HomeMy WebLinkAbout0572.093November 4/ 1993
The Honorable City Council
Palo Alto, California
Attention: Policy and Services Committee
&c:~~~ Cable &ate Regulation
Members of the Council:
Report in llrie£
1~1s report transmits the reasons why Council referred the staff report
on Cable Rate Regulation to the Policy and Services Comrr.ittee and
includes the minutes of the Council Meeting on Septetrber 20 and the
original staff report. It is accompanied by a separate report from the
City Attorney.
DilC1l"sion
On Sept-ember 20, Council voted
regulation to the Policy and
following questions:
to refer the ma..tter of cable rate
Serw-ices Committee to consider the
Can rates be regulat~d in an active or passive manner?
Is the decision to regulate rates irrevocable?
can an authority other than the Council review and/or "r'"egulate
rates and service issues?
The referral will also ensure adequate: opportunity for the public and
the other Joint Powers member jurisdictions to give their input on
whether Pale ~to should regulate cable rates.
This report is accompanied by a staff report from the City At to I.'ney, s
Office responding to the first three issues. Staff has sent information
to the Jo": nt Powere agencies, asking them to att.end the policy and
Sexvices meeting or send vritten comments, and has cablecast an
invitation to ~e public to attend the meeting.
Respectfully s~ttedt
9:~f1il
Director, Info~atioD Resources
At tac!lments
1
jny
Manager
[xcl!rpt -Minutes of -li~o!'mbe[ :.W. 19>9.3 City Council ~ng
RESOLUTION'S
13. Resolution Finding and Determining that the Cable T","levisicn
System operating within the Joint Po~ers Service Area,
including the City o! Palo Alto, is not Subject to Effective
Ccmpetition and AlJthcrizing the Regulation Df Basic Cable
Service Rates
Director of Information Resourc9s Dianah Neff s~id the Cable Act of
1992 presented challenges for both cities and cable operators.
Many residents were interested in Palo Alto becuming certified tc
re-regulate the basic tier which meant the city could regulate all
cablp. costs.
council Member ~~dersen queried the need for a consultant to advise
on the cost-oi-servicE regulatory principles.
Ms. Netf said several companies specialized in the Cable Act~ but.
there was no indjvidual on staff ~ith the time to investigate the
rules. ']'!",e cost-ai-service document was expected to I:;;.e very
lengthy; it. .... auld re:quirC! a great cieal of time for sorneor.e to
become proficient in the regulations.
Council Member A.nder:;;en asked about the current staffing level.
Ms. Neft replied ther0 ~s a half-time staff person and she handled
all of the administr~ticn.
09/20/93 71-265
~ r:~
Excerpt -Minute.s of ~I?rnber 20. PH3 City Counc; i l ~""'--,-.;.ng
lingering communications gap bet\l,lcen the utilities Department, the
Council, and the cOMmunity.
Council !1ett,bcr Wheeler said one of U'.e most ir:1pc'r-t,-lTIt responsibili
ties of the Council , • .'as to make appropriate decisior.s that related
to utility issues. Some excellent decisions in the past resulted
in the he.:!l.lthy condition of the Cityrs utilities. The Council
should carefully guard the condition of the I..Jtilities. It W"35
importaTjt to have 'the policy questions laid before the Council
either in writing or bi phone in advance of thE meetings. She
suggested it would be t;e1pflJ1 for the UA'2 to s.end the council a
separate memorandul11 that included policy comments.
Coun~il Member Cobb than'ked Utilities Advisory carnmis;;ioner Fred
Eyerly and Jack Sutor-ius fo:r their efforts. He addt"d that UAC
\r{ould probably take on an increasingly importan~ role~
MOTION: Counci 1 ~le!llber Cobb moved, seconded by Rosenbaum, to
approve the Utilities Advisory Commission recommendation to
authorize the Kayor to e>:ecute the Northern Califor-nia PO\lier Agency
(NCPA) Facilities Agleeruenc and its assQciated s("~edules and the
NCPA Pooling Agreement aDd its associated scht"!dules.
MOTION PASSED 9-0.
RECESS: 9:40 P.M. -9: 45 P.M.
13. Resolution Finding and Determining that the Cable Television
System Operating ~ithin the Joint Powers Service Areal
including the City of Palo Alto, is not Subject to Effectiv~
competition and Authorizing the Regulaticn of Basic Cable
Service Rates
Di1~ector of Information Resources Dianah Neff said the Cable Act cf
1992 presented challenges for both citi<::!s and cable operators.
Many residents wer-e interested in Palo Alto becoming certified to
re-regulate the basic tier which meant the Cit}' could regu12lt.e all
cable costs.
Council Member Andersen quer ied the need for a consultant to advise
on the cost-of-s-ervice regulatory principles~
Ms~ Neft said several companies specialized in the Cable Act, but
there was no individual on staff ~ith the time to investigate the
rules. The cost-oC-service document "Was expe.cted to be very
lengthy; it ..... ould require a great deal of time for someone to
became proficient in the regulations.
Council Member Ander~en asked about the current staffing level.
Ms. Neff replied there ... ..,.s a half-time staff person and she handled
all of tt-,e administr-ation.
09/20/93 71-265
council Member Anc®.en as).:ed about ·palO Altol;::)OlC with regard to
the other cities.
Ms. Neff repljed Palo Alto \I,'dS the lead agenc/.
council l-lember Andersen asked 'WhE.,ther tr.e other cities · ... ere
approving the same document or \I,'hether Palo AJ to w:..:s the only city
approving it.
Ms. Neff replied the a9ree~ent of 1983 left the responsibility of
approving such items on behalf of the Joint PO·.Jet"s to the Palo Alto
City council.
Council Member Andersen asked whether Palo Alto had received any
feedback from the other cities.
Ms. Neff had sent memorandUms to the staff on the ::roint PO'o.'ers but
had not received any feedback..
Council Member Fa.;:::z ino requeste-j more inform.:ltion regarding Palo
Alto's role in regulating rates.
Ms. Neff stated Cable Co-op \oo"ould fi~e its basic rat..:! which
included the full cable pr icc. She eY.'plair.ed a c3!Jle op"3rator
could apply to the Federal Conrrnunications Cor;lr.lission (fCC) ruling
for a nbench~ark" rate which could be adrnillistered by the City on
behalf of the Joint Powers, or cable operators CQ1.lld ask tot" a
"cost-at-service analysis!! if thr=:y felt the benchmark did not
reflect the cost they incurred in pr-oviding the service. The
consultant would work with staff to provide the necessary analysis
and recommendations regarding cost-of-service and accurac:r· of
information by cabl'2 co-op. That information · ... auld be submitted to
the City Council.
council Member Fa~zino asked how the ~ther cities ~ould be involved
at that point.
Ms. Neff replied that. a joint colt1.!!'tittee of the citi~s .. ould meet
after the consultant evaluated the information. As a courtesy, the
other councils would have an opportunity to comment. on the group IS
reconunendatior.. The Palo Al to City Council ""auld :.11 tirnately
approve the recommendatio~.
council Member Fazzino asked whet-her the Council's approval would
occur on an annual b:lsis based upon rate. increases.
~s. Neff said FC~ would allow cable operators to come back on a
quarte-_rly basis if there .... ere changes in the costs. The council
'Would be in a position to revie .... any and all proposed rate
increases.
Council Member Fazzino assumed council 'Would review C~ble Co-op's
record tn ensure consistency with the federal standards.
Ms. Neff said the review would be handled administratively by s~aff
which would not require Cout'lc.i:l action unless the council ..... anted to
09/20/93 71-266
}~ ..
;;:;;':~
~<'"
.~
amend the customer service standards. The Cou~~il would receive an
annual report on the subject and cO'Jld agerdiz.c the; matt~.r for
fo~mal revieW".
Council Member Fazzino asked \Jhcthcr an.y cO?)'sidcration had been
given ·to having an authority other than the C~uncil n=vie'..I rat~s
and service iS~U2S, such as the Utilities Advisory commission.
Ms. Neff had not considered using any other au::.hority.
Council Member Wheele~ asked ~hether the City'= need far consulti~g
advice would be ongoing~
Ms. Neff repl ied c-.r"!ce the major cost-Of-S0::V icc analysis Wc.'lS
prepared, she hoped staff ,"'Quid be able to handle subsequent
requests for rate increases. HOi.,ever; if tr.ece ' .. 'ete a compl:::te
restructuring, there might be>: a need fot" a':':·:it.lon;~.l consulting
E<!rvice-s.
Bob Moss l 4010 Orme Street, said cable Co-op h3d adopted a formal
position rega!:"ding rates and he had been as~· . .;d to present that
position to thE! council. He affirmed that. C~ble Co-op ,"'culd be
going with a cast-oi-service, not a benchmark, method for pricing
services .... 'hich -.:rould increase the bdSic rates significantly. The
Cable Act outlawed charging for additic,nal outlets, and tne Cable
Co-op would have to make other adjustments to r::J.k:e up for the loss
of revenue. A consultant did ~ork on a co£t-of-service evaluation
for Cable co-op_ l~o one knew exactly wtlat the FCC regulations
'Would be. but the FCC regulations 'Were clear tha~ any city
regulating must use the franchising fee as the~source of income for
regulation. -rhe volume of FCC regulations ...... as expected to be
staggering. The franchise fee \oIas not subject to the Gann
limitations. To the extent that the money .. ·:as used for other
purposes such as regulating co'Ible. it .as not-available for general
public purposes. FCC service le'Jels were adopted several years
ago, and Cable Co-op had almost al~ays exceeded the requirements
for service levels. He cited several examples. FCC ass'.lllled the
Council ..... ould be the final arbitrator of ra.tes and thd~ there would
be full public hea::-ings. The FCC expected regulators to fello ...... the
rules set by the FCC'.
Tom Passel, 3825 Louis Road, Vice Chair of the Board of Directors
of Cable Co-op, expressed his de-sire that the system be second to
none and that it be available for local communit.y use~ He favored
Cable Co-op continoing as a subscriber-owned system, and the only
"'~ay to continue ..... as to go ..... ith the cost-at-service method of
pricing services. The findncial books 'Nould be open so t,hat anyone
could tell where the n10ney ...... as going. Cable Co--op \rIould cha:rge·
what it would cost to deliver services_
council Member Fazzino asked ... 'hat the current basic rate was.
Mr. Passel replied the rate \t,Ias $26.95 and cove:red access to
62 channels.
09/20/93 71-267
\
/
I / ,
!
I ' 'I II
council Me:rnter Fa@:r:. asked about an estimateQat(; of increase :in
rates.
Mr. Passel replied ~~~ new rate would p~obably ~c abo~t ~JO.OO, or
about a 10 percent i:,:.::ease.
Council Member Fazzi.-.. -:; asked how the new rat.e ""QuId c01'!1pare to
other basic ra't-es in :E:3rby comm'.mities.
Mr. Passel replied C::'::~e Co-op co~pa=-ed q1..i.it..e fa'Jcrtlbly en a cost
per-channel basis. :~ was important not to cODpare "apples to
oranycs" when look in; at cable rates.
