: they company it .via a microwave link'to,.a rooftop antenna.. Paul• • ew rk Telephone.spokesman Davidsonavsaid the company plans to make the service available to other cable -TV companies upon request if it is , successful in New York City. : He said expansion would be ex anded to Syracuse if cable compa. ies here as Tim `Henderson, .general ager of A, elphia Cable Com man- ager ._ .. munica- y tions Inc,, which provides; cable -tel- Man t- ' supported ision service to Syracuse,` sajd he Pported cooperative"..• `efforts between telephone companies and cable companies 'Currentlaw prohibits phone n 0 providing televi- sjon se ice. mpanjes from ked for it. Mark Ganley, gen ge of NewChanne1$ Corte could not:''comment;.. P„� `stYd qhs Manhattan 00e ,test ti , However, Henderson said he h be, knowall its ;details' concerns about tel as But:he ,: Hies enteringcom a -said he also's js>cdnceiii, the cable -television about the possibility' of . , ss. busine A telephone company could use its telephone service revenues . to subsidize its video transmission services, providin advanta a g`jt with an unfair g over cable -television companies, he said. • with tsucvvery difficult to'compete said. a large monopoly,' he Petition from telephone com>T, ed • NewChannels rovides �. ' service to 79,009.. moble -y', ban Onondaga Co PeOPIe jn sub',: NewCha nets is ownrFtr Newhouse family,�� by they; The Post -S which,also •miiii,:,, and Herald ' tandard, Herald Jowl American The Associated Press, alit r. . Moriarty, contribute(jT,.to ,t port .. OFFICE OF CITY ATTORNEY CITY OF ITHACA 1 OS EAST GREEN STREET ITHACA, NEW YORK 14850 MEMORANDZ71v1 TO: Cookie Paolangeli, City Clerk FROM: Chuck Guttman, City Attorney DATE: November 18, 1992 SUBJECT: ACC TELEPHONE: (607) 274-6504 FAX: (607) 272-7348 Enclosed please find a Notice of Public Hearing for the public hearing which will be held at C & 0 on Wednesday, December 10, 1992. This public hearing is being called pursuant to Section 22.1 of the Franchise Agreement which merely states that "in the event ACC fails to cure the default within the stated period, the City shall convene a public hearing on reasonable notice at which hearing ACC may be heard and afterwards the City shall specify the complaint against ACC." Council has decided to hold the public hearing at C & 0 on Wednesday, December 10th. I assume we should publish this (if we have not already done so). I will also be sending a letter to ACC specifically advising them of this so there can be no question that they have received appropriate notice. I'll send you a copy of that letter. If you have other questions about the public notice for this, let me know. In terms of the public hearing itself, I do not think we need to have a stenographic transcript of this hearing made; however, I think we should attempt to tape the hearing. Please talk to me before December 10th as to what can be done so we can tape the hearing. If you give me good enough instructions, I can probably do it myself. We also will be having a public hearing on curfew that evening. Again, we will not need a stenographic transcript of that but we should also tape that. If you trust me, I will try to take good care of your tape recording equipment. Enclosure 'An Equal Opportunity Employer with an Affirmative Action Program' Ci Recycled Paper OFFICE OF CITY ATTORNEY CITY OF ITHACA 108 EAST GREEN STREET ITHACA, NEW YORK 14850 MEMORANDTTM TO: Cookie Paolangeli, City Clerk FROM: Chuck Guttman, City Attorney DATE: November 18, 1992 SUBJECT: ACC TELEPHONE: (607) 274-6504 FAX: (607) 272-7348 Enclosed please find a Notice of Public Hearing for the public hearing which will be held at C & 0 on Wednesday,, December 10, 1992. This public hearing is being called pursuant to Section 22.1 of the Franchise Agreement which merely states that "in the event ACC fails to cure the default within the statedperiod, the City shall convene a public hearing on reasonable notice at which hearing ACC may be heard and afterwards the City shall specify the complaint against ACC." Council has decided to hold the public hearing at C & 0 on Wednesday, December 10th. I assume we should publish this (if we have not already done so). I will also be sending a letter to ACC specifically advising them of this so there can be no question that they have received appropriate notice. I'll send you a copy of that letter. If you have other questions about the public notice for this, let me know. In terms of the public hearing itself, I do not think we need to have a stenographic transcript of this hearing made; however, I think we should attempt to tape the hearing. Please talk to me before December 10th as to what can be done so we can tape the hearing. If you give me good enough instructions, I can probably do it myself. We also will be having a public hearing on curfew that evening. Again, we will not need a stenographic transcript of that but we should also tape that. If you trust me, I will try to take good care of your tape recording equipment. Enclosure "An Equal Opportunity Employer with an Affirmative Action Program" to, Recycled Paper PLEASE TAKE NOTICE that pursuant to Article XXII of the Franchise Agreement between the City of Ithaca and American Community Cablevision, the City of Ithaca shall hold a public hearing at the Council Chambers, City Hall, 108 East Green Street, in the City of Ithaca, on Thursday, December 10, 1992 at 7:30 o'clock p.m. at which time the public and American Community .Cablevision. may comment as to whether or not American Community Cablevision has defaulted in the performance of any provision of the franchise agreement. Information regarding allegations of default and the procedure for the public hearing may be obtained from City Attorney Charles Guttman, City Hall, 108 East Green Street, Ithaca, NY 14850 - 607/274-6504. PLEASE TAKE NOTICE that pursuant to Article XXII of the Franchise Agreement between the City of Ithaca and American Community Cablevision, the City of Ithaca shall hold a public hearing at the Council Chambers, City Hall, 108 East Green Street, in the City of Ithaca, on Thursday, December 10, 1992 at 7:30 o'clock p.m. at which time the public and American Community Cablevision may comment as to whether or not American Community Cablevision has defaulted in the performanceof any provision of the franchise agreement. Information regarding allegations of default and the procedure for the public hearing may be obtained from City Attorney Charles Guttman, City Hall, 108 East Green Street, Ithaca, NY 14850 - 607/274-6504. PLEASE TAKE NOTICE that pursuant to Article XXII of the Franchise Agreement between the City of Ithaca and American Community Cablevision, the City of Ithaca shall hold a public hearing at the Council Chambers, City Hall, 108 East Green Street, in the City of Ithaca, on Thursday, December 10, 1992 at 7:30 o'clock p.m. at which time the public and American Community Cablevision may comment as to whether or not American Community Cablevision has defaulted in the performance of any provision of the franchise agreement. Information regarding allegations of default and the procedure for the public hearing may be obtained from City Attorney Charles Guttman, City Hall, 108 East Green Street, Ithaca, NY 14850 - 607/274-6.504. OFFICE OF CITY ATTORNEY CITY OF ITHACA 108 EAST GREEN STREET ITHACA, NEW YORK 14850 November 18, 1992 Barbara Lukens General Manager American Community Cablevision 519 W. State Street Ithaca, NY 14850 Dear Barbara: TELEPHONE: (607) 274-6504 FAX: (607) 272-7348 Enclosed please find a copy of the Notice of Public Hearing which is being published and notifying the public that a Public Hearing will be held pursuant to Article XXII of the Franchise Agreement on Thursday, December 10, 1992, regarding the City's allegation of ACC being in default under the Franchise Agreement. I have discussed the state of the negotiations between ACC/Time Warner and the City with the Charter and Ordinance Committee and I sincerely believe that we are making great strides to get this matter resolved. However, inasmuch as we do not have a final signed agreementat this time, and inasmuch as Council has passed a resolution directing that the public hearing be held on December 10th, we must, of course, schedule the meeting and give public notice of it. I do not want you to believe that the calling of this public hearing is in any way a statement by the City that we are not as interested as ever in resolving this in a non - litigiousness manner or as a statement that the City believes the settlement negotiations are not proceeding successfully and in good faith. If you wish to discuss this, of course, do not hesitateto contact me. Very truly y City Attorney Enclosure cc: Peter Hess, Chair, Cable Commission "An Equal Opportunity Employer with an Affirmative Action Program" tli Recycled Paper PLEASE TAKE NOTICE that pursuant to Article XXII of the Franchise Agreement between the City of Ithaca and American Community Cablevision, the City of Ithaca shall hold a public hearing at the Council Chambers, City Hall, 108 East Green Street, in the City of. Ithaca, on Thursday, December 10, 1992 at 7:30 o'clock p.m. at which time the public and American Community Cablevision may comment as to whether or not American Community Cablevision has defaulted in the performance of any provision of the franchise agreement. Information regarding allegations of default and the procedure for the public hearing may be obtained from City Attorney Charles Guttman, City Hall, 108 East Green Street, Ithaca, NY 14850 - 607/274-6504. OFFICE OF CITY ATTORNEY CITY OF ITHACA 108 EAST GREEN STREET ITHACA, NEW YORK 14850 November 18, 1992 Barbara Lukens General Manager American Community Cablevision 519 W. State Street Ithaca, NY 14850 Dear Barbara: TELEPHONE: (607) 274-6504 FAX: (607) 272-7348 Enclosed please find a copy of the Notice of Public Hearing which is being published and notifying the public that a Public Hearing will be held pursuant to Article XXII of the Franchise Agreement on Thursday, December 10, 1992, regarding the City's allegation of ACC being in default under the Franchise Agreement. I have discussed the state of the negotiations between ACC/Time Warner and the City with the Charter and Ordinance Committee and I sincerely believe that we are making great strides to get this matter resolved. However, inasmuch as we do not have a final signed agreement at this time, and inasmuch as Council has passed a resolution directing that the public hearing be held on December 10th, we must, of course, schedule the meeting and give public notice of it. I do not want you to believe that the calling of this public hearing is in any way a statement by the City that we are not as interested as ever in resolving this in a non - litigiousness manner or as a statement that the City believes the settlement negotiations are not proceeding successfully and in good faith. If you wish to discuss this, of course, do not hesitate. to contact me. Very truly y City Attorney Enclosure cc: Peter Hess, Chair, Cable Commission 'An Equal Opportunity Employer with an Affirmative Action Program' tot Recycled Paper PLEASE TAKE NOTICE that pursuant to Article XXII of the Franchise Agreement between the City of Ithaca and American Community Cablevision, the City of Ithaca shall hold a public hearing at the Council Chambers, City Hall, 108 East Green Street, in the City of Ithaca, on Thursday, December 10, 1992 at 7:30 o'clock p.m. at which time the .public and American Community Cablevision may comment as to whether or not American Community Cablevision has defaulted in the performance of any provision of the franchise agreement. Information regarding 'allegations of default and the procedure for the public hearing may be obtained from City Attorney Charles Guttman, City Hall, 108 East Green Street, Ithaca, NY 14850 - 607/274-6504. 47 USCS § 542 TELECOMMUNICATIONS § 542. Franchise fees (a) Subject to the limitation of subsection (b), any cable operator may be required under the terms of any franchise to pay a franchise fee. (b) For any twelve-month period, the franchise fees paid byacable operator with respect to cable system shall not exceed 5 p nt of such cable operator's gross revenues_derived in such ,period from the operation of the cable system. For purposes of this section, the 12 - month period shall be the 12 -month period applicable under the franchise for accounting purposes. Nothing in this subsection shall prohibit a franchising authority and a cable operator from agreeing that franchise fees which lawfully could be collected for any such 12 - month period shall be paid on a prepaid or deferred basis; except that the sum of the fees paid during the term of the franchise may not exceed the amount, including the time value of money, which would have lawfully been collected if such fees had been paid per annum. .