Council Member f'azzi;-,: 2.sked for Mr. passel's rccction to t.he s*;af!
proposal regarding c:r'::'lcil review of cable rates.
Mr. Passel indicat.ed :~ble co-op was comfortab~e dealing with the
city.
Council Member Rc~en:::::';~ asked y"hether l'1r-. Passel at'1d J-lr. Mess .... ·e::-e
subtly saying that Ca:::':'e Co-op did not want tn€ Counci 1 to take tr,e
action recommenoE=d b/ 5taff and engag-e in rC9u lation.
Mr~ Passel reiteratE:: the Cable Co-op ",as conforta.ble ..... it.h the
Council revie'W~.n9 r='":,= increases. He pointed out that the Cable
Act .... as a complex dO::-'::l':mt ..... hich. among other things, was adver-
tised as a mechanism :;.::. reduce cable rates. Under the fie ..... rules..
Cable co-op was forc,='1 to carry SOl!1e channels that it \oIould not
ordinarily carry. Tn,=: cable Act was aimed at "the big players'" but
the cost-of-service ::.sthod would allow the smaller companies to
survive.
council Member Rosenb~um clarified the cost-af-service study might
reitult in a mcch hi:-:'er rate for service, which would help to
compensate for the lc~s in revenue mentioned by Mr. Moss.
Mr. Passel replied th~ cost-of-service study might r:esult in much
higher rates for basic services. Cable Co-op \oIas charging $8.95
for an ad~itional outlet, and Cable co-op wo~ld l~se ~bout $54,000
per Jrlonth. The people ... ·ho had additional television sets · .. ·ere
subsidizing the average cost of everyonE else's bill for basic
service.
council Member Ros2nbaurn asked about the number of subscribers.
Hr~ Passel said Cable co-op had about 21,000 5ubscribero.
Council Member Rosenbaum asked whether Cable co-op h~d anticipated
higher rates regardless of the connection fee issue.
:Mr. Passel did not have enough
biggest effect was the in~bility
:sian set.
09/20/93
information to respond~ The
to char,ge for the second televi-
71-268
':,.' .. ~J~
• r· Council Member Andprsen asked to what extent--aid che additional
revenue from the premium channels and pay-per-'liew channels r-"!cjuce
the cost-of-service component.
Mr. Passel replied the ch'3.n."le,ls did provide r.2venue 3nd, in some
sense, did subsidize the basic rate.
Mr. Moss added that .... hen the cost-of-service stUdy 'Was prepared,
they :Looked at tbe income from both pay-per-·Jie'.., and ths premium
channels and determined that. Cable Co-op ... as not ,::-ha.rging e:1ough.
for either services to recovez-all the costs. He rr.en':ioned that
Cable Co-op was spending ~:Cout $4.00 per month ,ger subscriber for
under-grounding.
Council Me!t'.ber Andersen as'ked 'Whether indebtedness ',!as a factor and
if the council could expe~t a recovery over a ::;~l':nt period of tjm.:;:
resulting in a stabiljzati~n cf rates.
Mr. Moss replied it · ... 'as a very cOr.lplicated qu(;sticrl. Cable c:;-op
had a high debt load and a high capital cost ',Ihich Mad to be built
into the cost-af-service base. Cable Co-cp was short a fe· .. ·
thousand customers from being able to recover: fwl1y. If Cable Co
op chose the benet-.mark met.hod and decided not to charge 100 percent
of what ..... as allowed, the Cable Act would prohibit Cable Co-op from
future rate increases. Subscriber !:"ates could be ra i sed only by
cost-ot-living increases. If the Co-Op did not 2Si{ tor 100 percent
of the cost-ai-service method allowed by OCtober 1, 1993, Cable Co
op could never recover that amount. C~ble Co-op might be forced to
raise rates more than it ",anted to in order to build into the
system full recovery. If the cost-of-service ",'ere reduced because
of efficiencies and increased SUbscribers, the ratl2s "'ould also
fall. Dividends to the subscriber t"Jad be.en built into Cable Co-op.
Mayor McCown asked the alternatives the Council had. The issue of
cost-oi-service versus benchmark .... as not a decision the CO'Jncil had
any control ever. The choice of the City WctS whether to become the
rate regulator.
Ms. Neff replied there \I.'ere t ...... o alternatives: eith.er the City
chose to regUlate or not to regulate. The FCC ..... auld step in if the
City did not have the franchise fees to cover tile cost of reg'.lla
tion~
Mayor Mccown asked st.aff to explain why the city sh'Juld becomE'" thE'.
rate regulator.
Ms~ Neff sensed from residents that they ~antad the city to review
the actions that Cable Co---op took for the prot~ction of the
subscribers.
M%:"~ Calonnc clarified that the: market place was not functioning in
a noz"!l\al manner since there ",'as only one purveYDr. palo Alto would
probably be involved in a contentious rate-making process. The
City would probably need cOi,sulting assistance.
C9i20/93 71-269
.-;--------------
@ 0
Mayor McCovn .said .... hen the sub:;cr iber-owned sjl~tcm was select::·d,
the City made a conscious decision not to get i'lto the ro] e of the
provider of cable and/or regulator. it was her un(lGrstanding that
the nev federal law had caused t."l8 city to eke ide 1o.'hetJ-,er-to
regulate or not.
Council Me:mb~r Cob!::. stated that if the city b~cal:'1e the rate setter,
there '.".ouid k'e a perception on t"ne part. of the public that the
·"ouneil should be able to do sometl:"ling about the services provided.
:.uncil Member Roser-.baum asked whether a decision on the issue
r,eeded to be made irr.mediatp.ly. BCised upon what he had heard, be
did Toot think that it was a good idea. for the City to take on the
regulatin-g role. He suggested that a deci:s:ion be deferred until
the Ccuncil could get D10re input fronl the pUblic.
Ms. Neff said if the City ~ad not chosen to r~~ulate by November
15~ 1993, the rates could be increased without the City's approval.
It took 30 day'3 to be c2rtit'ie:d. The latest possible date that
Council could make a decision to regulate I"ates. :.:ould be October
12, 1993 ..
Council Member Rosenbaum asked
process at e:ny time even if
deadline.
,",'hether the Council could start the
it missed the October 12. 1993.
Ms .. Neff replied there "'"as no tim-E':' limit by \o>hich franchising
authorities must file for certifica~ion reouests_ The real time
.frame was November 15 r 1993, because the -freez.e on cable rates
applied on April 5, 1993, would be lifted.
MOTION: Council Mcmbe.r Fazzino moved~ seconded by J<niss~ to
approve the staff recommendation as follows:
1. Adopt the resolution determining that the cable tele .... ision
system operating with the Joint Po· .... ers service area is not
subject to effective competition and authorize the regulation
of basic cable service rates;
2. Authorize the City Manager or her designee to file with the
FCC forrt 3:28, "Certification of Franchising Authority to
Regulate Basi.::: Cable Service Rates and Ini tia 1 Finding of Lack
of Effective Competition"; and
I
3. Approve notificatio!l to Cable CQ-op:of the intent of the City
to enforce FCC customer service StandaI'ds and/or cont inued
enforcement of the customer service: stdndar-ds in the Am.e.nded
and Modified FL"anchise Agreement section "9 -;.. .Additional
Subscriber Rights, .... 'hichever r.'Iethod of enfcrcernent is more
beneficial to the subscriber.
Council Member Fazzino said 't_here was a role for government to play
in the cable television 'World. He did net 5upport the idea of
municipal ownership when the issue came before the council years
ago. At that time the council did not have a si~nificant problem
~ith the idea of regulating rates~ He preferred to have another
09/20/93 71-270
authority regUlatt~9 rates. .He suggested t~" 1) group like the
Utilities Advisory Commissio~ assist the Coun~il with the issue of
rate regulation and service standard <Hiherc-·ncc. By t3king no
action on the issue. tha Council would ta%e oction. He f~lt that
Cable Co-op had done an e~cellent job. He recogr-.ized the rates
were high, but based on the quality of the prograrr.r:1ing,. the rates
were fair. Staff should explore ways to avoid some of the concerns
expressed by council Member Cobb relati~g to co:-.plc:. int letters and
the problems associated l,oj'i th being put in the position of regulat
ing rates. He felt the Cable Act placed the City in a position of
playing a role in the area of rate regulation.
Council Member Simitian said there wa5 a lot 0: data but not much
clarity about the policy decisions to be made and tt-.e ir.,plications
of those decisions. H~ oid not disagree ..... ith :m'Jch of what COl.ll1cil
Member Fazzino said except for the conclusion he reached. One
possibility was to refer the matter to the Policy and Services
(P&S) COr.1!nittee. Given the number of "t,,'ritten com:rnl1nications
received about cable Yhe~ ~he city was not responsible for
regulating, he was inclined to believe that there were many people
who would like to share their opinjor.s on the subj ect. It .... ould be
a disservice to the community to make a decisic,J1 -.Jithout l.hose
opinions. He understood that there .. as ISO clays or longer period
of time in 'Which to decide whether to regulate. To the extent t.hat
Cable Co-op was concE"rned about ~rje City's actions l there were
political imperatives for Cable Co-op to continue to respond in a
responsible way to the community's conce~ns about rates while the
City continued its deliberations~ If that did not. provide the City
with enQugh protection l h~ asked 'Whether the Cit}' could take an
action to become the regulator, refer the matter to P&S committee
and then consider if the Councills decision should stand.
Ms . .Neff did not have an answer to the questien.
contact th~ FCC to get an answer.
She offered to
council Member Simitian asked for staff response to the suggesticn
of referring the matter to the P&S Committee.
Ms. Neff said 'With regard to the issue of cor-.plaints., the city 'Was
required bJt the frd:lchise to administer complaints. If the City
got a complaint regarding service r staff responded to the com
plaints. The new activity 'Jas the rate regu.lation, not the
complaints.
council Member Simitian said that his comment about complaints · .. ·as
.to point to the fact that,as the rate regulator the Council could
expect e'\~en more comrnentary~ He believed there wen: many people
who would like to cOIllIilunicace with the COLlncil about the issue.
There was a strong view expressed in the letters. He proposed a
substitute motion in the absence of staff being able to clarity the
issue of referring the m~tter to the P&S Committe~.
SOlJSTITUTE MOT.TON TO RE:'ER: Council .~emb€r Simitian mOVed,
seconded by Rosenbaum, ,tc refer the iss~e to the Policy and
Services committee r with the proviso that If nec~ssary, staff be
09/20/93 71-271
I
i
· ,
~ :":,c>-
:.::~~1"'.?
~;~/,·..;~:,;.·_;;ii,"""""'''''''iiio'''''
® 0
given the authority to bring the matter bock before th~ entire
Council if there ..... as a deadline that ~'arrantf::d it.
council Member Sirnitia'n said the councii should ca~,t ,J cautionary
glance at Cable Co-op and he hoped it understood th~ j~pljcations
of rate increases during that interim period. He understood the
Council could join the regulating "garr,e" at a later tine.
Mr. Calonne suggested if COllflCi 1 ""'a~ted to refer t~c matter in
order to get soree quest ions answered, the subst i'tutc 17.ot i on shDuld
be specific about authoIizing staff to return befor~ october 12,
1993.