-1> (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. (d) In any court action under subsection (c), the franchising authority shall demonstrate that the rate structure reflects all costs of the franchise fees. (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. ej"` • (g) For the purposes of this section— '(1) the term "franchise fee" includes any tax, fee, or assessment of any kind imposed by a franchising authority or other governmental entity on a cable operator or cable subscriber, or both, solely because of their status as such; (2) •the term "franchise fee" does not include— (A) any tax, fee, or assessment of general applicability (iincluding any such tax, fee, or assessment imposed on both utilities and cable operators ortheir services but not including a tax, fee, or assessment which is unduly discriminatory against cable • operators or cable subscribers); (B) . in the. case of any franchise in effect on the date of the enactor nt of this_ titre [enacted Oct. 30, 1984], payments which are required by the franchise to be made by the cable operator durin . sus • . • 0. or in su' • • • of pu • c, -• ucatron . , or governmental access facilities; (C) in the case of any franchise granted after such date of enactment [enacted Oct. 30, 1984 , calm • costs w c. are requtr • by the franchise to be incurred by the cable operator for public, educational, or_governmental access facilities; (D) requirements or charges incidental to the awarding or enforcing of the franchise, including payments for bonds, security funds, letters of credit, insurance, indemnifica- tion, penalties, or liquidated damages; or (E) any fee imposed under title 17, United States Code [17 USCS §§• 101 et seq.]. (h)(1) Nothing in this Act shall be construed to limit any authority of a franchising authority to impose a tax, fee, or other assessment of any kind on any person (other than a cable operator) with respect to cable service or other communications service provided by such person over a cable system for which charges are assessed to subscribers but not received by the cable operator. (2) For any 12 -month period, the fees paid by such person with respect to any such cable service or other communications service shall not exceed 5 percent of such person's gross revenues derived in such period from the provision of such service over the cable system. (i) Any Federal agency may not regulate the amount of the franchise fees paid by a cable operator, or regulate the use of funds derived from such fees,, except as provided in this section. (June 19, 1934, ch 652, Title VI, Part III, § 622, as added Oct. 30, 1984, P. L. 98-549, Title VI, Part III, § 622, 98 Stat. 2787.) HISTORY; ANCILLARY LAWS AND DIRECTIVES References in text: "This Act", referred to in this section. is Act June 19, 1934, ch 652, 48 Stat. 1064, popularly known as the Communications Act of 1934, which appears generally as 47 USCS §§ 151 et seq. For full classification of this Act, consult USCS Tables volumes. Effective date of section: Act Oct. 30, 1984, P. L. 98-549, § 9(a), 98 Stat. 2806, which appears as 47 USCS § 521 note. provides that this section shall be effective 60 days after enactment on Oct. 30, 1984. jtiyr CCT r No r ponce qo 3S9 n 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 (§22.1). 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 §22.1 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 MICHAEL EDMOND LANE ATTORNEY AT LAW POST OFFICE BOX 835 12 SOUTH STREET DRYDEN, NEW YORK 13053 TO Charles uttman, Esq. Ithaca City Attorney City Hall Ithaca, New York 14850 Dear Chuck: TELEPHONE: (607) 844-8440 DATE 8/31/92 SUBJECT AC C I received a package today from Indiana. As packing were some pages from the South Bend Tribune. I found the article with respect to to an Indianapolis lawsuit agains company over Olympics Triplecast. Since I know you are s ACC, I thought you might might find it of interest. Kindest regards. Michael Edmond Lane MEL:encl. , there enclosed t a cable crutinizing Item # ML5N72 The Drawing Board, Dallas, Texas 75266-0429 © Wheeler Group, Inc., 1982 FOLD AT (—) TO FIT DRAWING BOARD ENVELOPE # EW1OP • B4 ❑Thursday, August 131992opouth Bend Tnouneo sues Triplecast situation. INDIANAPOLIS .(AP) .. Some 3-.7customers of American Cablevision have filed a lawsuit overltte pay- ,. per -view broadcast of the Olympics t on the station that normally carries• :::the color weather .radar channel. Cable subscriberS'I were offered • the NBC network's. Olyrnp ics Tri- .., plecast expanded, Olympic .cov- erage. on three channels for a fee -during the,-15-day..Olympic .Games: • • "' in .Barcelona, Spain. •One, of those Triplecast channels was cablecast-on channel 14, which normally ' .displays color' weather :'radar.. is The . lawsuit 'filed by --four ;5,:. -subscribers ,says they were denied • -{ythe radar channel even though they ti ;had paid for it. They, are -'seeking credit for the loss of theservice and' triple damages from company own- The lawsuit also . asks that- the- - .! `case be declared a class' action'. to .. include. all Airierican.Cablevision; t' subscribers who' did not b y Triple- J., "You may not live or die by it, but .1 •;;the'. question becomes: ;Should the ' 'cable company get,, to -'keep your • nickel or your.. -50,- cents or your ;dollar when•they haven't 'provided ''!'the.`service " said attorney Irwih'B. Lev •`in who:: filed ' the . lawsuit in ` w Marion Superior Court... He argued -in the lawsuit that`the < cable service : providers "exerted unauthorized control vier the plain- ': tiffs property" and breached their ;' contract by ' removing the , radar channel.= - • <' ButAmerican 'Cablevision of- ficials ,say ,they continued:to .offer The Weather Channel, which offers national and local weather informa- . Ltion; ;and shows the .color weather..' ;,radar. -.They" alsosaid-,: during,, any i storm watch_ or -,,warning, -the 'coin { .ipany cablecast color weather radar. • The lawsuit was'filed on behalf of ;cable subscrib ers: John_M. and Lee L. Mikuta, -, and Mabel R. and ' e .Sharon L: Pruitt: ,None could be 1 ,,reached for comment Tuesday. - 4. } 6,444, Peir: vK •a he/ l fob, Procedure for Filing for Non -Compliance from Franchise Section 22 (Breach) 1. The City will notify ACC in writing of the provision or provisions which the City believes may be in default. 2. ACC has 30 days to: a) Respond in writing contesting the assertion of default or b) Take reasonable steps to cure the default 3. If ACC fails to cure the default within the stated period: a) the City shall call a public hearing at which ACC may he heard and .after which the City shall specify its complaint against ACC b) The City shall appoint an impartial person as fact finder who shall set a date for a hearing at which evidence is presented c) The factfinder shall make a report in writing to both parties with his/her findings of fact d) The Common Council makes a finding of violation or no violation based on these findings „s. 4.)If the City determines ACC to be in default, the city may pursue remedies, as follows: a) Foreclose on security in the amount necessary to remedy the default and pay City expenses incurred in the course of factfindinq b) Sue for monetary damages c) Declare the franchise to be revoked d) For failure to provide capital equipment, facilities, and services for PEC access as specified in the franchise, the City may assess a fine of $75 per day. 5) ACC may seek recourse as available by law or federal or state regulation. Yyittice- Azz- --- CITY OF ITHACA 108 EAST GREEN STREET ITHACA, NEW YORK 14E50 OFFICE OF TELEPHONE: (607) 274-6504 CITY ATTORNEY FAX: (607) 272-7348 MEMORAPTDUdvi TO: All Members of C & 0 Richard Booth, Neil Golder, Daniel Hoffman, Chair, Robert Romanowski and John Scljroeder FROM: Chuck Guttman, City Attorney e4Ut 1 DATE: November 12, 1992 SUBJECT: Negotiations with ACC In September. Peter Hess and I met with. Barbara Lukens and John Fogarty, the attorney for ACC, regarding the allegations that ACC has violated the franchise agreement. At that time we set forth a list of items which we felt ACC was violating and other items where we felt ACC could or should be granting additional concessions to the City. Peter and I met again with Barbara Lukens and John Fogarty on October 22nd and received their response. I am attaching hereto a copy of a Confidential Memorandum which I sent to the Mayor summarizing the items which the City raised and the response of ACC. As you will see, they have responded to most of the issues we raised. The issue which at that time we were still farthest from agreement was determining a standard for activation of new access channels. Peter Hess and I and other members of the Cable Commission met with Barbara Lukens again on November 4th and discussed that issue. I will attempt to summarize what I understand to be the position of ACC and the position of the Cable Commission on what a formula would look like to determine when new access channels should be activated. It appears to me that both ACC and the Cable Commission agree that there should be a formula developed to determine when new access channels should be activated. The basic opinion of both sides seems to be that if there is sufficient programming to fill up prime time slots, that a new channel: should be opened. The disagreement arises as to exactly how that determination is made. 'An Equal Opportunity Employer with an Affirmative Action Program' t Recycled Paper Memo to C & 0 November 12, 1992 The first issue is whether to consider total number of hours of programming per week as opposed to a percentage of programming hours compared to total number of hours the ACC channel is open. ACC originally proposed that this be done on a percentage basis. The Cable Commission and I disagreed with this and would rather have it tied to total number of hours of programming. The reason for this is that ACC could unilaterally decrease that percentage by simply having access channels open more hours per day and therefore avoid opening up a new channel. The next question is what number of hours of new programming should be sufficient to require the opening of a new channel. ACCs position is that 36 hours of programming is sufficient. This is approximately 5 hours per day which would cover the 6:00 p.m. to 11:00 p.m. slot. By comparison, the Cable Commission's position is that 28 to 30 hours per week is the appropriate range of new programming that should be considered sufficient to require the openingof a new channel. The 28 hour figure comes from calculating four hours per day being the approximate prime time period. The, 30 hour figure comes from the New York State Cable Commission's calculation that an access day is 8.5 hours long and. that if 50% of that is used for new programming it is considered full. The third issue is what shows are counted as new programming. It is ACCs position that for original shows the first showing and the first repeat would be considered as new programming. For syndicated shows (shows which are produced otherwise and acquired and shown here) only the first showing would count as new programming. The Cable Commission's position is that for both original and syndicated shows both the first showing and the first repeat would count as new programming. The next issue to be decided arises out the agreement of ACC and the Cable Commission that if a show is shown and an extended period of time passes before it is shown again, that it again would fall into category of a new show. For example, if a local producer produces a show which is shown in January two times, it would be agreed by both ACC and the Cable Commission that both the original. show and the first repeat count as new programming. If that show is then put on the shelf and shown, again the following year, both ACC and the Cable Commission agree that it would again be considered as new programming. The only issue is how much time must expire before it would again be considered new programming. ACC believes a one-year period is reasonable. The Cable Commission believes that somewhere in a one to four month period was a reasonable period. The next issue to be decided is, assuming a formula approach can be agreed upon, to determine how much new programming there must Memo to C & 0 -3- November 12, 1992 be to open up a new channel. Then, it must be determined over what period of time the programming must reach the standard before the new channel is opened. Everyone agrees that if in one week there is a glut of programming that is not grounds for a new channel. Everyone further agrees that you do not need to demonstrate this glut of programming for years before the new channel is opened. ACC believes that a four to six month period is a reasonable period of time. The Cable Commission that a three month period was a reasonable period of time.. The other issues that tie into this are a request by the Cable Commission that if the City wants a channel to be opened before the formula would require it, that the City would have the right to have the channel opened if the City is willing to pay the infrastructure costs of opening that channel. It is unclear whether this would come out of the City's general funds or out of the 2% money. It will also have to be determined who makes the decision as to opening a new channel -- whether it is Common Council or the Cable. Commission or some other group. It would have to also be some clear definition of what "infrastructure costs" are. Another point