KAJ:ER '-ND SECONDER AGREED TO INCORPORATE INTO THE" SUBSTITUTE MOTION
the understanding that staff could bring the matter b3Ck to the
full Council p:-ior to t~e policy and Se:r-vices COli.mittee hearirlg if
staff believed it ~as appropriate.
Council Member Andersen said re'jardless of ho .... · the Council acted,
there would be a rate in.r.rease. There was a large number of people
in the community 'Who anticipated the Council \.rould be involved in
the process. The council should not send a message to the
community that jt did not w'ant to be responsible far rate regulat
ing.
Mayor McCown had not been persuaded that having the City in the
regulatory role ~ould make any difference to what Cable Co-op was
forced to do given the changes in the federal 15w, The one 3rea ef
concern that \lias not justified on the part or t.he public .... ·as the
issue of cost~ Cable Co~op had demonstrated the justification for
the le...,el of charges~ She queried ,"'hat additional value the
Council would provide by looking over the shoulder of Cable Co-op.
She noteQ that no one from the community wa~ in attendance to speak
to the issue. She did ~ot thil"lk the Cou:icil should rush into a
decision on the matter unless staff tcld them differently.
Council Me~brr::r Faz:uno said that by supporting the substitut.e
Illotion the City was giving Cable Co-op free reign to establish
whatever rates it desired. The decision as to whetl"-.er the Council
vas a rate regulator ~ad alread:r' been decided by Co~gre.ss.
SU}lS'l'r'l'OTE MOTION TO REFER PASSED 5-3, AndersE:n, Fazzir.o~ 1<niss
... no ....
QRDINANCES
.14. Ordinance 4172 entitlea "Ordina!""Ice of the Council of !:.he city
of Palo Alto Amending the Budget fo.r thE Fj scal ~ea:r 1993-94
to Allow for th~ Purchase of a 36.5 Acre Easement Commonly
known as International Telephone an:d Telegrc:pb site"
Agreement between cjty of Palo Alto and KFS World communica
tions, Inc., for Purchase and sale of a 36~5 Acre Easement
Commonly known as International Telephone and Telegraph site
09/20/93 71-272:
~ ,?,. '? -....;
given the authority
Counci! if there was
to bring the :matter back befo:-e
a deadlin~ that Wd!ranted it.
the ent5rf;
Council Membe~ Simitian said the Council should cast ~ cautionary
glance at cable co-op and he hoped it und~r5tood the implications
of rate increases during that interic period. He ~n~erstood the
Council could joir, the regulating ~ga-;::c" at a later ti:"1€.
!1r. Cd.lonne suggested if Council +wanted to refer the matter in
order to get. some questions answered, the substitut.e ~otion should
be specific about authori~ing staff to return before October 12,
1993.
kAJl:ER AND SECONDFR ~GP.EED TO INCORPORATE INTO THE SUBSTITUTE MOTION
the understanding that staff could bring th~ natte~ back to the
full Council prior to the Policy and Services committee hee.r-ing if
staff believed it was appropriate.
Council Melllber Arldersen said regardless of how the Council acted,
there would be a rate increase. There \,:as i! large number of p.:::-ople
in 'the community who anticipated the Council would be involved in
the process. The council should not send a message to the
community that it did not want to be responsible for rate regulat
ing.
Mayor McCown bad not b~en persuaded that having the City in the
regulatory role would make any difference to what Cable Co-op was
forced to 00 given the changes in the federal law. The one area of
concern that was net justified on the part of the public was the
issue of cost. Cable Co-op had denonstraled the justification for
the level of charges. She queried ..... hat additional value the
Council would provide by locking over the shQulder of Cable Co-op.
She noted that no one from the community was in attendance to speak
to the issue. She did not think the Ccu:1cil should rush into a
decision Dn the ~atter unless staff told them differently.
Council Member Fazzino said that by supporting the substitute
!!lotion the City was giving Cable co-op fz-ee reign to establish
whatever rates it desired. The decision dS to ~hether the Council
was a rate regulator had al~eady been decided by Congress.
BUBSTXTUTE MOTION TO REFER PASSED 6-3, Andersen, Fazzino, Kniss
"no."
09/20/93
;.. ..... <-"',
September 16, 1993
The Honorable Ci~y Council
Palo Alto, california
Members of the Council!
Report in Br1_fl
./
-:
13
The purpose of thie report is to request that Council approve a
resolution OIl behalf of Palo AJ.to and the other Joint Powers me:mtler
jurisdictions to regulate the basic cable service rate as allowed
under the cable Television Consumer Prot.ection and Competition Act
of "1992 (.l992 Cable Act); a.uthorize the City Ma:o.ager or her
designee to file Federal Commu.. .. ications Commission (FCC) Form 328.
·Certificat.ion of Franchi-sing Authority t.o R.egulate Basic Cabl.e
Service Rates and r.niti~ Finding of Lack of Effect~ve Competition
with the FCC; and approve the notification letter Co Cable Co-op of
the City'S intent to enforce FCC Customer Service Standards and/or
con~inue to enforce the Amended and Modified Franchise Agreement
Sect-ioo .9 --Mditional Subscriber Right9~ whichever method of
enforcement i8 more beneficial to thE'! cable subscriber.
Pi.Qup«ion
Tbe 1992 cable Act~s basic premise is to curb rapidly increasing
cable television consumer rates and improve customer service. The
1992 cable Act's requirements extend to numerous areas of cable
television operations. Same of the law's provisions apply only to
certain types of multichannel video programming distributors, while
ethers affect all players involved in providing video programming.
See attached 'Summarv of S. 12 -The cable Television Consumer
Protection and Competition Act of 1992' for details.
Perhaps most significantly, the act 're-regulates' the industry,
changing the way broadcasters~ cable systems, local governments and
programmers conduct business. While the 1984 ('-able Act took a
CMR:488:93 1
•
I
!
• -'"" >
general hands-oft approach to cable, there now exist federal rules
fnr almost all aspects ot cablecasting. ranging from what broadcast
st.ations must be carried and how they are arranged, to the
parameters that may ce established for rate setting and minimum
Btandards for customer service~
!,.ccal governments may begin enforcing new federal regulations
governing cable rates and customer service standards this fall. In
order to regulate basic service rates and the rates for equip~~nt
and installation used to receive basic cable service, local
franchising authorities must be certified by the PCC and may begin
filing certification requests (Form 329) Sept~~Der 1, 1993.
Complaints regarding cable programming service tier rates (Form
329) may be filed with the FCC on that same date. At this time,
cable Co-op has indicated that they ~ill not be tiering rates (all
cable progr~n9 will be included in the basic tier}. Therefore~
it is Dot necessary for the City to file Fo~ 329.
lranch1ae AUthority Certifieat!cn
A franchising authority seeking to regulate the basic tier cable
rates. which includes all local television broadcast channels
{cOll'lnercial and non-commercial) and public, educational and
governmental (PEG) access channels, and any other video programming
a cable operator chooses to place on the basic tier, must first
file a written certification with the FCC that it:
1. will adopt and administer rate req'Ulations consistent
with FCC regulations;
2. has the legal authority to adopt, and the personnel to
administer. such regulations; and
.3. will adopt laws and regulations providing a reasonable
opportunity for consideration of views of interested
parties.
Franchising certifications ~ill be deemed effective 30 days after
~iling, unless the FCC deter.mines that the franchising authority
has not met the three criteria. The franchisiog authority will
tben have an opportunity to revise or modify its certification.
cable operat.ors or other interested parties may petition the FCC at
any time to revoke a franchising authority'S cercification.
The FCC itself must step io and exercise jurisdiction over rate
regulation if it (a) disapproves or (b) revokes a franchising
authority~s certification. If the franchising authorlty chooses
not to file a certification. the FCC will not step in; and local
franchising authorities would have no authcrity to order rollbaCKS
of basic rates or to protect consumers from continuing increases in
the basic service or equipment charges_
2
.0. , .:...::..~
IAt-Regul. t: ion
under the new regulations; franchising authorities may regulate the
rates for basic service (1.e.; the tier containing local television
broadcast stations, PEG channels and any other pro9r~ng placed
by the cable operator on that tier}1 ~~d the rates for equipment
and installation used to receive basic service. The FCC will
regulate the rates for cable programming service tiers (i.e., all
tiers of service ocher than premium and pay-per-view programming) I
but the FCC will do so only in response to complaints frOill
franchising authorities. subscribers or other-relevant governmental
entities. The rates far prem.i1..lD'l. channels (e.g., Home Box Office,
Cinemax, Encore} and pay-per-view programroing are not Subject to
regulation.
Cable rates are subject tc regulation only in franchise areas not
subject to -effective competition, • which is defined as a franchise
area:
1. where the cable system serves fewer than 30 percent of
the households in the franchise area; or
.2. which is served by at least two unaffiliated multicr.a.nnel
video programming distributors tr~t cover 50 percent of
the franchise area and serve 1S percent or more of the
households; or
3. where a orunicipally-owned system covers 50 percent of the
households in the franchise area.
Under tbe new rules ~ the FCC will presume that ra tea can be
regulated in all markets; and Cable operators must show they are
subject. to effective competition. Under these rules, the Cable Co
op system is ~ot subject to effective competition, because they
serve 47 -50 percent of the households in the franchise area and
there are no other multichannel vid~o programming distributors t~~t
meet the criteria aboVe. Therefore~ Cable Co-op would be subject
to rate regulation upon certification of the City by PCC.
Local franchising authorities may begin filing requests for
certification to regulate basiC service rates on September 1~ 1993.
although there is no time limit by which franchising authorities
must file a certification request. September 1 also is t.he
effective date of the FCC'S rate regulations. Franchising
authorities~ cable subscribers and other relevant governmental
entities may begin to file complaints about the reasonableness of
cable programming service tier rates on that. date.
Both a request for certification and a complaint regarding Donbasic
rates are to be filed on official FCC forms (see attachment).
CMR:4BB :93 3
.. ..;.
.. ~. ,. ...
The FCC's rate regulations establiah a fonnula by which cable
operators determine their rates for basic and cable programn..ing
service, and then compare them against a benchmark tate derived
from basic and cable progranr.ting service ratea in cDmpetitive cable
environments. Generally, rates i~ effect on September 30, 1992
that are above the benchmark rate must be reduced by 10 percent or
to the ben~~Ark rate. whichever is less. or shov that the higher
rates are justified based on a cost-oi-service showing. Cable Co
op has notified th~ City it plana to r~quest. a cost-nf-service
shOlting.
Co,t-of-Soryiqe Shoving,
Cable systems that do not have competitive benc:t-.mar:k rates are
permitted to demonstrate by a cost-of-service showing that rates
higher than the penchmark rate are justified. The FCC pl~ to
develop and propose national cost-ot-service standards by November
1993 to b@ used by cable systems in making rate justifications. In
the meantL~, cable systems and local franchising authorities are
expected to use general cost-of·service regulatory principles.