is how long ACC has to opena channel. formula requires it. I believe there is fairly general that a 60 -day period would work on this. The Cable Commission would also want ACC to report on basis to the Cable Commission the relevant information calculations required by this formula. • Enclosure cc: Mayor Benjamin Nichols. Dominick Cafferillo, City Controller Peter Hess, Chair, Cable Commission Dictated by. CG but not read once the consensus a monthly to do the CITY OF ITHACA 1 O EAST GREEN STREET ITHACA, NEW YORK 14850 OFFICE OF TELEPHONE: (607) 274-6504 CITY ATTORNEY FAX: (607) 272-7348 �O1%Tp'2DENT=AL MEMORANDUM TO: Mayor Benjamin Nichols FROM: Chuck Guttman, City Attorney DATE: October 28, 1992 SUBJECT: Negotiations with ACC In September, Peter Hess and I met with Barbara Lukens and John Fogarty, the attorney for ACC, regarding the City's alleged violations by ACC of the franchise agreement. At that time., we set forth 'a list of items where we felt ACC was either in violation of the franchise and in addition other items where we felt ACC could or should be granting additional concessions to the City. Peter and I met again with Barbara Lukens and John Fogarty on October 22nd and received their response. I will try and outline below the items which we raised and their response. The first issue had to do with the manner in which ACC calculates the 5% franchise fee. ACC is allowed, on their bills to customers, to separately itemize the franchise fee. For example, if the basic charge to the customer was $20.00 the bill to the customer would list the $20.00 fee for services and would separately itemize the 5% or $1.00 franchise fee. ACC then was paying to the City a $1.00 franchise fee. It is our position that ACC should have been paying to the City 5% of $21.00 or $1.05. The relevant wording from § 20.1 of the franchise agreement is that the City shall be entitled to receive from ACC a franchise of 5% of ACC's gross City revenue. Gross City revenues are defined in § 1.18 as "all revenue derived directly or indirectly by the grantee (ACC) and by grantee's affiliates from services provided within the Cityvia the cable communications system". There is a policy statement by the New York State Cable Commission to the effect that the method of calculating the franchise fee which we are proposing is the correct method. ACC is very opposed to conceding this, point because it would establish a precedent which would apply to other municipalities. ACC's response on_ this issue is that money collected as franchise fees should not be included in the definition of gross City. revenues. ACC went on to state that including that portion of the subscribers bill would not only be contrary to the intent of the franchise agreement but would be Ofi 'An Equal Opportunity Employer with an Affirmative Action Program' tee, Recycled Paper Memo to Mayor Benjamin Nichols 2 October 28, 1992 contrary to federal law. A copy of Fogarty's letter to myself of May 12, 1992 discussing this point as well as others and a copy of the New York State Commission on Cable Television statement of policy from April 20, 1992 are attached hereto. Depending on how that issue is resolved would determine whether ACC is, in fact, overcharging customers by one cent for basic service. Another issue that is connected with the calculation of franchise fees is whether advertising revenues are to be included in gross City revenues. At present, ACC is not including in gross revenues monies they earn from advertising. Our position is that advertising revenues are included in all revenues derived directly or indirectly from...the services provided within the City. ACC's position is that these are not revenues derived for services provided within the City. Fogarty points to a broader definition which he says is used in some other franchise agreements; namely, revenues derived "of operations of the system". ACC's response on October 22nd was as follows: Fogarty stated that under the new federal legislation regulating cable companies that the FCC has until April 3, 1993 to establish regulations governing rate regulation. He claims that when these regulations are established it is likely that this issue will be clearly determined by the FCC. Since there is a 5% cap, if FCC determines that the 5% cap applies to only the $20.00 in the above example that their position will be upheld. Alternatively, if FCC states that the franchise fee should be calculated on the total amount the customer pays, the City's position will be fairly clearly established. He therefore. suggests that this issue be put on hold until the FCC issues its regulations. I will be checking with John Grow, the attorney for the New York Commission on Cable TV, to see if the City loses or risks anything by leaving this issue on hold until that time. This would apply to prospective calculations of the total franchise fee and how customers are charged. With regard to the question of whether to include advertising revenues within the base on which the franchise fee is calculated, Fogarty is willing to concede this point both prospectively and retroactively if the City is willing to drop any claim for retroactive calculation of the "franchise fee on franchise fee" issue discussed above. I have not done complete calculations on this issue. However, based on 1991 figures that we have, total revenues of ACC excluding advertising revenues was $2,412,000.00. Five percent (5%) of that is $120,600.00. Five percent (5%) of that 5% would be an Memo to Mayor Benjamin Nichols 3 October 28, 1992 additional $6,030.00. By contrast, advertising revenues for 1991 were $184,000.00. Five percent (5%) of that amount is $7,400.00. I also have the figures for January through June of 1992. Doubling those figures to come up with estimated figures for 1992, total revenues excluding advertising would be $2,550,000.00. Five percent (5%) of that amount would be $127,500.00. Five percent (5%) of the 5% would be $6,375.00. By contrast, advertising revenues would be $202,000.00. Five percent (5%) of that amount would be $10,100.00. In § 19.1 of the franchise agreement, ACC agreed to give a need - based senior citizen discount of ten percent (10%) to those who qualify for real property tax exemption and others who qualify using mutually agreeable criteria. In § 19.1, this only applied to fees for the basic tier. We requested that this ten percent (10%) exemption apply not only for the basic tier but also for the expanded tier. ACC has responded that, assuming agreement can be reached on all other issues, that they would agree to extend this to the expanded tier (but not to premium channels or pay per view) provided that appropriate procedure can be established to determine who is eligible. With regard to senior citizens who own their own homes, it is very simple. With regard to senior citizens who do not own their own homes some checking of their age and income has to take place. It appears that this would be an easy procedure to establish. Article XV of the franchise agreement has to do with the institutional network (I -net). ACC, in the franchise agreement, agreed to do specific things some of which, according to the Cable Commission, are not particularly valuable to the City. For example, in § 15.2 ACC agreed to maintain dedicated cables to I - net sites. At this point, they have "drops". The Cable Commission says that what the City really wants in this respect is to have modulators and demodulators available for check out in sufficient quantities. ACC in principle is agreeable to this. Our Cable Commission would also like this expanded to three additional sites; namely, Southside Community Center, Sciencenter and Cooperative Extension. ACC is seriously considering agreeing to extend the I - net to those sites provided the City drops its demand for dedicated cables. This appears to be a "win-win" situation where the City will drop a right it has under the franchise agreement in exchange for ACC giving the City something it wants more which ACC is not obligated to provide. The remaining issues with ACC have to do with access and with the 2% monies. With regard to access, ACC agreed to televise the monthly Council meetings and not less than two of the five standing committees on a rotating monthly basis. ACC is also agreeing, Memo to Mayor Benjamin Nichols 4 October 28, 1992 probably starting next March, to additionally televise t e-- Committee Of the Whole meetings. 1(r -t:74,- (r 711,ujv ! 7c7140 In § 14.C(3) ACC agreed to set aside 2% of gross City revenues for access equipment. Obviously, both prospectively and retroactively, this amount will have to be adjusted as the definition or calculation of gross City revenues is adjusted. In addition there have been disputes as to what equipment is to be purchased with these 2% funds. The dispute centers around a difference of opinion as to whether these monies should go for production or transmission equipment. In particular, when a new channel is activated, certain equipment such as modulators and demodulators have to be acquired or purchased.. It has been ACC's position that this equipment should come out of the 2% budget. The access community's position is that this expense should not be paid out of the 2% money. ACC has agreed on October 22nd, that, assuming everything else can be agreed, prospectively, and retroactively with regard to Channels 53 and 54 those expenses will be paid by ACC and not out of the 2% money. It appears that this will result in a retroactive increase to the 2% monies of approximately $10,000.00. The last issue, and the one on which we are still farthest from agreement, is determining a standard for activation of new access channels. § 14.1(A)(1) of the franchise agreement provides that nine downstream channels shall be designated for access. Based on this, the City and the access community have been maintaining that the City has the sole discretion of determining when access channels should be activated and that we are, at this time, entitled to nine channels if we wish them. § 14.1(A)(3) provides that any access channels unused by the City three years after the rebuild is complete shall revert to ACC, provided that if community needs substantially require the use of any such channel ACC will return said channel to the City six months after receiving written notice if ACC has a use for the channel and immediately if there is no use for the channel. ACC maintains that the current number of access channels are sufficient and that they are unwilling to activate more channels until there is a demonstrable need for those channels. We have been taking the position that a clear procedure should be established in which the Cable Commission would request of Council that the City determine that another access channel should be activated; ACC would have a right to comment and Council would make that decision. ACC would rather have this decision made based on a clear calculation of how much the access channel is used for "new programming". In terms of this, they would define new programming Memo to Mayor Benjamin Nichols 5 October 28, 1992 as both the first showing and one repeat of a show that has just been created plus the first showing and a repeat of a show which was done sometime in the past which people wish to have reshown. Obviously, there still has to be work done on clarifying the definition of "new programming" and also on determining what a reasonable percentage is. We will be discussing this matter with ACC in the next few weeks to see if we can reach hopefully a mutually agreeable definition and standard. Council has decided to call a public hearing on this issue at the December C & 0 Meeting. I would suggest, that in light of ACC's recent proposal, that the issue be put on the November C & 0 meeting for a short discussion in Executive Session so that Peter Hess and I may get a sense as to Council's feeling on this matter and some direction as to our future negotiating position. If any of you have any questions about this, please get back to me. Enclosures cc: Dominick Cafferillo, City Controller Peter Hess, Chair, Cable Commission Daniel Hoffman, Chair, Charter and Ordinance John 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 14550 -It'l brand fax tranmittal memo 7671 RE: City of Ithaca - Franchise Fees Dear Mr. Guttman: Television & Communications CorpOratlon 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 Ietter of January 22, 1992. I appreciate your patience in waiting for this response. In your letter you object that Cablevision's rate for bask service increased beyond the maximum 3% 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 Cablevfsion 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 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 hi 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 The City rlAims 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. % C j Nor It is Cablevision's position, as detailed below, that (1) the funds it collects as —a 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 ,r/§d R 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. 1.MoWasinitsatamirambistruawLmamenustumdefined in the Franchi e. 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. Cinder 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. u a►3nrargss. 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. III. U_ nder the terms of the able A tamonies collected ss franchise fees are 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(f) 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(1) 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 bythe 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 • W 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 Rinds 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. Very truly yours, John E. Fogarty JF:pg ithaca.f® In the Matter of NEW YORK STATE COMMISSION ON CABLE TELEVISION The Itemization of Franchise Fees on Subscriber Bills STATEMENT OF POLICY (Released: April 20, 1992) 92-217 DOCKET NO. 90389 During the past months, various cable companies in the state have commenced the practice of including all or a portion of a franchise fee as a separate line item on a subscriber's bill. The practice is manifest in one of two ways. In some instances, the franchise fee is one of many items, e.g., basic service, premium service, additional outlets, etc. listed in a single column, the amount for which is included with and added to all other amounts to arrive at a total amount due. In other instances, the bill recites the various services subscribed to and the amounts thereof, sets forth a subtotal of all such amounts and then includes an amount denominated "franchise fee" which, when added to the subtotal, creates a total amount due at the bottom of the bill. In the latter case, the franchise fee is treated in the same manner as a sales tax. In either case, the fee is stated as if it were a direct charge upon the subscriber. Some companies have instituted this practice coincidental with a franchise renewal or current increase in the amount of the fee or both. For other companies, the practice is unrelated to the franchise term or any change in franchise fee requirements. Because the practice raises fundamental issues concerning the effect of federal law and the relation of federal statute to state statute, Commission regulations and franchise fee provisions in cable television franchise agreements, the Commission has determined that it is appropriate at this time to issue a general statement of policy on franchise fee itemization and "pass-throughs." Itemization of Fee Section 622(f) of the Cable Communications Policy Act of 1984 ("Cable Act") (47 USC Section 542(f)) provides that "[a] cable operator may designate that portion of a subscriber's bill attributable to the franchise fee as a separate item on the bill." Consistent with this section, a cable operator. may include on a subscriber's bill a separate statement indicating the portion of the bill --as a percentage or fixed amount --that will be payable as a franchise fee by the cable company to the franchising authority. This section is not authority for including a franchise fee as a separate billable line item on a subscriber's bill. • 2 In this regard, we note that franchise agreements in New York State have traditionally required franchise fees based on a percentage of revenues --either all or some portion thereof --received by the company from subscribers and, in some cases, from other sources. In other words, the fee is calculated as a percentage of all revenues received without deduction or allocation for such portion of the revenues as may ultimately be paid by the cable company to the municipal . government in fulfillment of the franchise fee obligation. This practice is fully consistent with Section 817 of the Executive Law which requires the Commission to impose an assessment upon cable companies calculated on "gross annual receipts.i1 The only exception from "gross annual receipts" recognized in the statute would include sales taxes which are imposed directly on subscribers. (See, e.g., Tax Law, Section 1131(2)) Neither the municipal franchise fee nor the amount of the Commission's assessment is excluded from "gross annual receipts." The practice of billing the fee as a separate line item in addition to rates transforms the very nature of the fee from a component of doing business calculated on all revenues to a separate add-on charge imposed directly on subscribers. This practice also has the effect of transforming the very method by which the fee is calculated and, therefore, purports to modify the underlying statutory and franchise obligations. A simple example will illustrate the' effect of itemization. Assume a cable company has been charging $20 per month for a service under a franchise which requires a franchise fee of 3%. The franchise fee attributable to such bill would be sixty cents. If the company determines to separate and itemize the fee as an add-on in the manner of a sales tax, the bill is likely to read as follows: Basic service rate --- $20.00 Franchise fee --- $0.60 Total $20.60 1 Section. 817(2) provides that the Commission "shall...bill and collect. ..[from cable companies]...the total direct and indirect costs necessary to operate and administer the commission for the. ..state fiscal year." Each company is required to pay a pro rata share of the commission's costs based upon its gross annual receipts when compared to the gross annual receipts of all companies. "Gross annual receipts" is defined in Section 812(5) as follows: ". . .any and all compensation received directly or indirectly by a cable television company from its operations within the state, including but not limited to sums received from subscribers or users in payment for programs received and/or transmitted, advertising and carrier service revenue and any other moneys that constitute income in accordance with the system of accounts approved by the commission. Gross annual receipts shall not include any taxes on services furnished by a cable television company imposed directly on any subscriber or user by any municipality, state, or other governmental unit and collected by the company for such governmental unit." 4 3 Apart from the fact that this is a rate increase subject to notice requirements (and government approval in the absence of effective competition), it is readily apparent that the company, by its own unilateral act, has purported to change the manner of calculating the fee by reducing the base from the total amount billed to an amount which is artificially described as the "rate." In fact, $0.60 is but' 2.91% of $20.60 -- the total amount billed. If the fee is calculated as before -- 3% of the full amount billed -- the fee attributable to the bill would be sixty-two cents. We find nothing in the Cable Act to suggest that Congress intended to transform the nature of a franchise fee or to amend existing franchises by permitting cable television companies to reduce franchise fee obligations by manipulating the subscriber's bill in such manner. On the contrary, the effect of Section 622(a) was to increase from 3% to 5% of gross receipts the amount of franchise fees which could be required in a franchise. It could be argued that a cable company is free to bill in this manner without also intending to modify its franchise fee obligation. If so, such a bill would be inaccurate and, therefore, misleading. Nothing in the Cable Act authorizes cable companies to engage in inaccurate and misleading billing practices. We also note the likelihood that some cable companies would argue that the franchise fee is a tax and, as such, is a separately billable item. We need not finally determine whether the franchise fee is a tax for the simple reason that even if the franchise fee is in the nature of the tax, under New York State law it would be in the nature of a special franchise or real property tax; but clearly not in the nature of a sales tax.2 The special franchise tax is imposed on the owner of the special franchise property, i.e., the cable company, and not on the subscriber directly. As such, it is simply a component of doing business similar to other non -sales taxes and business costs. 2 Section 626 of the Real Property Tax Law ("RPTL") provides as follows: "1. (a) When a tax levied on a special franchise is due in any assessing unit, if the special franchise owner has paid such assessing unit for its exclusive use during the past year under any agreement or statute requiring the same, a sum based upon a percentage of gross earnings or other income, a license fee or other sum of money on account of such special franchise possessed by such special franchise owner, which payment was in the nature of a tax, all amounts so paid for the exclusive use of such assessing unit, except money paid or expended for paving or repairing the pavement of a street, highway or public place, and except in a city having a population of one hundred seventy-five thousand or more according to the latest federal census, car .license fees or tolls paid for the privilege of crossing a bridge owned by the city, shall be deducted from the tax based on the assessment .made by the state board for purposes of the assessing unit, but not otherwise, and the remainder shall be the tax on such special franchise payable for such propose." 4 In sum, it is our determination that franchise fees cannot be stated as a separate line item on subscriber bills as direct charges on subscribers. This policy does not prevent cable companies from informing subscribers on bills, or otherwise, of the fact that franchise fees are paid to government, including the specific amount of the fee attributable to an individual bill. It is consistent with the Cable Act because companies may include a statement on the bill which identifies the franchise fee without imposing a separate and direct charge for the fee itself. Pass Through Provisions We also take this opportunity to express our policy with respect to the so-called "pass through" provisions in the Cable Act. Section 622(c) of the Cable Act (47 USC 542(c)) provides that "[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." Section 622(c) provides that "[a]ny cable operator shall pass through to subscribers the amount of any decrease in a franchise fee." The issue here is whether these provisions have meaning in a deregulated cable community. We note, 'initially, that for many years prior to the enactment of the Cable Act the rates for premium cable television services had been deregulated by the Federal Communications Commission ("FCC"). See Brookhaven v. Kelly, (428 F.Supp. 1216 N.D. New York (1977); 573 F.2d 765, 2d Cir. (1978)) We also note that in many, if not all, cable television franchise agreements in New York State a franchise fee is required to be paid based on revenues derived by the cable television franchisee from premium services or some portion thereof. In fact, at the time the Cable Act became law, cable companies could unilaterally price premium services to account for all costs including franchise fees and increases therein. As a practical matter, the Cable Act did not alter the regulatory status of premium services. Section 623 of the statute provides that "[a]ny franchising authority may regulate the rates for the provision of cable service. . .provided over a cable system to cable subscribers, but only to the extent provided under this section." Section 623(b)(1) required the Federal Communications Commission to "prescribe and make effective regulations which authorize a franchising authority to regulate rates for the provision of basic cable service in circumstances in which a cable system is not subject to effective competition." Under Section 623, only basic cable service can be subject to rate regulation.3 Cable companies remain free 3 Although basic cable service is defined in such a way as it is theoretically possible that single channel premium services could be marketed as part of basic service, we are not aware of any such circumstances and it is unlikely that a cable company which is not subject to effective competition would choose to submit rates for premium service to regulation by such marketing practice. 5 to price "premium" services without the need for governmental review and approval --a right which transcends the more limited language in Section 622(c) which merely permits a rate increase in the event of an increase in franchise fees. We note, as well, that historically, "pass-through" is used in utility ratemaking to permit a cost or change in cost to be included in the regulated rate borne by ratepayers. It fully appears, therefore, that the pass-through provisions in Section 622(c) of the Cable Act are intended to enable cable television companies to increase regulated rates by an amount equal to any current increase in the franchise fee attributable to the regulated rate.4 Similarly, the obligation imposed by Section 622(e) to decrease rates by any reduction in the franchise fee is only sensible in an environment where rates are regulated. Otherwise, there is no real benefit to subscribers. In sum, the pass-through provisions are redundant in rate deregulated communities. Granting to a cable company the unilateral ability to charge to subscribers whatever rate it wants—as the Cable Act does --transcends and makes meaningless cost pass-throughs which are reflective of a rate regulated environment. SO ORDERED. Commissioners Participating: William B. Finneran, Chairman; Theodore E. Mulford, John A. Passidomo, Barbara T. Rochman, Commissioners. 