Because cf staff's lack of expertise in administering cost -of·
service regulatory principle8~ it will be necessary to hire a
oonsultant or firm to review cable Co-op's cost-of-service
justification. This process will follow cartification. and staff
will return to Council in No~tember or December 'With a contract for
consultant services and a budget amendment ordinance (BAO). scaff
anticipates the contract will be under $25,000.
The FCC'~s new customer service regulat.iona set minimum national
standards f or ~
1. office hours and telephone availability;
2. installationB r outages and service calls; and
3. communications between the cable systezn and subscriber,
billing and refunds.
A copy of the FCC Customer Service Standards are attached for your
review. Although the federal standards :became effective on July 1,
a franchising authority cannot enforce the standards" unless it has
provided the cable operator 90 days.t written notice via certified
mail of its intention to eDforc~ the federal standards. A
franchising authority retains the right.t however.t to establish
and/or enforce existing cust~~r service standards that exceed the
FCC'S standards, or which are not covered by the FCC's standards.
Such local standards tlay be enforced pursuant to a franchise
agreement, or by state or local law or regulation.
CMR:488:93
--'---------
C'"'\.,." -,jJI
Staff has prepared a letter to notify Cable Co-op, upon Council's
approval, of its inte:lt to enforce the FCC Customer Service
standards and/or contiuue tv enforce the cuetomer Ettandards in the
Amended and Modified Franchise Agreement SectiDn S --Additional
Subscriber Rights, whichever method of enforcement is more
beneficial to the suDscriber.
fb,,"'ry o£ »I-'ir; Sf!rviee RasuA.tgry proceu
Act:ion
City Adopts Regulations
Pile Certification
Certification Effective
Notice to Cable Co-op by certified
mail that certification has occurred
and necessary rules have been adopted
cable Co-op Files Rates
City decides case, or issues order
saying more time needed
City decides case or allows rates
to take effect subject to refund
Written decision and order to roll
order back rates. if appropriate
Staff recommends that council:
Effective Rate
9/20/93
9/22/93
Automatic, 30 days
after filing: 10/22/93
10/25/93
Earliest Date Due:
11/25/93
Must issue 30 days
after Co-op filing
of rates
120 days after first
order for cost-of -service.
90 days for benchmark
120-150 days after first
for rate review
1. Adopt the attached resolution determining that the cable
television system. operating within the Joint Powers service
area is not subject to effective competition and authorize the
regulation of basic cable service rates;
2. Authorize the City Manager or her designee to file with the
FCC Form 32e~ "Certification of Franchising Authority to
Regulate Basic Cable Service Rates and Initial Finding of Lack:
of Effective Competition-; and
3. Approve notification to Cable Co-op of the intent at the City
to enforce FCC Customer Service Sta.."ldards and/or continued
CMR:4BB:93 5
enforcement of the customer service standards in the A~euded
and MOdified Franchise: Agreement Section 9 Additional
Subscriber Rights, whichever method of en~orcement is more
beneficial to the s'.,UJscriber.
Respectfully sUbmi.tted,
£) iaau
•
/L1i+----Dianah Neff
Director, Info tlon Resources
Attachments! l} Resolution Regulating Servi ce Ra tea
CMR,488 :93
.2) PCC Porm 328 "certification of Fram:::::hiS"ing
Authority to Regular Basic Cable Se:rvice Rates and
Initiate Finding of Lack of Effective Competition-
3) Certified Letter to Cable co-op
4) Summary of S .12 -The Cable Television ConsU!I1er
Protection and Competition Act of 1992-
5) PCC Customer Service Standards
6
"~,--<>
.. ,.,-.",,-"
RESOLUTION NO~
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO
FINDI~iG AND DETERMlNING ~~T THE CABLE TBLEVISION
SYSTEM OPERATING WITHIN THE JOI~~ POWERS SERVICE
AREA. INCLUDING TIlE CITY OF PALO ALTO. 1S NOT
SUBJECT TO EFFECTIVE COMPETITION AND AUTHORIZING
THE REGULATION OF BASIC CABLB SERVICE RATES
WHEREAS, the City of Palo ~to '-City") is a party to an
agreement entitled -Joint Exercise of Po~ers Agreement by and among
the Cities of Palo Alto, Menlo Park, and East Palo Alto, the Town
of Atherton, and the Counties of Santa Clara and San Mateo· (~Joint
Powers Agreement-" and represents the interests of the parties
{·Joi!lt Powers·} in connection with the cable television system
(·System ll ) operat.ed in t.he joint powE:rs senriee area ("Service
Area·); and
WiDL~, the Council of the City of Palo ~to (·Council-)
finds and determdn~B that the System operating within the Service
Area is not subj eet to ef.fective competition UT!der the Cable
Communi =at ions Policy Act of 1984~ as amended by section 623 (a) (2)
of the Cable Television Consumer Protection and Competition Act of
1992 l'Act'). 47 u.s.c. 5 543{a) 12); and
WHEREAS~ the Council will, within 120 days of certifi
Cdtion of the City by the Federal Cozmrunications Commission (-FCC·)
as a franchising authority authorized to regulate basic cable
service rates, adopt and administer regulations with respect. t.o
basic cable service that are consistent with the regulat.ions
adopted by the FCC pursuant to Section 623(b) of the Act~ 47 U.S~C~
§ 543 (ll), and
WHEREAS, under Article II of the Charter of the City of
Palo Altu, Article XI, Section 5 (a) of the ccostitution of the
State of California~ and the Joint Povers Agreement, the Council
has the legal authority to adopt and administer the regulations
with respect to basic cable service rates; and
WHEREAS. the procedural laws and regulations applicable to
basic cable service rate regulation proceedings by t:he Ci ty provide
for a reasonable opportunity for consideration of the views of
interested parties;
NOW, THEREFORE, the Council of the City af Palo Alto does
RESOLVE as follows:
SECTION 1. The Council hereby approves and aut.horizes the
City Manager, or her designated representative, to file on behalf
af the Joint powers, an application for certification of the City
as a franchising authority to regulate basic cable service rates
~
-..;;---------~
and. an initial finding of lack of effective compec ition witt. the
FCC.
SECTION 2. The CO\lncil further approves and authorizes the
City Manager~ or her designated representative .. aft.er the '2!fective
date of the .FCC's approval cf the City's application for certifi·
cation to adopt and admciLister regulations with respect t~ basic
cable service that are consistent with the re;ulat10ns adopted by
!:he FCC pursuant to Section 623 (b) of the cable Television Consumer
Protection and Competition Act of 1992.
SiCTIQN 3. The Council
approved does not constitute a
Environmental Quolity Act.
INTRODUCED AND PASSED,
ABSBNT
ABSTllllTIONS ,
ATrEST:
finds that the
project under
APPROVED:
City Clerk Mayor
APPROViID AS '1'0 FORM: City Manager
action hereby
the california
Senior Asst. city Attorney Director of Information Resources
2
•
-'
FCC 328 Ff«""O~' J
CEItTIFlCA.TION Of FRANCHISING AUTHORITY TO REGULATE BASIC CA.BLE SERVICE RATES
AND INITIAL FINDING Of LACK OF (FFECTIVE COMPETITION
-.:~-City of i. (> Alto _ ......
~~ltQn Aver.u!
ao, i Sate j np UOt-
Palo Alto CA 94301
T~"""'~_~
415/329-2313
..... to COIIUct .ntiI NIIpeC1lO dIG ~
Dianah "eff
La. ....... (tJ .... ~Dfabk~ ....... .-I~FCC~
... ~ rihiIt pur ~ Wboc:h lldationll .... 1f ~
~~·s ~ ;'!~7~ ,,~ommun:lcations Co--
ve Ii'! 1t'.C: Inc.. --3200 Park Soulevllrd
ao, I~ I ZH""* Palo AltO 94306
CIMt"... .. 1CC~1JNI ~
c.w.~ .......... --ao, 1_ I"'Cod<
ClMts,.a-"i ra: ~ lJrJI IdtftliAr.
L~"'-coWflf~_~~-.ii ~pou
a. ... IUbjKt.~ .... 'lIiIIh ~ID.wcJI ,....,~IiiiIlt ...
~,~~IMesIf~J
J 1-"-!~ .... Cable COlUNnicatio:lls Co-IdentifiB-
"pendy" Of fAlp Altg, Inc
Zoe. ..... ,.. ....... """af ... *""_.~ 1!1 ..... 0-
..... -u,.,
,
!. WiD ,..... ~iNnt: ~ .dap:
~ 'H .,... III artirra§onj and
~~~~Io
kJiI; ~ III!!f"'I'k.a IhIt ...... L-onMtent
wiO. \tl.e ~ ~trr~ fCC
,...,..... to ",. U.s.c. $ediM s-I34br."
... 0-,... ~ MIIbDrity ilwwe
dw '-PI ~ ....... Iheool
It. 001II your ftMdwm( authority Mve [ill'S DIW
the' ~ 10"""'" ItIeml
,. 0. ... JIII'OC'I!'IM'Il '-' .-I ~
~"r"'~~
"''f''l'Ja''~~''''''''''. ~ sw«CW*r ,. tcIIIfIidor...,.,
of!:t.viN'1 of ~..-r
Ii. .C . 7 ~tMlhatie
~ ....... u..iI~"".qea
..,.,..... S t" ....... _s-
IItIinICiaa ..... , II ,.. It.oM: __ ..,
~""'p: ,.CIIlIJt'kt1'
~ $ t·· _\hd(a) ........... )O~ot!k
.....,.... ill IN ~ __ ~ ... the caIi* ... of.
CilIbII-",....f,J .. ~_.(i) __ ~ ...... ...
..........., ...... , d~p''''' 's~eadI"
wWdI.... ..... ... P..' a •• "'50~
':_~kl6e~ ... _a"--'-'"
........ ~ ... .-...-.. ~ -'Itred .,.
.... , till ~".....-Mt ~ IICIw '!NIl .......
~ ............ • ............. 15 JUWI'II oJ
1M ~ in ..... ~ ___ Id. ~ wideo
pt.., . c ~ ....... .". dill' ~ auIJIorit)o ..
_ hnctIiIe ............ .w.o ................ ., ... 5O,pernr!I
e(1Ihot ~ ua...t6r-=:IM--.J
WUlfUl fA.l5l 51.4~"lS M.4Of ON THtS FOItM AIIt:.I
'UNISttAAU I't' F.(NE 4N[);0« :Mf'C1SONMf"", (\.1.1. coot
TJTU 1&. SKTlON 1001).
a.wm tM 1PriIiNI_ 11M CiIP¥ ef dW ~ ..... C
~,,~,""'rih-r~_
........ CCC ......... ~
.... c.wr~~Certif'~
.. 'O ..... 1ISYI
w ......... D. Co 1IItl6
i!,c'
,fJ~~:
~,------------------------
.,,'" -""
•
, .
,',
t.:, ,'~?'.,.(,"
_l __ _ ..
INSTRUCTIONS fOR FCC 323
FRANCHISING AUTHORITY CERTlFICATlON
I. Tht-c..t"r T .... ,,;OO'1 ~I PnlIK'I>on arn:J COfJ1~ition ,"'ct.
~ ... ~ 1'1'12, ~~ me """"~ i!1 ,""",'101 able"
~ ryttemS N ... not .. .-bjed II:> ~~ wmlH'ttl;~ .ate
~ In~. fIIIe5forlk b,;"jr .. orjrlf!ier!IMtie-"~ .. ired
•• condition oJ oIC'CftIo ., all IXheJ tndeo seMa:s .,::i COf'It,II~I;:'S.
_. __ ~ Ioar ~ lUIicJI ~J..,:j p".Ib.!io::.
~, MtI' JMAWit ItCCti5 ~.rod .1oOC'-d ~
will tie-.sub;ta ttl 1t!QlIbt00t! by Iocil 01' Ita ~mentJ.
rf="tnd'!i,...,...choriI:io"i. Il»!I fo, Qb~ ptOIIrammin. _~ IfId
~ eq:l~ WI ieNicftntlllPl bMic Ind PlY ~f.) will
be ~ • ~ bof tI'Ie F«... .... b patt ~~
Id\Intwb. far ..tIic:h-theI"e if; • ipfi'Oflc ,..~: 01' ~
ch.irp) -,. ~
2. Clt'IIr able S'fIIt'!lS IIh« M' noll ~ Ie e&c:iYI' ~ may
Jae.,.,..bIed E~ awnpet~ muII~ N raJ ~ tn.n 30
pillJ'Clnlvlu.. ~ in 1M" 'nrochiM' ara ~111 the cab~
IefYb d. table t)'!tefn.. ell) thI" ""-'dliw ilIU is Ii) teMd by;r ieasi
t'WO~1<at!d ~ vi6eo ~"":"I d~-.-t. of
~~~wWec~inllO.IustSC~cS
Ifoe ~ in Ih: ~itoe aru, ~ Ii~ the ~ ai
~ ~ iii:! ~I ~ oIfMCf by
~ ~ prov~iI"I dlil'riltvt«s cdICr ~ 'IN> Iarp!sf
mu~ oridao PJ'OII'II'I"IirII liisL'ibulrw ~ 15 pP'Ce!'1t of
... ~ in ... ~ IrQ,; or id • rn;.;h]dlIme\ 'I\6ec
~lftJdtIIributor~ bydw ~i5irc~ lorN
FrwIdI".t:w oIferI wIdeo ~IIO _1east.50 ~ fAlhe
~InN~ ___
3. 1ft 0I'Il!J It! """'-11M ..we:. Up PaS, ~ ~ IIUthorify
.,. bI! ~ by me FCC. In Ofder kI be ceIti5ed, II hocf,ilinl
~ rnwr ~ tMI fbmo_ .u ~:;a,;i one CXIpf .........
~,.,.and .. II r • __ "'~.IheFCC
by ~ ..a. ,... r.,.r,t ~ ... 1M fCC ..... ...............
~ A ~dlfle lcImIlT'ioZII: bIo ...... on It. ~ 0DeQI1)O' iIy l\nI:-dI:!s
..... 1 d!' _lIei:wIo the 0.. v.. fann is left: 01 def~!O!he fCC.
5. n. ~utIority'lo ~ wiU berorroe 6:.:I'''''-lQ,Am
"!tw 4w .........0 "" .... P>flII4! """m ..... P lll'llesi cctIetwDe
~ tor h ~ by at. cia. T'he-franchiUIIl ~
QrWIGt ......... ,... ~. untJl,if: "-~ oIdopIed
... rwquiIIed ~ IMtbelowt.E!'1 un1l1 ill M ncJIm.d the r;;aipI,p
......... It h-. ... artified .-I NI • hal adopred the t'equiflld -6... m.~1ICIbe~~~_trnAt~~1!O
~ 3,~.".o 3,...+rid! :no ~iFted.as fo,'lowt;
7. Qua&ion J: The ~ aurtwrity f'IlU,:I ~ r-= rqubliorH
~withthe ~'I~ forbAicQll~ ~
1«1 hMlill (tIi:I ~b~. tftthnctli5irlS~ mer ~ .a.x .. ~. 1ncfM2tfr18 1M! • will JoIIow the
_ ...... """' ..... F<£.
~ ~ auNriIy has. 120 c:"y, Ir! a6bpI ~ ~I
.. IN 'lime it .. ~ The ~cflitil'lS author.". i'I"I.I'y lid,
~. tJe&in 10 ~ alIle r-. urnil ~ iI ~ ~ IIhese
~ rod YN:il iI ~ .. nc:er.ed me ~ opefaot IN! it!Y& bft:tl
certified.-.d tw IIdopted h ~ Pefl.llaliCnL
I. . Queslic)n -4W:: TN! &anch~~I"" ~.r,.' tofellJl.-.
basic: ......0 fIlUIl ~ from uae law. ~ '!liN m!Y!he
... .,..,...""... """ "TMe gbie pta 1n!hc:H,r;~. ~ .. ~ Jhould Ii., Ihi.J atti~. ~""onJ ~ fr...u.iM
~ ChM PI'OMWt '* ~ -Itt l/Qid. WId do"oc ~
.. ~ ~ Irc:m ..,..inJ !he ~k: ~ ti.!I -'
~~
Qvor1fiGil ~ib): T~ ft..-,c:l1i),ns "\II~rt"r' ml,j~ ~ I kJl!,C"i-tN
num~' of Zlf"rJ.a(Int) Ie ~rtMct ~t ~ .. ~j,on.
A ""~M" ~ uro.a.b<e h.'''-" 'res~ ". Qut$liQn~ 4&IJ .x .. ~)
~ "oIIfi~""IICI I'I!YiroI< the-fCC, Br5"!'lr! and Orde,'n Q'ttir! if.1fj1j
F~C 91-' n Irt'uwd ~ 3, 19!1!, b fljl"l:~ Ulfomy!:lQn Ot\ tnt:
~~"'TIe!"rt of ,,~""" ~; tqul#ory PfQC:edi.lr"'el
9. Quesriotl .5: Frand1i~r., ~~ mllC hi"" ~u~ rqu'-illtU
lililwlnS k:r publ'" P"lrticJp.-iO'l'1 U. f'Ite 1"CI'Yt.ac1On ptOCMdinp. If I
,....c-i'"~ .. \J\hoNI:y ~ftOl \'Ia.ot\hHt ~lOt\l ~ in pI.ac:e,
ir: IN.'SI adopc ~ Wft+I.ir', 110 ~ cI cMilicatioi and ~ it.,....,
yt)~ rvt reJ"~,
1 O. QuariM fi: MOil ab~ ~ art DQI ~ ~ effean.<t
compejiliOll, III df{,ftItd by the-c..a.ble Aa. (The 6efi"ilJDrl is; irocIlIdtd'
~.-.d on the btmJ TI1e fBnchlSinS.aIiItIOri!'f ~ arJ:..ID.Imr tN!
the c.¥>le I"(W8"1I m It). juriiJdid.t<>n is rxt ~ 11;1 ~ -FDI" pul"PQW"l cI ~Ivint tho _"ilion 01 ot8ec.iYe ~itiQt, Lie!!
Item 1 ~. "ml'lJ.v.annel \'>deoPfOlTll'l'"i"'S dl~bul:OI"i" in:f1lN
ill ~ optI'ilDI", • ImIJhclwnner muttipomt diRrib~ion 1efVice, ..
d~ bo"""OirdcM" Ii&I:fte ..... iO!. ill ~ ~ .atrmt~
~ cf;~. :I v'deo d"1Ihorw IrtMce. .-.d • loIIbef\ite t'n.lIRtf
oII'l~~~ Amlllli~~~iItS
~~ ~ WIn be dreoernI!d ~oIkntd' when '!hey are-bdtI
1irC1M1a11y /iIId ~ ...... ,... §erv;ce iI. ~iCiIOy I'r.aikble"
whef. the muJrt~ d"ISI7lNOI' 1$ ~ able to dref..---Itwt
JerVQ 10 I ~ w~ 10 ~ wi\tl only m.'nin\3f
ackflUon,al in~ bot the diRribu1ol-. A IIIII"Vlce If 'aaualIy
.. ... iwwe· ", subscribers; in EN! ~ "" IfII" ~Iy IWaft
~ ~""'''''Clftl.IhII!be IeNiCe is...-aibrble. ~~
d.d'rOIe~'ridreG~I~(lfterirll.mat
1O.r.a50~fIIlhe~Jir1 .. ~...awm_
~ 11;1 ~inI-~ .-: leas:: 1!5 peKe"II d h
~~Che~~M"Srtf'\<'l"dby~A
~ \.'ideo ~ ,frSlrib\.co)i" must ~ • lull II
chaNwb 01 Pf'IIFI"JfrlIn&. • ~__ ~ ~ntll d -.iTd'I is
!'lOla dart Iobeb.ndllOofJer·~~""'~
11. TIIlI.~bmll'lllltbesitnedby.~CII'I'«:"I"Nit/I
:MtIoriIy to a"!: on behiIIIf fII rt.e-~I~'
Th<'.-......_ ....... ~ ...... _~. ___ ... IIc~_A(lrI 1'1",.--"-n..c-ao...-__ .......... _~ ..... """" ............
t .... .....,...........,.IfIauIoII ... ~.~aioIr_ . ...,.... ..... --.-... .-...--. ...,~-..... ~ ____ ..................... ......-__.. AJ .......... POriI*! .....
........ Iw~ ... ~~ .. _"-.~ .......... ~ -,
P-.rIiIc ---.~ ..... ~ "'~ .---=_.-.30---.,
~ ........... ---.-...-.---..-...." ................ _........" .... .,....... .............. ~~ ............ s..d
_~ ..... ~_._ .... _rtl .... ~_ ..............
~ ......... ,..-.... ... ~.IIw,.,...C-_-=--.~ ___ ~.~, ............. o.c. JOSs.._."OIIot_~
aN ........ ~ ~ I">otoa IJCWWI1Kt w ......... D C. JO:!Q.
""" ~ "tOna • U<)t..Mto .., no!! _AC:t IC Of "14. U • .,..5'1.
~ n, l'fno I U.l.CO JJloIorIt»»ID TM p.uoo:awc.: 1ItlM.ICTIrOfro.tlCf 01' 1"Mt, • .1. "'WIt, CIIICbIIK 1"1. _ .. ~...,..
t>viScn;
""""~ T.Li::"'Ua:t~
~
~"::.s.,-..
VIA CE!ITIflF.D MAt!.
John Kelly, Presideo,
Cable Co-<Jp
3200 Parl< Boulevard
Palo Alto, CA 94306
Dear Mr. Kelly,
'" QtyOrPaloAlto
Department ofInfomuUiorl Rl'saurces
September 16, 1993
On April 7, 1993, !be Federal Communicarions Cornmissioo relea>od a Report
and Order adopting a new rule (47 C.F.R. § 76.3(9) implementing Section S of
!be Cable Te!ev4ion Consumer Pro!ection and Competitioa Al:t of 1992; !bat
se<tion governs !be establishment, imp_1lIrion and enforcement of cuS1O!ller
service stal>dards for cable operaton nationwide. A ""py of !be new rule is
enclosed.
l'arogJ3ph (c) of !be new rule eslab!ishes federal customer service _
("fede:al _"). Paragraph (al of the new rule provides !bat • haDcbising
autbori!y may enfo"", !be federal !Wldards, but in order to do so, the fmnchising
.utbority must provide affc<:Ied cahle operaton 90 days' "ritteo ootice of its
intent 10 enforoe !be stal>dards. This leiter constitutes !be City of Palo Alto',
_ on behalf of !be Join! Powe" of its intent to enfon:e !be federal _.