4 It is important to note here (1) that Congress sanctioned basic rate regulation for a minimum of two years following the effective date of the Cable Act for all cable systems irrespective of the existence of effective competition, and (2) that FCC regulations rather than statutory mandates caused most cable systems to be rate deregulated. CITY OF ITHACA 108 EAST GREEN STREET ITHACA, NEW YORK 14850 OFFICE OF TELEPHONE: (607) 274-6504 CITY ATTORNEY FAX: (607) 272-7348 1v13EMOa2 NDUM TO: All Members of C & 0 Richard Booth, Neil Golder, Daniel Hoffman, Chair, Robert Romanowski and John Schroeder FROM: Chuck Guttman, City Attorney' DATE: November 12, 1992 SUBJECT: Negotiations with ACC In September Peter Hess and I met with Barbara Lukens and John Fogarty, the attorney for ACC, regarding the allegations that ACC. has violated the franchise agreement. At that time we set forth. a list of items which we felt ACC was violating and other items where we felt ACC could or should be granting additional concessions to the City. Peter and I met again with Barbara Lukens and John Fogarty on October 22nd and received their response. I am attaching hereto a copy of a Confidential Memorandum which I sent to the Mayor summarizing the items which the City raised and the response of ACC. As you will see, they have responded to most of the issues we raised. The issue which at that time we were still farthest from agreement was determining a standard for activation of new access channels. Peter Hess and I and other members of the Cable Commission met with Barbara Lukens again on November 4th and discussed that issue. I will attempt to summarize what I understand to be the position of. ACC and the position of the Cable Commission on what a formula would look like to determine when new access channels should be activated. It appears to me that both ACC and the Cable Commission agree that there should be a formula developed to determine when new access channels should be activated. The basic opinion of both sides seems to be that if there is sufficient programming to fill up prime time slots, that a new channel should be opened. The disagreement arises as to exactly how that determination is made. 'An Equal Opportunity Employer with an Affirmative Action Program- tw, Recycled Paper Memo to C & 0 November 12, 1992 The first issue is whether to consider total number of hours of programming per week as opposed to a percentage of programming hours compared to total number of hours the ACC channel is open. ACC originally proposed thatthis be done on a percentage basis. The Cable Commission and I disagreed with this and would rather have it tied to total number of hours of programming. The reason for this is that ACC could unilaterally decrease that percentage by simply having access channels open more hours per day and therefore avoid opening up a new channel. The next question is what number of hours of new programming should be sufficient to require the opening of a new channel. ACCs position is that 36 hours of programming is sufficient. This is approximately 5 hours per day which would cover the 6:00 p.m. to 11:00 p.m. slot. By comparison, the Cable Commission's position is that 28 to 30 hours per week is the appropriate range of new programming that should be considered sufficient to require the opening of a new channel. The 28 hour figure comes from calculating four hours per day being the approximate prime time period. The 30 hour figure comes from the New York State Cable Commission's calculation that an access day is 8.5 hours long and. that if 50% of that is used for new programming it is considered full. The third issue is what shows are counted as new programming. It is ACCs position that for original shows the first showing and, the first repeat would be considered as new programming. For syndicated shows (shows which are produced otherwise and acquired and shown here) only the first showing would count as new programming. The Cable Commission's position is that for both original and syndicated shows both the first showing and the first repeat would count as new programming. The next issue to be decided arises out the agreement of ACC and the Cable Commission that if a show is shown and an extended period of time passes before it is shown again, that it again would fall into category of a new show. For example, if a local producer produces a show which is shown in January two times, it would be agreed by both ACC and the Cable Commission that both the original show and the first repeat count as new programming. If that show is then put on the shelf and shown again the following year, both ACC' and the Cable Commission agree that it would again be considered as new programming. The only issue is how much time must expire before it would again be considered new programming. ACC believes a one-year period is reasonable. The Cable Commission believes that somewhere in a one to four month period was a reasonable period. The next issue to be decided is, assuming a formula approach can be agreed upon, to determine how much new programming there must Memo to C & 0 -3- November 12, 1992 be to open up a new channel. Then, it must be determined over what period of time the programming must reach the standard before the new channel is opened. Everyone agrees that if in one week there is a glut of programming that is not grounds for a new channel. Everyone further agrees that you do not need to demonstrate this glut of programming for years before the new channel is opened. ACC believes that a four to six month period is a reasonable period of time. The Cable Commission that a three month period was a reasonable period of time.. The other issues that tie into this are a request by the Cable Commission that if the City wants a channel to be opened before the formula would require it, that the City would have the right to have the channel opened if the City is willing to pay the infrastructure costs of opening that channel. It is unclear whether this would come out of the City's general funds or out of the 2% money. It will also have to be determined who makes the decision as to opening a new channel -- whether it is Common Council or the Cable. Commission or some other group. It would have to also be some clear definition of what "infrastructure costs" are. Another point is how long ACC has to opena channel formula requires it. I believe there is fairly general that a 60 -day period would work on this. The Cable Commission would also want ACC to report on basis to the Cable Commission the relevant information calculations required by this formula. Enclosure cc: Mayor Benjamin Nichols. Dominick Cafferillo, City Controller Peter Hess, Chair, Cable Commission Dictated by. CG but not read once the consensus a monthly to do the OFFICE OF CITY ATTORNEY CITY ®F ITHACA 1 OB EAST GREEN STREET ITHACA. NEW YORK 14850 TELEPHONE: (607) 274-6504 FAX: (607) 272-7348 ONF = DENT=AL MEMORANDUM TO: Mayor Benjamin Nichols FROM: Chuck Guttman, City Attorney DATE: October 28, 1992 SUBJECT: Negotiations with ACC In September, Peter Hess and I met with Barbara Lukens and John Fogarty, the attorney for ACC, regarding the City's alleged violations by' ACC of the franchise agreement. At that time, we set forth a list of items where we felt ACC was either in violation of the franchise and in addition other items where we felt ACC could or should be granting additional concessions to the City. Peter and I met again with Barbara Lukens and John Fogarty on October 22nd and received their response. I will try and outline below the items which weraised and their response. The first. issue had to do with the manner in which ACC calculates the 5% franchise fee. ACC is allowed, on their bills to customers, to separately itemize the franchise fee. For example, if the basic charge to the customer was $20.00 the bill to the customer would list the $20.00 fee for services and would separately itemize the 5% or $1.00 franchise fee. ACC then was paying to the City a $1.00 franchise fee. It is our position that ACC should have been paying to the City 5% of $21.00 or $1.05. The relevant wording from § 20.1 of the franchise agreement is that the City shall be entitled to receive from ACC a franchise of 5% of ACC's gross City revenue. Gross City revenues are defined in § 1.18 as "all revenue derived directly or indirectly by the grantee (ACC) and by grantee's affiliates from services provided within the City via the cable communications system". There is a policy statement by the New York State Cable Commission to the effect that the method of calculating the franchise fee which we are proposing is the correct method. ACC is very opposed to conceding this point because it would establish a precedent which would apply to other municipalities. ACC's response on this issue is that money collected as franchise fees should not be included in the definition of gross City.. revenues. ACC went on to state that including that portion of the subscribers bill would not only be contrary to the intent of the franchise agreement but would be 'An Equal Opportunity Employer with an Affirmative Action Program' tori Recycled Paper Memo to Mayor Benjamin Nichols 2 October 28, 1992 contrary to federal law. A copy of Fogarty's letter to myself of May 12, 1992 discussing this point as well as others and a copy of the New York State Commission on Cable Television statement of policy from April 20, 1992 are attached hereto. Depending on how that issue is resolved would determine whether ACC is, in fact, overcharging customers by one cent for basic service. Another issue that is connected with the calculation of franchise fees is whether advertising revenues are to be included in gross City revenues. At present, ACC is not including in gross revenues monies they earn from advertising. Our position is that advertising revenues are included in all revenues derived directly or indirectly from...the services provided within the City. ACC's position is that these are not revenues derived for services provided within the City. Fogarty points to a broader definition which he says is used in some other franchise agreements; namely, revenues derived "of operations of the system". ACC's response on October 22nd was as follows: Fogarty stated that under the new federal legislation regulating cable companies that the FCC has until April 3, 1993 to establish regulations governing rate regulation. He claims that when these regulations are established it is likely that this issue will be clearly determined by the FCC. Since there is a 5% cap, if FCC determines that the 5% cap applies to only the $20.00 in the above example that their position will be upheld. Alternatively, if FCC states that the franchise fee should be calculated on the total amount the customer pays, the City's position will be fairly clearly established. He therefore suggests that this issue be put on hold until the FCC issues its regulations. I will be checking with John Grow, the attorney for the New York Commission on Cable TV, to see if the City loses or risks anything by leaving this issue on hold until that time. This would apply to prospective calculations of the total franchise fee and how customers are charged. With regard to the question of whether to include advertising revenues within the base on which the franchise fee is calculated, Fogarty is willing to concede this point both prospectively and retroactively if the City is willing to drop any claim for retroactive calculation of the "franchise fee on franchise fee" issue discussed above. I have not done complete calculations on this issue. However, based on 1991 figures that we have, total revenues of ACC excluding advertising revenues was $2,412,000.00. Five percent (5%) of that is $120,600.00. Five percent (5%-) of that 5% would be an Memo to Mayor Benjamin Nichols 3 October 28, 1992 additional $6,030.00. By contrast, advertising revenues for 1991 were $184,000.00. Five percent (5%) of that amount is $7,400.00. I also have the figures for January through June of 1992. Doubling those figures to come up with estimated figures for 1992, total revenues excluding advertising would be $2,550,000.00. Five percent (5%) of that amount would be $127,500.00. Five percent (5%) of the 5% would be $6,375.00. By contrast, advertising revenues would be $202,000.00. Five percent (5%) of that amount would be $10,100.00. In § 19.1 of the franchise agreement, ACC agreed to give a need - based senior citizen discount of ten percent (10%) to those who qualify for real property tax exemption and others who qualify using mutually agreeable criteria. in § 19.1, this only applied to fees for the basic tier. We requested that this ten percent (10%) exemption apply not only for the basic tier but also for the expanded tier. ACC has responded that, assuming agreement can be reached on all other issues, that they would agree to extend this to the expanded tier (but not to premium channels or