The City inleods 10 begin enforcing !be f_ standaJd, on December 21, 1993.
Pm.gr;Iph (h) of !be new rule m.erves 10 ftancbising authorities, among other
things, rights 10 establish and/or enf",.:e stale and local customer service
""IUi=nems !bat exceed or are cO( rovered by !be fedenl standards. The City
of Palo Alto resuves and inteMs 10 exercise all rights idectificd in !be AmeOOed
and Modified Franchise Agreement by and between !be City of Palo Alto on
bebaIf of the Join! Powers and Cable Communications Cooperative of Palo Alto,
Inc. «(,.able Co-op).
Sincerely,
Enclosure
P.O.BadGlSlJ
PaloNto, CA 94Xl3
4l5.329.2313
CJ5.323.8356""
.-/ ..
•
. :
SUMMARY OF nm MAjOlt l'UOVISrONS
IN S. 12
I. Role Regul.llo"
A. R.gulalor
S. 12 permit. 'ale regulation where I cable syslem is nOI
,ubjecllo ".ff""liye con/pelitlon" (which is defined below). II is
assumed Ihal. under Ihe n .... ,.w. a very subslnnlial majorily of all
cable sy"ems will now be subject 10 rale regulallon.
(1) Fl'!1nc/JI.ing AUlllorily
The Commission .hall ensure thai Ihe rale for b .. ic cable
sctvice is "reasonable." In .slablishlng a reason.ble rale. Ihe FCC
"I is direcled 10 ,slabli,h regulalions "d .. igned 10 IIChi.velhe ,oal of
prolecting subscribers '" (rom til .. for Ihe basic scrvlce ti.r
. Ihal elceed Ihe rales Ihat would b. charged for Ihe basic service
lier if such cable system were subjlOCl to efrecUve competition ••
S. 12 lillS some of Ihe faclors Ih. FCC shall take inlo aCcounl in
establishi., a reasonabl. rale and it cslabli!hes a procedure by
which frilllchising aujhorities Q,n be cer1ified 10 -enrOI"Ce" Ihe
administration of Iht: FCC's basic r21~ regulations. In order 10
regulate basic !:ervicc. ralest I franchising authority must file a
ce"ificale wilh Ihe FCC. The c<:"ifieation becomes oJfeelive 30
days aner Ihe date ills mod unlels Ihe FCC Icls 10 disapprove il.
The FCC also is empowered to revoke a franchising authority',
rale regularol)' r.sponsibilili .. if slale and local rale I.ws and
r~gula(ions ate nol in oon(ormance with .the FCe's basic rale
«gulalions. A franchising aUlhority has the right 10 apply for
recertificalion aftcr revota.ion and the: FCC musl aCI on such a
rO(ertification request within 90 days afler il i, filed.
2
'~v..:tt._
(2) FCC
The pCC is liven Ih •• uthorily 10 ensure thallhe rale! for
olher cable pro&ramming scrvl ... (""'''pt programming lCIVices
offered on a per·channel Or per·program basi.) are not
"unreasonable. " The bill allows. franchising aUlhorily. olher
relevant local or state co.y.mmenlltl enlily. or a cabl. subscriber
10 file a complaint with Ihe pce challenging a rate as
·unreasonablc .•
B. Basic Cabl, StMCI
The new law requires every cable operator to provide a
basic service Iler containing at least Ihe (ollowing: (i)leIeyision
broadcast si,nals carried pursuant 10 lbe new law'S must carry
provisions; (Ii) PEG channels; nnd (iii) any signal of any broadca<l
station Ihal is provided by Ihe cabl. operalor to any subscriber,
e"cept a signal which il secondarily lransmitted by a salellile
c.,rier beyond lhe local service area of such Jlation. S. 12 permiu
• cable operalor to add addilional video programming services to
Ihe basic service lier. A Subscriber must purchase lIIe ~lSic
scrvice lier •• bUI only Ihe basic lier -In order to purchase allier
service! offered on the cable system. The new law coolains an
"anti-buy-Ihroug"" provision Ihal prohibits. cable operalor lrom
requiring a tier of service. other than the basic Ilet, as a condition
of receiving premium cable channels (lOch as HBO and Cinemu)
and pay·per·view channel •. Cable operators must comply willi lIIe
" .. ,i.buY·lhrough" provision as soon as lbey are technically
capable of complying; all cabl. syslem. mUll be in compliance
wilhln len years. A cable operalar Can obl>.in a limited waiver of
Ihis requiremenl if lb. FCC delermin .. Ihal compliance would
require lhe cabl. operalor 10 increase it. ralOS; the FCC may gr>nt
Ihe cabl. operalor a waiver in such • case lor "such specified
period as the Commission determines reasonable and appropriale.·
3
-,Ii.) 'lV
I '. . /
,
".' "" ':,t.',' .
'>,
._P .. ____ ~~'~"'.~~"._ ."'Ir"~ji .. au
SUMMARY OF S. 12
THE "CABLE TELEVISION CONSUMER
PROTECTION AND COMPEln'10N
ACT OF 1992"
IntroductiDn
On October 5, Ih. Hou.~ and S""alO overrode I presidential
veto and enacted S. 12, Ih. "Cabl. Television ConSUmet
Protection and Compe,tition Act of 1992" (hereafltt roferred to as
'5. 12" or 'the new law'). Tho SenalO overrode Pretidentllulh', <5'.0.
velo of the Ieglstlllion by. vole of 74 to 2S; lIle House followed "'.Y
suit wilh a 308 to 114 YOlo. This concrossional volO marlcod the
fim tim. ClJIllretl has ovttrIdden a YeIO by Pte.Sidenl Bush.
S. 12 should promote compelition in the cable television
induslry and help curb unfair rate Incroase.s and other cUUomer
service 8buse.s by cable lelevision operators. S. 12 ,fOIIU local
,ovemnlenl, additional lulllorily 10 help promote competition and
curb cable operltors' abuses, and providellocal govcmmenu wilh
Ionmuoity from monclary dam.... in suits challenging their
regulotion of cable systems.
S. 12 ""lui res the PedOI'al Communiations Commission
("PCC" or "Commission") and local governments to lake many 0
actions within the ne.t yeat 10 implemenl the provisions of S. 12. .
It is critical thaI local governments participate in implemen ... tion
proceedings before Ihe FCC in order to ensure 'Ihat cable
subscribers receive the maximum protection under S: 12 and that
local governments have Ibe ability to proltCt cable subscriters to
the fuli extent allowable under the new law.
The (ollowing i •• summary of (he mljar provi.ion. in S.
12 and of same of (h. critical deadlin .. (or IClians by the FCC
Ind 10<:,1 lovemmenls.
".1: ,
" .:.>~. , . ',.
,:.,
_: -~~-,-:: -,r -::
\} _ :_ -:> 7t'~~\£::'lP-',M -;_{'}:~ ~~"n., _,,;,tf>""f1:" ,: .',", "': ';~if: ~~~.":,:;,,~:·rif;,
, , , /
/
,1
•. ,
C. IY/.tll .. CampI/ilion
S. 12 donn" Ih. cin:um.Wlcu under which ·.Ueclillt!
competition" •• isl. as, (I) I ubi •• yslem Ihat aeryes r.~r than
lO pe1tenl of the hOllsohold. in til. franchl.e .rea; (Ii) tile presence
of at I .. st two muWchann.1 video proeramming distributors In a
(ranchis. aru. If each offers tOmpaiIble video programming
service to al least SO percent of the eabl. community and if I.ho .
number of households subscribing 10 video programming selVice.
offered by multichannel video programming distributors. other
than the largest such distribulor, .. ceeds 15 percent of the
households in Ihe franchise area; or (iii) R multichannel video
programming dislributor operalcd by the (rallchising authority (or
that rlanchise area offers yideo programming to at least SO pen:cnt
o( Ihe households In Ihat (ranchis. area.
D. Ollor, Ral.-R.IDI.d P",.isionr
Significantly. th ••• thorlly to regulate ratcs (or the basic
tier and all other cabl. programming ",rvice. ~ the right to
regulato installation and equipment costs a"oeiated with those
service$.
S. 12 allows cable operators to itemize on cable bills CO$IS
~ltriblltable to (rallchise: (ees, PEG f'eqUiremeflls, laxe~ and other
cost~ impo~ed by local governO'en".
The new law prohibits a caolc operator (rom chareinJ I
cat)le subscriber (or a programminc: service that the subscriber has
not amrmatiYely requested.
S. 12 allows. cable operatOr to of(el' reasonable discounts
to senior citizens and olher economically. disadvantaged groups.
The nfw law requiks a cable operator to rerund to cabh~
sub!cribers the por1ion or the cable rate paid by subscribers (or
. -",':""'-"~'':1_'.~-;x::~~~~l\·'··<·'·~.''\'!'';~...r::
non-basic tiers o( selVi.:c tIIal Ihe FCC deems unreasonable from
Ihe period ar Ume a camplalnlls filed willi til. PCC.
". Cuslome. Service Standards
S. 12 direc .. the FCC to "lUIabli.h standards by which
cable operalors may fullill their custom'" ..,.,ice "'Ivlrements."
Tho new law allows: (AI franchising authorities to establish and
enforc~ customer sel'llcc sta.~dards that r.xcec:d, 0' differ from, the
standards established by the FCC; and (8) franchising luillorities
and cable operator. to negolille standard. that e:.<eeed those SCI by
Ihe !'CC. The new I,,> also pesmitJ a franchising luthori'y to
require a cable operator to provide thirty day. writton notice of ,;)
any programming chang".
III. Rone".1s
S. 12 contemplates leyeraJ chanC" to the ren.wal process.
Among olher things, (or th. lirst lime, I cable operator would be
required to provide specifiC ~ notice to invoice (ormal
renewal p,oeeedings. 1(. cabl. operator provid" a wrillen
request (or (ormal renewal, til. new law wo.ld require I
(ranchising luthority to commence a formal rtnewal proceeding no
lalcr IhAl' six month$ arter such tequest is submitled.
S. 12 also amends socition 626(dl of the Cabie Act by
striking "e((ectively acquiesced" and inserting "or tile cable
operator givel wrillClt notice of a failuft, or inability to cure and
the (ranchisinc authority (ails to object within. reason.ble time
after receipt o( .such notice.· This aOlt..ndment remove'" 'certainty
over whether a rranchhing authority had notice of (ranchise
violations or poor SClVi.:c and oyer Ihe subjectiye intenl of •
franchising authority in not objecting to (ranchise viOlations or
inadequate service. Moreover, the new law clarifies thai tI. court
shall not overturn a franchising authority'S decision to det1y a
renewal request i( it is based on on infraction or Ihe proeeduraJ
! ;
i
I
Ii .
j
<,
//
/ I,
requiremenl' of "",lion 626 Ibltl eourl delermlne, is "harmle ..
error," Finally, S, 12 clarifies 1I'lllnIIOCIlion of formal renewal
proceedings does nOI negale Ihe right or. franchi,ing aulhority ,0
revoke. franchise (or cause during Ihe ",newal process.
IV. DO'.'I05 hnmunlly
In one of ill key provision., S. 12 grants frlllchbing
authoriUes immunity from monetsry damage, In most federal. state
0' localla""uit, challenging the righl of. flllnchising aulhorilY to
regulate a cable .yslem. This inanunily applies 10 both ca.e;
pending on October 5 and 10 an suits initiated ancr October 5. It
applirs to the full range of abfc: regulatory Activities, including the
award, tenrwal, transfer or amendmen( of 11 franchi5c or the
ongoing regulalion of Ihe cable system.
V. SI,nal Quollt1 Siandords
S. 12 requires the FCC 10 establish minimum leehnical
standards (or signal quality, and to periodically update such
standards, II allows. franchi<ing au'hority to include provisions
(or the cnforcemen, of the FCC's standards in a frlllchise
agreement. and permits a franchi.ing aUlhority 10 seek • waiver
(rom the fCC 10 impose more slringent slandasd5i. The new law
also requires the FCC to establish ",!ulotion. to ensure that
viewers of cable programming have. access to thr: emergency
infotmation provided by the emergency broadC2IStiflg system.
VI. Multiple franchises
'111. new law prohibill. franchiSing authority from grlllting
exclusive franchises IIId unreasonably refu.ing to award In
additional competitive franchise. S. 12 .tate. that, in awardin, a
(ranchi ... lhe ftanchising authority: (A) shall allow the applicanl"
cable sys'em • reasonable period of lime '0 become capable of
providing cable service,lO all households In Ihe frlllchile area;
6
• ~-_." J, ........ 1..,-.-.::....dL"' .... ~
(13) may require adequate assuranC. thai the cable operalor will
pro,vide adequale PEG access channel capacily, (aeilili .. at
financial suppert; Ind (C) may require adequale assurance Ih\lthe
cable operator has Ihe fiMnciai, technical or legal qualifications to
provide cable .. tvlce.
VII. Loal Authorlly 10 Relulale Ownenhlp
S. 12 clarili.. the righl of • franchi,inl authorlly to
prohibit the ownership or conlrol of li cable system by any perton
bo::au,. of such person's ownership or conlrol of any other cable
syste", In the franchising authorily', jurisdiction or in
circumstanCf.t In which a stale or franchising authority dctennines ()
that the acquishion of such a cable system may elimin.te or reduce .
competition in Ihe delivery of cable service in such jurisdiction.
This provision \\la, designed, among olber purpo .... as a way to
foster head·to-head competition by cable operators by making it
e.iui~1' for I franchbing 8uthority 10 deny an .operator the right 10
buyout it. competitor i~ a particular markel.
VIII. Musl Carry
s. 12 te·established requirements for Ibe carriage of local
television stations by cable 'Y"'''5, II allows broadcasters. every
Ihree years, 10 choose between mandatory carriage under
Iraditional must carry principles or payment for retransmission ,
rights. The choice of either one would waive 3 broadcasttr's right 0
10 Ihe othc:r. The new law excludes noncommercial ~ueational
lelevi.sion signals from Ihe re~ransmiS$iQn oonsel" t'rovisions. and
requires the PCC to: (A) consider the impact of the granl of
relransmiuion consenl on the ... tes for basic cable service, and
(8) ensure Ihat ,uch ratOJ a'" tea1onable. The bill establish ...
must carry regime for local commettial lelevi.ion stations. low
power leleyi.lon slallons, Ind noncommercial educational
television stations. Auble operalor COuld satisfy requiremull for
Ihe carriage or noncommercial or low power stations by c.anying
7
~ifW,~. ;~\:{:f';;'~'rc
~ -
,". ,
W~\i~,'ft~;r~ :'/ • ,
·it~
'\ .~
i ,
//
-'
!
\
!
!
Slich "aI,on. on UflUS«! PEG chanoels. The use o( an unused PEG
chaj)nel 10 carry a noncommercial or low power ~!ation is,
howev". subjecllo approval by Ihe (ranchising aUlhorily.
IX. Mlllllcll'.' Owne""blp of Cable Syslelll.
S. 12 clarifies the righl or. municipality 10 opetate a cabl.
lel.vi.ion syslem, and Slates Ihat a municipalily ne«! nOI have.
frlllehi", 10 provide such ",,,,ice. "also (rMs a
municlp.Jly·own«! cabl. system (rom rale regulation if it is Ihe
only system operating in Ihe markel.
X. COlI.sulller Eleclrunks Eqllipmellt
Th. new law requires the FCC to issue regulalion. IhOl
assure compJlibiJity between lelevisions Ilrld video caSsette
recorders ("VCR.·) and cable systems, so thai cable .ublOribe"
• ,Voy tile full beneliIS of bolh th. Pros,.,"mins available on cable
s),slemJ and the functions available on their televisions and VCRs.
The FCC'. regulalions shall: (A) specify lechnical requirenlents
Ihal permit • lelevi,ion receiver or VCR 10 be sold as "cable
ready"; (B) require cable operalors to orrer subscoibers Ihe oplion,
ir "Iechnically and economically· (easible, of having channels
delivered directly 10 the subscrib~rs' television receivers or video
c.sseHe recorders withou! passing Ihrough a converter box; (C)
promote the commercia) availability of convel'~s and of remOle
conllol device. compatible wilh co~verten; (D) r"'luire cable
operalors, which offer subscribers the option of rcntine a femole
cOIUrol unil, to notify subscribers (hat, instead of renting a remOle
cO~lrol unil, thty may purcha.e commercially available renlOI.
conlrol units compalible with th. cabl. system's conye~er box;
4Ild (E) prohlbil a cable operalor from laking any .c,ion Ihal
prevents a converter box suppli«! by Ihe cable operalor from
operaling compalibly with commercially available remole <ontrol
units.
8
I
I
__ '!;:,~~~'C'':i'r ,~
XI, Programming Access
As a further slep loward Ih. goal at increa.i"g compelition .
10 exiSling ca~l. systems, S, 12 prohibits a video proer.unmer
amlialed with a cable operalor from discriminating again" I
mulliehan •• 1 video programming distributor and, except in limited
circumslances, prohibil$ an exclusive programming conlnCI
belween a cable operalOr and • programmer .ffilialed wilh the
cable operalor, The prohibilion doe.! nOI apply 10 exclusive
programming conlracts enter«! inlO on or before June I, 1990.
The new law also requires Ih. FCC to establish regulalions barring
cable operalOI3 from; (A) requiring a financial intefesl in a
programming s.",ice, or "coercing" exclusive pro&nmmin'ri&h~. l
3S a condition of carria&e; and (8) discriminating Iglln.......,
unamli.,ed programrnc". S, 12 dirccu Ihe FCC to ""'blish rules
Ihallimi!: (Al lh ••• mber of cable subscrib ..... mulliple system
operaror (0 MS"") can reach; .nd (8) Ih. number of chann.ls on
a syslem thai may ~. aceupi .. , . an affili.,«! video progl1.mme ...
The new law prohibils cable opetalOn from holding licensc.s for
multichannel multipoint diSlribuli6n service ("MMDS") or
providing satellite m;ut.r anlenn. television ("SMA TV") service
in areas served by Ihe cable sYSIern, absenl an FCC waiver.
Pinally, Ihe new law direcls Ihe FCC to: (A) iniliale a rIIlemal:ing
to impose public interesl requirements on direcl broadcast salelli,e
("DBS·) services; and (B) require such services 10 re!Crv. channel
capacity for noncommefcial educational or informational uses.
XII, Sal'" of CBbie 5y,toll15 /"
S. 12 prohibits cable operators from selling or transferring
ownership of a Clble system within 36 monlhs following llIe
acquisilion 01 ijlitial construction ot thai sys1em. The Commission
may waive Ihe prohibition for public inlerest reasons, subjccl 10
the approval of a franchising aUlhority Ihal has Ihe righl 10 acl on
a rran.fer requesl pur,.anl a franchise. For any lransfer or sale
after the 36-ITlOIIIII l'lIIOO, the new law stales lh:u if a franchising
9
~.
.
",
.i.J<.7 -. "
':>' ,.
. •
.
/
J
1 • r ,
•• lIIorlty fails \(J let within 1'2() dlYS, the trandor Is deemed
lranted'(unl"" the eable opemor and flllllChising authority agree
10 an exllln$ion of time). The 120-day period does nol IItgl. to
run unlilth. table operalor ho •• ubmilled informalion ""lulred by
the franchising authority wllbe !'CC.
xm. (;wed/PEG Ac<tSS
S. II requlrtJ \IJe FCC to establish a (ormula 10 de!.ermine
the maximum rea!Onable IlIte • able opetalor may dillS. for
leased aC<e$l, and to CSlabl!sh fUSOIltb16 torm. and COnditions fOf
such I!:U". A able oporalor would \Ie permilted 10 use up 10 one
third of itl leased accetl channel qpacily \0 provide quaJjflOCl
odutatlonal or minority cable ~mlng services, regMlles •
o(whether such pro,ramming servlc:es are .frlll3ted wilh Ih. cabl.
operalor,
The new law: (AI ,UOWI cable opera\ors, pu.suant 10 a
wrillen and published policy, (0 decllne to carry malUial on lea~
channels wbleb liter reuonably bel; ...... to de..:ribe or depict sexual
Of excretory activities or organs in a patently offensive mannet as
",wu.ed by COIIIemporlry tOmmunlly standard.; and (B) directs
the FCC 10 odopt ",olatlons that would r<quire: (I) cable
operators to urry ind .... nl prollramminl On only _leased ~$
channel, (2) <:able oporllDrI 10 block such c~annel unless a
subscriber ''''1uem a<lCUS 10 it, lind (J) abl<o ;;rogralllmetl 10
inform cable operators of \Vbelller lIIelr programminJt i. Inde/;tnl.