pay per view) provided that appropriate procedure can be established to determine who is eligible. With regard to senior citizens who own their own homes, it is very simple. With regard to senior citizens who do not own their own homes some checking of their age and income has to take place. It appears that this would be an easy procedure to establish. Article XV of the franchise agreement has to do with the institutional network (I -net). ACC, in the franchise agreement, agreed to do specific things some of which, according to the Cable Commission, are not particularly valuable to the City. For example, in §15.2 ACC agreed to maintain dedicated cables to I - net sites. At this point, they have "drops". The Cable Commission says that what the City really wants in this respect is to have modulators and demodulators available for check out in sufficient quantities. ACC in principle is agreeable to this. Our Cable Commission would also like this expanded to three additional sites; namely, Southside Community Center, Sciencenter and Cooperative Extension. ACC is seriously considering agreeing to extend the I - net to those sites provided the City drops its demand for dedicated cables. This appears to be a "win-win" situation where the City will drop a right it has under the franchise agreement in exchange for ACC giving the City something it wants more which ACC is not obligated to provide. The remaining issues with ACC have to do with access and with the 2% monies. With regard to access, ACC agreed to televise the monthly Council meetings and not less than two of the five standing committees on a rotating monthly basis. ACC is also agreeing, Memo to Mayor Benjamin Nichols 4 October 28, 1992 probably starting next March, to additionally televise t e - Committee Of the Whole meetings. (;-e4' r°` Y-712-1(-- 0 -7'2-1` 7 4/1.4 In § 14.C(3) ACC agreed to set aside 2% of gross City revenues for access equipment. Obviously, both prospectively and retroactively, this amount will have to be adjusted as the definition or calculation of gross City revenues is adjusted. In addition there have been disputes as to what equipment is to be purchased with these 2% funds. The dispute centers around a difference of opinion as to whether these monies should go for production or transmission equipment. In particular, when a new channel is activated, certain equipment such as modulators and demodulators have to be acquired or purchased. It has been ACC's position that this equipment should come out of the 2% budget. The access community's position is that this expense should not be paid out of the 2% money. ACC has agreed on October 22nd, that, assuming everything else can be agreed, prospectively, and retroactively with regard to Channels 53 and 54 those expenses will be paid by ACC and not out of the 2% money. It appears that this will result in a retroactive increase to the 2% monies of approximately $10,000.00. The last issue, and the one on which we are still farthest from agreement, is determining a standard for activation of new access channels. § 14.1(A)(1) of the franchise agreement provides that nine downstream channels shall be designated for access. Based on this, the City and the access community have been maintaining that the City has the sole discretion of determining when access channels should be activated and that we are, at this time, entitled to nine channels if we wish them. § 14.1(A)(3) provides that any access channels unused by the City three years after the rebuild is complete shall revert to ACC, provided that if community needs substantially require the use of any such channel ACC will return said channel to the City six months after receiving written notice if ACC has a use for the channel and immediately if there is no use for the channel. ACC maintains that the current number of access channels are sufficient and that they are unwilling to activate more channels until there is a demonstrable need for those channels. We have beentaking the position that a clear procedure should be established in which the Cable Commission would request of Council that the City determine that another access channel should be activated; ACC would have a right to comment and Council would make that decision. ACC would rather have this decision made based on a clear calculation of how much the access channel is used for "new programming". In terms of this, they would define new programming Memo to Mayor Benjamin Nichols 5 October 28, 1992 as both the first showing and one repeat of a show that has just been created plus the first showing and a repeat of a show which was done sometime in the past which people wish to have reshown. Obviously, there still has to be work done on clarifying the definition of "new programming" and also on determining what a reasonable percentage is. We will be discussing this matter with ACC in the next few weeks to see if we can reach hopefully a mutually agreeable definition and standard. Council has decided to call a public hearing on this issue at the December C & 0 Meeting. I would suggest, that in light of ACC's recent proposal, that the issue be put on the November C & 0 meeting for a short discussion in Executive Session so that Peter Hess and I may get a sense as to Council's feeling on this matter and some direction as to our future negotiating position. If any of you have any questions about this, please get back to me. Enclosures cc: Dominick Cafferillo, City Controller Peter Hess, Chair, Cable Commission Daniel Hoffman, Chair, Charter and Ordinance John 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 `t' brand fax tranmIttal memo 7671 RE: City of Ithaca - Franchise frees Dear Mr. Guttman: ..i Television & 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 bask service increased beyond the maxdmum 5% permissible without regulatory approval. Your calculation, however, as your letter explains, is based on including within the rate charged for bask 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 perceits "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 ch0lcee ' 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 --a 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 .cC f.. 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. Franchise. Mawslsougskautfraughistkeumnautamenusituriked in the 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 luted 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. IL 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 isa letter of November 9, 1989 from accountants Ernst & Young so stating. III. Under the t sof the able Act, monies collect d ancbise fees are pot "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 franchisirtg 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(f) 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). 4 If, after youi 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 Very truly yours, orAi John E. Fogarty CM • In the Matter of NEW YORK STATE COMMISSION ON CABLE TELEVISION The Itemization of Franchise Fees on Subscriber Bills STATEMENT OF POLICY 92-217 DOCKET NO. 90389 (Released: April 20, 1992) During the past months, various cable companies in the state have commenced the practice of including all or a portion of a franchise fee as a separate line item on a subscriber's bill. The practice is manifest in one of two ways. In some instances, the franchise fee is one of many items, e.g., basic service, premium service, additional outlets, etc. listed in a single column, the amount for which is included with and added to all other amounts to arrive at a total amount due. In other instances, the bill recites the various services subscribed to and the amounts thereof, sets forth a subtotal of all such amounts and then includes an amount denominated "franchise fee" which, when added to the subtotal, creates a total amount due at the bottom of the bill. In the latter case, the franchise fee is treated in the same manner as a sales tax. In either case, the fee is stated as if it were a direct charge upon the subscriber. Some companies have instituted this practice coincidental with a franchise renewal or current increase in the amount of the fee or both. For other companies, the practice is unrelated to the franchise term or any change in franchise fee requirements. Because the practice raises fundamental issues concerning the effect of federal law and the relation of federal statute to state statute, Commission regulations and franchise fee provisions in cable television franchise agreements, the Commission has determined that it is appropriate at this time to issue a general statement of policy on franchise fee itemization and "pass-throughs." Itemization of Fee Section 622(f) of the Cable Communications Policy Act of 1984 ("Cable Act") (47 USC Section 542(f)) provides that "[a] cable operator may designate that portion of a subscriber's bill attributable to the franchise fee as a separate item on the bill." Consistent with this section, a cable operatormay include on a subscriber's bill a separate statement indicating the portion of the bill --as a percentage or fixed amount --that will be payable as a franchise fee by the cable company to the franchising authority. This section is not authority for including a franchise fee as a separate billable line item on a subscriber's bill. • 2 In this regard, we note that franchise agreements in New York State have traditionally required franchise fees based on a percentage of revenues --either all or some Portion thereof --received by the company from subscribers and, in some cases, from other sources. In other words, the fee is calculated as a percentage of all revenues received without deduction or allocation for such portion of the revenues as may ultimately be paid by the cable company to the municipal . government in fulfillment of the franchise fee obligation. This practice is fully consistent with Section 817 of the Executive Law which requires the Commission to impose an assessment upon cable companies calculated on "gross annual receipts."1 The only exception from "gross annual receipts" recognized in the statute would include sales taxes which are imposed directly on subscribers. (See, e.g., Tax Law, Section 1131(2)) Neither the municipal franchise fee nor the amount of the Commission's assessment is excluded from "gross annual receipts." The practice of billing the fee as a separate line item in addition to rates transforms the very nature of the fee from a component of doing business calculated on all revenues to a separate add-on charge imposed directly on subscribers. This practice also has the effect of transforming the very method by which the fee is calculated and, therefore, purports to modify the underlying statutory and franchise obligations. A simple example will illustrate the effect of itemization. Assume a cable company has been charging $20 per month for a service under a franchise which requires a franchise fee of 3%. The franchise fee attributable to such bill would be sixty cents. If the company determines to separate and itemize the fee as an add-on in the manner of a sales tax, the bill is likely to read as follows: Basic service rate --- $20.00 Franchise fee --- $0.60 Total $20.60 1 Section. 817(2) provides that the Commission "shall...bill and collect. ..[from cable companies]...the total direct and indirect costs necessary to operate and administer the commission for the. ..state fiscal year." Each company is required to pay a pro rata share of the commission's costs based upon its gross annual receipts when compared to the gross annual receipts of all companies. "Gross annual receipts" is defined in Section 812(5) as follows: ". . .any and all compensation received directly or indirectly by a cable television company from its operations within the state, including but not limited to sums received from subscribers or users in payment for programs received and/or transmitted, advertising and carrier service revenue and any other moneys that constitute income in accordance with the system of accounts approved by the commission. Gross annual receipts shall not include any taxes on services furnished by a cable television company imposed directly on any subscriber or user by any municipality, state, or other governmental unit and collected by the company for such governmental unit." 1• . a. 3 Apart from the fact that this is a rate increase subject to notice requirements (and government approval in the absence of effective competition), it is readily apparent that the company, by its own unilateral act, has purported to change the manner of calculating the fee by reducing the base from the total amount billed to an amount which is artificially described as the "rate." In fact, $0.60 is but 2.91% of $20.60 -- the total amount billed. If the fee is calculated as before -- 3% of the full amount billed -- the fee attributable to the bill would be sixty-two cents. We find nothing in the Cable Act to suggest that Congress intended to transform the nature of a franchise fee or to amend existing franchises by permitting cable television companies to reduce franchise fee obligations by manipulating the subscriber's bill in such manner. On the contrary, the effect of Section 622(a) was to increase from 3% to 5% of gross receipts the amount of franchise fees which could be required in a franchise. It could be argued that a cable company is free to bill in this manner without also intending to modify its franchise fee obligation. If so, such a bill would be inaccurate and, therefore, misleading. Nothing in the Cable Act authorizes cable companies to engage in inaccurate and misleading billing practices. We also note the likelihood that some cable companies would argue that the franchise fee is a tax and, as such, is a separately billable item. We need not finally determine whether the franchise fee is a tax for the simple reason that even if the franchise fee is in the nature of the tax, under New York State law it would be in the nature of a special franchise or real property tax; but clearly not in the nature of a sales tax.2 The special franchise tax is imposed on the owner of the special franchise property, i.e., the cable company, and not on the subscriber directly. As such, it is simply a component of doing business similar to other non -sales taxes and business costs. 2 Section 626 of the Real Property Tax Law ("RPTL") provides as follows: "1. (a) When a tax levied on a special franchise is due in any assessing unit, if the special franchise owner has paid such assessing unit for its exclusive use during the past year under any agreement or statute requiring the same, a sum based upon a percentage of gross earnings or other income, a license fee or other sum of money on account of such special franchise possessed by such special franchise owner, which payment was in the nature of a tax, all amounts so paid for the exclusive use of such assessing unit, except money paid or expended for paving or repairing the pavement of a street, highway or public place, and except in a city having a population of one hundred seventy-five thousand or more according to the latest federal census, car license fees or tolls paid for the privilege of crossing a bridge owned by the city, shall be deducted from the tax based on the assessment .made by the state board for purposes of the assessing unit, but not otherwise, and the remainder shall be the tax on such special franchise payable for such propose." 4 In sum, it is our determination that franchise fees cannot be stated as a separate line item on subscriber bills as direct charges on subscribers. This policy does not prevent cable companies from informing subscribers on bills, or otherwise, of the fact that franchise fees are paid to government, including the specific amount of the fee attributable to an individual bill. It is consistent with the Cable Act because companies may include a statement on the bill which identifies the franchise fee without imposing a separate and direct charge for the fee itself. Pass Through Provisions We also take this opportunity to express our policy with respect to the so-called "pass through" provisions in the Cable Act. Section 622(c) of the Cable Act (47 USC 542(c)) provides that "[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." Section 622(c) provides that "[a]ny cable operator shall pass through to subscribers the amount of any decrease in a franchise fee." The issue here is whether these provisions have meaning in a deregulated cable community. We note, initially, that for many years prior to the enactment of the Cable Act the rates for premium cable television services had been deregulated by the Federal Communications Commission ("FCC"). See Brookhaven v. Kelly, (428 F.Supp. 1216 N.D. New York (1977); 573 F.2d 765, 2d Cir. (1978)) We also note that in many, if not all, cable television franchise agreements in New York State a franchise fee is required to be paid based on revenues derived by the cable television franchisee from premium services or some portion thereof. In fact, at the time the Cable Act became law, cable companies could unilaterally price premium services to account for all costs including franchise fees and increases therein. As a practical matter, the Cable Act did not alter the regulatory status of premium services. Section 623 of the statute provides that "[a]ny franchising authority may regulate the rates for the provision of cable service. . .provided over a cable system to cable subscribers, but only to the extent provided under this section." Section 623(b)(1) required the Federal Communications Commission to "prescribe and make effective regulations which authorize a franchising authority to regulate rates for the provision of basic cable service in circumstances in which a cable system is not subject to effective competition." Under Section 623, only basic cable service can be subject to rate regulation.3 Cable companies remain free 3 Although basic cable service is defined in such a way as it is theoretically possible that single channel premium services could be marketed as part of basic service, we are not aware of any such circumstances and it is unlikely that a cable company which is not subject to effective competition would choose to submit rates for premium service to regulation by such marketing practice. 5 to price "premium" services without the need for governmental review and approval --a right which transcends the more limited language in Section 622(c) .which merely permits a rate increase in the event of an increase in franchise fees. We note, as well, that historically, "pass-through" is used in utility ratemaking to permit a cost or change in cost to be included in the regulated rate borne by ratepayers. It fully appears, therefore, that the pass-through provisions in Section 622(c) of the Cable Act are intended to enable cable television companies to increase regulated rates by an amount equalto any current increase in the franchise fee attributable to the regulated rate.4 Similarly, the obligation imposed by Section 622(e) to decrease rates by any reduction in the franchise fee is only sensible in an environment where rates are regulated. Otherwise, there is no real benefit to subscribers. In sum, the pass-through provisions are redundant in rate deregulated communities. Granting to a cable company the unilateral ability to charge to subscribers whatever rate it wants --as the Cable Act does --transcends and makes meaningless cost pass-throughs which are reflective of a rate regulated environment. SO ORDERED. Commissioners Participating: William B. Finneran, Chairman; Theodore E. Mulford, John A. Passidomo, Barbara T. Rochman, Commissioners. 4 It is important to note here (1) that Congress sanctioned basic rate regulation for a minimum of two years following the effective date of the Cable Act for all cable systems irrespective of the existence of effective competition, and (2) that FCC regulations rather than statutory mandates caused most cable systems to be rate deregulated. o 4 51 74' 0 ) Afr f r p- , ---t, 5:—.X. A.,,,,,,,,z_e_ -_.......--- , •-------- , • -tia4 ki--v /,'mss /• __ #‘ '1, Ai t \ ----,---.-- /- , , '-• /22 ) 04E/7-Air/if --n7 • ,r m,effr .,.2e.c ,,, -° --a- nit9 /---e-- -------P.--)=- _ _-2----- / '1-- ,'L? 7 y/l,f7- 71 -/PLS fl c2/1/A 727 ,------- --,Z.--e----r..--,,--ee-->.---__- e!Wffie ---- i<reg , 1,-,2 G- 9 - i'' --z--------... ., •- „ .., I i / fl._11W-°"gr4146 1112w411 -' ---- _ P ‘ 4--7(2 . . , ,7--- .,tzvice,rff-/ - i frni 2 1/Ar/74-2'‘ . /e-, ---6//4-- -----, _,/ j•Tt9/t (0---- K7 - - - -- - /WW44,4i2fif /4 -- X -e- -ff CA' OFFICE OF CITY ATTORNEY CITY OF ITHACA 108 EAST GREEN STREET ITHACA, NEW YORK 14850 MEMORAN'YDUM TO: John Efroymson FROM: Chuck Guttman DATE: October 30, 1992 SUBJECT: ACC TELEPHONE; (607) 274-6504 FAX: (607) 272-7348 For your information enclosed please find a copy of a Confidential Memo regarding ACC. As I believe you are aware, there will be a meeting with myself and the Cable Commission on November 4th and I am requesting. that Dan put this on the C & 0 agenda for November 12th. I am sending this to you for your background information. 'An Equal Opportunity Employer with an Affirmative Action Program" +.H: Recycled Paper ) CeX ,-�_ Se ,Oy ------41,7e--.,cao‘f,f, . ___7.41W 4y —c. /S4,co-4-.7••• �G e Jif•g/% 0,4 — 2-,-4. .e -v - -- _/P'7 .4e.vevbe __._/)A1/. ._e12 /1?_T efr/'9.4 if�1,'�•% <46,01"- l s —._;,_! /G4-0.4- lye 9' Gee ...-c .5/4' Ga®GA& 'c4S4-7S ,r,;,. 4#,,,-e eihwA--- .,,,,,,:of..- /k-CPw G4/ / - -e ,r.--i .._- r'o ss• . j► / _ //b .46.5 r= / ,e--e44.-- d / 7 l- A .,—,S- oma- -- _ I) 2' /J7e.ci PS J --- .2 u4T ' i9_ �I.- - _Ac. /7r40.(licr�®0---- %"%dt"v ,;.tsf_ .s570A aoa-- ,v?_ *9.? �,� ��a/ en 9- "2_2ioi Q,c.� 2 _ 151,.5::€.0.e)0,-..0 --- — __)___..ef/oet.•.___,>- A47. ye c--df_02.40--ezfrs-- ,2,-_e-,_z___. zf ..e.et-.. av75wfr es--ezes-.'et. c44e 4,s&,,212aL,e, cer."11-4-y___IA_ 7g_?r ._,e.,?. 40.eee- -.J-p-i-e-o• 1 -e,e, 7-- e,,,sie (....-,--- 2-0 ,--- ..., 30,• --.V ,, .',e- o..-- d'y •/-5-i-ff--6' .77~. .s,E.. deeieg _____z . 4._____,4,4•4e - - -4,--0',*'c, - Irs.‘44/.42)- de ..--eifra) —40cer..4 . / •7,.,,,/5-',..• 6, a',e 42Cbee $24 /.•/r-7---7/ J44fr•--- e# ,115 - /t9,9a/ , e se--,see,9 ,*v ice-e-- 9-____.02.2____J, —774/friofe---=_ft9,_____--,2-- ".7.4o — _ee-.____R______>_.--,02k- )".- 0,%01/9•1-_________Z-4.,-- A-70.o_aes..- ,-i.. • //' A----C---_—_-______ , ` , - .-7--7----eL...)" ,._., /-,:: D-C....:---ge---- • "4: 2.1_-:_-__-_c,-- ./,e/f 2.!/`!_ iite /redo Ca,/Cori ----4.1- - ...-- ---- -- Sys _ ---- -------- - - ----- ______ - -----. ?S c-d.� -- — -- — -- 3 ,O -. / ' v d �"riee—� -- Ag' se.,- -- ' — ;$ ,,-e4- dee2,-- e....x,e,001‹ 1;.,_•04tie __Ald_--.4WO_c- __7Xe edte*V f _. ` ,GSC 5/1G2,4‘ 5 4e..4t< _' / ,.4,` -iii `may /C%) c% may .4, 9- ,ee-e. >ry h am / 0 2g.E,A_2 G 1 _ d?ee‹% -- 1�w ��i., - i C/77 -e -As ca'' ,d : j.r,/"e-- - r _i .l_ 1.1 MEMORANDUM To: Chuck Guttman, City Attorney From: Cable Commission Date: September 15, 1992 Re: Negotiations concerning Franchise Agreement. The cable commission believes that any negotiations regarding rate structure between the City and ACC should be predicated upon ACC's willingness to comply with the following unmet provisions in the franchise agreement: 14.1 A. (1) Nine downstream channels shall be designated for public, governmental, and educational access. Comments: ACC has charged equipment it purchased for activating access channels 52, 53, and 54 to the access capital budget. The New York State Cable Commission's Minimum Standards for Access state that "the designation of PEG access facilities shall include the provision of the technical ability to playback and to transmit programming information." In accordance with the NYSCC definition, we maintain in the strongest possible way that the franchise agreement's guarantee of nine access Z , 3' channels requires, the franchisee to have provided nine fully operational access channels as a condition of the franchise grant. This requirement is completely distinct from the provision of an access capital budget which set aside for access equipment expansion and replacement (cited below). The Cable Commission wants ACC to reimburse the access capital budget for all modulators, demodulators and playback decks purchased to activate access channels and not to charge any future such purchases to the access capital budget. The commission further wants ACC to acknowledge that the activation of additional access channels, up to a total of nine, shall be solely at the discretion of the City. 14. C.(3) ACC has agreed to provide 2% of Gross City Revenues for capital PEG access equipment replacement and expansion Comments: In addition to transmission equipment, discussed above, ACC has in the past charged building remodeling, equipment refurbishment, and spare parts against the access capital budget. We want these expenses to be reimbursed to the access capital budget and to have ACC acknowledge that the access capital budget shall be used only as stated in the franchise: to expand and replace equipment for PEG access. 14.6 ACC will advertise programs and access services in newspapers of local circulation. ACC shall conduct facility tours and maintain a speakers bureau to provide informational presentations to local organizations and institutions Comments: We want ACC to be more aggressive in addressing this requirement. 15.1 ACC will provide the City with...free drops and video converters at all [I- Net]..locations at no charge for the duration of the franchise. Comments: We want ACC to provide modulators and demodulators (RF converters) at all I -Net sites. 16.4 All rates for subscriber services and leasing of channels shall be published. 19.4 ACC shall file with the City schedules which shall describe all services offered by ACC, all rates and charges of any kind, and all terms and conditions relating thereto...No rates shall be effective except as they appear on a schedule so filed. Comments: To date, ACC has not made public rates for leased -access channels even though it is currently leasing such a channel. Advertising rates should also be routinely provided, as well as information pertaining to bulk discounts. 19.1 ACC will give a need -based senior citizen; discount of 10% to those who qualify for real property tax exemption and others who qualify Comments: To date, the senior citizen's discount has only be given for basic tier service. We believe the franchise agreement specifies no such limitation and want the discount extended to include all cable tiers and services. 20.1 The City of Ithaca shall be entitled to receive from ACC a Franchise Fee of J� 5% of ACC's Gross City Revenue. 14. C.(3) ACC has agreed to provide 2% of Gross City Revenues for capital PEG access equipment replacement and expansion. 1.18 Gross City Revenues means all revenue derived directly by the Grantee and the Grantee's affiliates from services provided within the City by the Cable Communications System. Z.J Comments: The cable company to date has excluded advertising revenue in calculating franchise fees. We believe the above provisions require that income from advertising fees as well as future income from telecommunications services are subject to a franchise fee. Clearly the same base figure should be used in computing the access capital budget. When the above matters have been resolved, and not before, we suggest that the following franchise provisions might be open for negotiation on a quid pro quo basis : 14. 1C.(1) All local programming equipment shall be made available for access use 15.2 During the rebuild, ACC shall install and thereafter maintain dedicated cable or cables to the following additional locations for originating local programming: IHS, Boynton, ACS, Ithaca Youth Bureau, GIAC, and CU. 15.4 ACC shall provide an all channel audio emergency alert system to the City..ACC shall provide a telephone line for activation of the emergency alert system. Some items the Cable Commission would like to suggest for negotiation are: • Additional I -net sites at the following locations: Southside Community Center; the ScienCenter; Cooperative Extension • Monthly billing for basic tier customers • Expansion of the access studios • Sale of remote control, units to subscribers at market value • Performance standards for access equipment • Second drop at all current and future I -net sites • Some form of emergency alert system, worked out in cooperation with local safety authorities • Rebate on the cost of the routing switcher to the access capital budget • A public access cable radio station Only when all of the above issues are resolved, would we advise the City to enter into negotiations on rate structure. These negotiations should assure that City residents are never charged more than the following for basic service (including the franchise fee): March 1992 - Feb. 1993: $13.95 March 1993 - Feb. 1994 : $14.65 March 1994 - Feb. 1995: $15.38 March 1995 - Feb. 1996: $16.15 March 1996 - Feb. 1997: $16.96 March 1997 - Feb. 1998: $17.80 1. The parties agree that rate increases for basic service will not exceed 5% per year for the remainder of the current franchise period, based on the 1992-3 rate. The maximum rates, as indicated below win include the franchise fee: March 1992 $13.95 Maxch 1993 $14.65 March 1994 $15.38 March 1995 $16.15 March 1996 $16.96 March 1997 $17.80 2. ACC agrees to rebate to the access capital fund expenditures for modulators and demodulators associated with activation of access channels 53 & 54 in 1991, as follows: Demodulator, ch. 53 $ 2,709.67 Modulatox, ch. 53 $ 2,842,02 Modulator, ch. 54 $ 2,836.37 Demodulator, ch. 54 $ 2,715.02 Modulator, ch. 2 $ 2,483.47 Demodulator, Ch 2 $ 2,403.22 Total: $ 15,989.77 The parties agree that in the future all modulator and demodulator equipment associated with activating any of the nine access channels guaranteed by the franchise agreement are to be paid for out of money other than the access capital budget. 3. The parties agree that establishment of new access channels up to the nine guaranteed in the franchise agreement is the sole prerogative of the city of Ithaca. The city will establish a reasonable process for determining the need for new channels which it can modify unilaterally at any time. 4. The parties agree that all income, including advertising revenues, will be counted when calculating the city franchise fee and the access capital budget. 5. In determining allocation of other access expenditures, the parties agree that all existing precedents and commitments will be honored for the duration of the franchise agreement. ___ 4e /6*- • .0 re %.1/d - -/ 7 ta;'6___, 47-dvw - G7-- c,fr ,-ae,t-Wceri ,44Y-1- -4— Ai'f7 C..„- c-_,-- . ,,'"•ce-/-z"-€ C,` ,-Z•& /1-. e >*--- e. ,2.. _>/-/-,--,-A--- . ‘,2'r, •-.,--c 3 v ,---- , --:- ,zio, 1,e_ e, .il-cc--4447- '''—e." --le, CV&S4e44e O'Ae-- ,.. 'ep/Idt-Ps•VM )4 '.r •• A ofe.-- w,,/ .2.e. Pt°4*/•0--/— "---,--,40q1 e;:o.,~2. J'e ./t°1 — ..• 7)e-" e11,1 ---- -Zee ./4.7-..0-.Q S.,9/ — "oar/ et ,,„ 1--- ___ -o / 9. 9 - /24„,,x/i,- ,,.„,i-- x,,-- ,, cr.. cce /42 49;')17- Gte..7”) ).;0e.----- /..1 --- 0,50~4.0- -0°°5 ..,--- Hi i C (1) / /, 2- •-,IiCe.e-Of •e_aae A iovaie 9 ' .2 4,- / -,,,e, 7 7` Get% 5Z -,e/ 5:.124-.•4 Ce0 '#7.-- aoe/e-- 6 ae . _ • - . . , . . . . ------•--------- . .4z. 1._ 9 MIA.- 4...,;-- k._.„_-e• r,* — ,...A.,0-- , • c-Ce 5' S aeA, '7- , . , fr;;;91c. ‘tx--sc 04ei5 -se- moo-- - / A-0,9e 7±____T__. ._ . __,A0/0, ,A.tv,,, ___,, 3 , /4e ... . . ... • To: Members of C & 0 Committee From: Ithaca Cable Commission Re: Impact of billing and accounting of changes recently instituted by ACC Date: June 11, 1992 The following tables summarize the impact of the practice, recently begun by ACC, of treating the city franchise fee as a separate billable item. The city believes that this is counter to state regulations and willhave a significant adverse impact on the city's revenues, and probably also on customer costs. I. Effect on city revenues This table shows the impact of recent billing and accounting changes on franchise fee revenue that will be collected by the City of Ithaca. Computations are based on actual receipts from 1991 and assume a 10% annual growth in ACC's gross city revenues. The annual revenue growth rate for the industry in recent years has been about 15%. Year Franchise fee Franchise fee Potential 1992 by city method $132,672 by ACC method $126,370 Toss to City 1993 $145,939 $139,007 1994 1995 1996 $160,533 $176,586 $194 245 $152,908 $168,199 $185,019 1997 1998 1999 $213,669 $235,036 $258,540 $203,521 $223,873 $246,260 ($6,302) ($6, 932) ($7,625) ($8,388) ($9,226) ($10,149) 011,1641 ($12,280) Loss to City over term of franchis ($58,832) II. Effect on subscriber costs This table shows potential costs to subscribers from ACC's new billing and accounting methods. These costs result from the fact that ACC now considers that the maximum rate for basic service as dictated by the franchise does not include the franchise fee. The following figures are based on 8200 homes subscribing to cable service in the City of Ithaca. ax. Month. Max. Month. Add'I Cost Basic rate Basic rate ranchise -ACC per month ea subscriber Add'I Cost Total Add'I per yr ea Annual cost to subscriber March '93 - Feb. '94 $15.37 $16.14 $0.77 $9.22 subscribers $75,630 March '94 - Feb. '95 March '95 - Feb. '96 $16.14 $16.95 $0.81 $9.68 $79,412 $16.95 $17.80 $0.85 $10.17 $83,382 March '96 - Feb. '97 $17.80 $18.68 $0.89 $10.68 $87,551 March '97 - Feb. '98 $18.68 $19.62 $0.93 $11.21 $91,929 March '98 Feb. '99 $19.62 $20.60 $0.98 $11.7 $96,525 Total or the remainder of the franchis $62.74 $514,430 94-fr-0.s -�-' O`er - s�L S'Piv.'e v .oe--v¢at- on- ' 7'—.6 , h -Ys c ' 4 -•-3/ i Oi cV-,„ljj' c�i?�� /ems ? . /�v ��gC72,/ e- � G� z",/e /-7,‘ S Pf y� C'' _ 0122 .�e�/� /��//L�/ /tel/ . 1 t4/0 ti-: - /2o, 6G' ,47/ 2 K / ?'� L 3 2 %�il�P.► 6?,t, ,' P/ �G . AfdM- ,' i%// zz / 2 Sy /2cGro �G3U iyv 3c Cm": S'79 �y Z A / 992- Sy = Z, S'99y2 /L 9 p66' /5--3, 9 Q L 769 9 43,09 — /L 4/ /9/ / c) — 57> z `f icy j L 7,� /7,t•53402.1 ri To: Chuck Gutman, City Attorney From: Rick Gray, Chair Cable Access Advisory board [CAAB] Date: November 11, 1992 Subject: 2% of Gross City Revenues for capital PEG accesss equipment The negotiations between the City and ACC seem to have proceeded very well to this point and the Access community should be quite pleased with the results. There are several issues, however, which if neglected during these negotiations could remain as points of friction between ACC and Access users in the future. As I mentioned at the November 4th meeting, the provision of"2% of Gross City Revenues for capital PEG access equipment replacement and expansion" has been an area of contention since the first year ofthe franchise. Your negotiations have apparently resolved the principal dispute over which type of equipment the 2% allocation is providing for access use, i.e. program origination equipment vs.channel or distribution equipment The remaining item of disagreement revolves around the interpretation of word capital in the phrase in question. The CAAB has consistently argued that capital be defined according to generally accepted accounting principals. Essentially this means that the 2% allocation is for the acquisition offixed assets or improvements to fixed assets which will be depreciated over time. Since ACC is assured ownership of all Access equipment by the franchise, they must record this information for reporting purposes . From the beginning ofthe current franchise, ACC has insisted on making expenditures for certain maintenance and repair items from the 2% allocation. The greatest portion of these expenditures are for an item known as refurbishment [of VCRs, VTRs, and camcorders]. I do not purport to be a technical expert; it is enough to know that refurbishment is performed on equipment routinely [recurring at predictable intervals by ACC's own reporting], that it is needed due to normal wear and tear, and the benefits of this application of labor and parts are used up over a relatively short period of time [approximately annually]. In short, refurbishment can be characterized only as maintenance or routine repair. The franchise anticipated that equipment needs maintenance and repair, and. in a section following the section dealing with the 2% capital equipment allocation it states that ACC will maintain and/or replace equipment "in a manner consistent with good operating practice". A number of video technicians [from BOCES, TC Library, and Joe Powers formerly of ACC] I have contacted this past week have stated that VCR refurbishment at regular intervals is simply "maintenance consistent with good operating practice". Since ACC must use generally accepted accounting criteria in their financial reporting, the CAAB believes that these same criteria might be used to resolve any differences in interpretation of the section on capital equipment replacement or expansion. We suggest the following criteria which were included in the 1992 CAAB budget as submitted to ACC, but were essentially ignored. A. Capital equipment must have an average expected usable life of more than one year. B. Original cost of capital equipment includes all reasonable and necessary expenses of acquiring and putting the equipment into service [sales tax, shipping, installation]. C. Expenditures for improvements to equipment are capitalized when: i. performance is qualitatively or quantitatively enhanced over the original [when new] standard of the equipment. an extraordinary repair [extending the life] of equipment can be documented by a concurrent increase in its book value, i.e., if usable life is increased, then part of past depreciation must be cancelled. in terms of past years expenditures, the CAAB believes that ACC has misallocated a significant portion of the capital equipment budget on maintenance and repair expenditures. 1992 [est.] $6,260.00 1991 8,156.00 [includes tools for maint. & repair] 1990 6,636.00 1989 17,000.00 [reported only as labor and replacement parts, estimate only] Each year has seen 12% to 20 % of the capital equipment budget being diverted to maintenance and repair items. More important than the past is the fixture. One might argue that reducing the capital equipment budget 12% to 20% per year has not hampered the growth of Access to date. This is because the Access equipment provision by the franchise was front-end loaded. In addition to a substantial existing equipment inventory valued at $150,000, an equipment package of $165,000 was purchased the first year [1989]. By video equipment standards, much of this equipment is already nearing the end of useful life. The latter half of the franchise period will see significant replacement costs simply to keep Access operating at current levels. Furthermore maintenance costs will surely rise with aging equipment and without any challenge to ACC's current practices ever greater portions of the capital equipment budget may be diverted to maintenance items. To summarize, the CAAB feels strongly that the 2% of Gross City Revenues allocated for capital PEG access equipment should be expended on appropriate equipment as defined by the accounting criteria cited above. Inhere is a dispute over an expenditure from this allocation, the burden of proof should be on ACC to verify the appropriateness of that expenditure since they alone keep the necessary accounting information to do so. Failure to provide verification would exclude an item from the capital equipment budget.