TIle new l.w r<quir .. the PCC to prolnulgate regulliion. lhal
would enable a cable operalOr 10 prohibil the use of PEG ehannels
to carry 'obscene malerial, SOl.ally expllcil conducl, or tnilerial
soliciting or promoting unlawful conduct." S. 12 lubJee~ able
operators 10 Criminal or civllliabilily (or tho aniage of obscene
pIQgramming on PEO and '.."ed a<:«!! channels,
XIV. EquAl Empl.,ment Opportunl1y
Tile neW i •• / lCquires cable ope~lI)n \Q file wilh 1110 FCC
an annual stalistical IqlOrt identifying by race, .... wi job lille.
the number of omployces in several full-lime an<! part-lime
Cltegories. It also codifieslh. FCC'. eluting !!EO ""luire<MAtI
ror lelevision broadcasl sllllion ••
XV. Home WI.ln,
S. 12 requin:. the FCC 10 establish rules collCallint the
disposillon, after a subscriber terminates ~Ie sonic<:, of Illy
eab16 <qulpment InslaUed in lIle subseriw'. home by a callIe ,
operatar. ()
XVI. Thelt or Cable Servlee
S, 11 inc ....... the penalties rOt ./left o( albic service.
llvn. Subserlbe. \>rl.&c"
The noW law clatllit$ ",vera! .. poets of \IJe ul,ting cable
privacy ",Ic. includine. among olh.et tiring., lhatllle deftnition of
"personally Identifi,ble informalion" under Section 631 0' the
Cable Act does not include any ro:ord of .ggre,ate data which
doel nm Id .... tlfy pasticular petSCInS. S. 11 also prohi~it! a cabl.O operator (rom ,ranling utWJl/torilC4 &<:(c$s 10 • subscriber's
information to lIIyone other than \IJe lubscriber or \IJe table
oporltor.
xvm. Antitrust ,"""unity
S. 12, elvin ... that It dGeJ not alter Of restriCl lite
.pplicabillly of fedefal and slalc .nliWltlaws. Slate 1984, lou!
,.~. '; .
~:
'~" ,
1 '.
"
,
government. have bwI immune (rom damages in antitrust ...... 1
I
.'''' ,
,
'-', 'l.
:Ji'
..
1
I
DATELINE FOR IMPLEMENTATION 011 KEY
I'ROVI~IONS IN S. 12 IN THE COMING YEAR
The rollowln.I •• summary or Rcdons Ihe FCC musl ellher
(ommence or (?mplele In tho coming year.
I. Within 45 n.,s .r En"elrnenl or S. 11 _
By No •• mb .. 19, 1991
A, The FCC most commence ... Iemaking proceeding
10 establish "'gulation, 10 lovern !he e.erclse by
lelevision broadcast stations or their ",,,.nsmission
or musl carry righi~. The FCC is required 10
consider .s pan of, this proceeding Ihe impact or
relr3Jtsml.sion consent on baslo cable rates and
musl ensure Ihal Ih. regulalions il promulg.l.., do
nol oennlc! wilh II, obligation 10 en,ure Ihat ,uch
rale. are reasonabl.. The FCC muS! complele il'
,ulemaking proceeding ",itl,in 180 d.y. aller Ihe
dale of enactment or s. 12 (j.,., by April 3, 1993).
NOTE; Turner Broadcasllng 5y'lem, Inc. filed •
la .. ,oil on Oclob", S, Ih. dale Ihe new law was
cnaeled, chalienging th. ~lru1smi"lon eonsent and
mosl carry provl.lons. S«. Turner BIOadMD2
Syslem, Ine, v. fCC, No. n-2247 (D. D.C. filed
Ocl. S, 1992).
II. Wllhln 120 DI,. of Enactment of S. 12 -
81 Febru.!')' Z, 1993
A. The FCC most promolgale regulation, requiring:
(I) cable OpeflltOrs to pllce on a single I .... sed
aCCess channel all indecenl programming; (2) cable
operalo" 10 block .och channel unless Ihe
subscriber reqUellS access 10 such ch~""el; and (3)
a ptogrammer 10 inform Ihe c;:,ble operalor if its
programming wvuld be indecen!,
12
B. The FCC must prescribe rul.., concerning ",mo>'ll
of any cable In!lllliled by a cable oper.llor within Ih.
premises of • subscriber who h8$ tennlnlted
subscription.
III. Within 180 nBYS of Enadtn.n! of S. 12 -
By April 5, 1993
, A.
B,
c.
D.
E.
The FCC mu.1 Impose regulations 10 ensure thai the
rales for the b.,lc cable service Uer are reasonable.
The PCC must Impose; (I) regulations Identirying
whelher rates ror non·basic programming se",lees
are unreasonable: (2) procedo .... for resolution 0\)
complaint. rrom rranchlslng .ollloriti.." col/sumen .
and other relevanl state or 1<>eaJ government enli ties
.bool unreasonable rat..,; and (3) procedures ror
reducing unreasonable nles and ror providing
refund. 10 ,obsorlbors.
NOTE: Local governments will have only 180
days afler the FCC', rules become .ffectlve to seek
• reduction In exlsling rates. A ncr the 180 day
period, local governments can seek relief only wl'h
r<speel to changes in cable ral.., that are initialed
arter the FCC's ruI.., become effective.
Th. FCC mUSt impo,e rule, 10 prevenl eV8$ion, of )
\ho FCC', rale regolation,.
The FCC onuS! lonpo •• regulalion. implemenling Ihe
local commercial television ,talion mu,t-carry
provisions.
The PCC must eomplele irs .. Iemaking proc«ding
implcmel1ling broadc.as(ers' right to choose eimer
re.trAnsmissio~ COnsent or musl carry.
13
" "
\
,\,
I, ,;.
,:',,'1. , '\.
'\ , I
I.e i
,
',' '
"', •
F.
0,
It
J,
j
I
J ,
The FCC must esIIbUsh standards by whleh cable
openton lilly fulfill their custom.r service
obligations.
The PCC mu.t establish rules ror determining the
rna.dmum INSOIIlble IlIles. and Ihe lerms and
condilion., of leated access.
The FCC must promul.ate reculallons 10 enablo an
operalor of • cable system I. prohibit the u,e. on
such ,ystem, of PEO channels for any programming
con!llin!ng obW'n< material, sexually e~plicjt
conduct. or mlterlal soliciting or plomoting
unllwful conduct. '
The FCC musl prescribe regulations making il
unlawful for a cable operator. or a· saleilile
programming vendor In which. cable operalor has
an allribul.!blo interest, to engage In unrair methods
of competition. or unfair or de.:eptive ~Is or
practices. the purpo,e or effe<:t of which Is to
hinder or prevent any multlchannei video
progrtmmlng diJt,jbulo, f,om providing
procnmming to subscribers, ,
The PCC must com~ence a rulemaking to Impose.
on providers of DlIS service. public Inleltst or
oth.r requlremenls for providing video
programming, Including. among olh., thing'. a
tequi",menl thaI DDS providers re$O ... channel
capacity for nonconuDercial programmlnr, of an
educational or informational nalure.
IV.
v.
....... -.... ~--"..-~~-.-
Within 270 Days of EnActment of S. 12 _
By July 2, 1993
A. The FCC must complete lb. proceedin, 10
determine whelller broadclst television .taUons thaI
lie p!edontlnlllUy uUllud for the IrulSmission of
sales p~lIllons or program lenglh commercials
am SOIVln, Ibe public Inlerell, convenience and
neeessily.
B. Tho FCC m," prescribe tevisions to It. EEO rul.,.
WllhlJl Oae Year ot E/Jaclmeal ot S. ll
By 0<10110. 5, 1"3 (,b.
'.7
A. The FCC must establish rules Ibat require cable
operators 10, file. within one yw after !he date of
enactmenl of S. 12 and annually Iberealter.
financial intormatlo, thaI may b. deemed -sat)'
{or enforcing Ihe FCC's IlIle "'guladons.
B, The FCC mUll condu.1 a proceeding to prl!5Cribe
rules and regulations e.,lablishing limits on: (I) the
number of cable subsetibets • person is aulborizod
to reach through cabl. system. owned by such
petsan; and (2) Ibe numher of channels on a cable
syslem that can be ,""upied by video programmp"
In which a cable operator hILI an attributaV
int<rest. The PCC must consider !he necessity of
Imposing llmitalions on Ihe degree 10 whWt
multichannel video progru!lming distributors may
engage In Ihe creation or production of video
programming.
, '
" "
, ,
-"",,"
.' \ .. ,
,
" "
/ 'I
I
,.-_ • ~~ mUD e.labllsb regulalloM go •• rnine
procram talriage a,reemenll 0!14 related praclice.
belwecn cable ~Iol'l and video J'f'ltrtmmer ••
0, The pce musl pmcribe ugulations which embllfh
minimum k<:bnlcal stand.wa relaling 10 cable
sysleml' k<:bnlatl operation and signal quso1lly.
E. Th. pce must report to Congress on mtam of
allSuring oompatibllll,. bel....... t~levl!lotU. video
cas~te r_~1 II1d cable ')'Ilms. Within ISO
days etW the date Of 1ubmlsslon of Iho repotllo
CongreJ., the Comm!"iof' mUSlluue regulalions IS
are n~.sary to ulUre welt compatlbllily.
F. The FCC must submit by luly I, 1~93. In interim
'~!lOrt on the mi,'8I1u" of !!lOIiS pro,r3mminl rrom
broadcast Italian. 10 ~ble progtll"'mlng ne!works
and pay-per·"iew >ystem.. 'the IInlll repoo it due
anJuly 1,199~.
,.,,,,-,,~ _,,,,",~-t"-'r"~~'<"" ,.-....-"'"' ,-"""-'!" ..
About the Authors , • •
1711$ summary WI. JIIl!pated (or NA TOA by' Norllllll M. SIIId,
I'llrlclc 1.0l1li1, Stephlllie M. Phillipps and WlUillll B. Cool', Jr.
Mess!!. SIne! and GIIIII and Ms. PbUllpps.,. p.Mm. and Mr.
Coole b III WIOCIaIe. at the WUhln&lon. D.C. hw firm of Arnold
&; l'orlet. Tho authon would be happy to an,wer Illy Inquiries
regarding S. 12. The .ulnor. CIIlI be ltaened tt 2021fm·~700 or
~, wdtln& to thtm at Arnold &. !'oller, 1200 tkw H2rnpmile
AVMue. NW. W.shlntton, OC 20036.
o
()
..
" , ',.'
, ,
,',
/:,
!
! fCC CUSTOMER SERVICE STANDARDS
Effective July I, 1993 •• cable operator ,ball be subject to the following customer service
slandards:
(I) Cable system offICe hours 3nd telephone availability -
(A) The cable operator will mainWn a local, toU-free or collect call telephone access line
which wiD be available to its subscnbe" 24 hOUTS • days, seven days a week,
(I) 1'mined company representatives ""ill be available to respond to customer
telephone inquiries during 1IOnna! business bouts,
(2) After nonna! bu";.ness oc"''', the = line may be answeroc! by a service m
an automated re5pO!ISe system including an answering machine. Inquiries
=eiv«! >fIN normal bosiness bours Clust be responded to by a training
company represenlative OD the I1.ClU business day.
(B) Under DOnna! ~g COIIditiuns, telephone a.oSWeT time by • cu.lomcr
repre.e"lal1> .. , including wait time, staII IlOl exceed thirty (30) ~ wben !!Ie
C04II: ction is made. If the call te:ds 10 be transferred, tr"a.n!fez time shall not exceed
Ibirty (30) seamds. Tbeoe standanls sIJaIl be m~ no less than nin<ty (9';) pert:eIIt of
the time UDder oormaJ. operating conditions, measured on • quanerl:' oam.
(C) The operaJor will not be required 10 acquire equipmOll' 01' periorm surveys I<J measure
compliance with !be teJepbooe answerillg standards above unless an b.istoricaI record
of oomp.I2ints indicates a clear failure I<J comply.
(D) Under normal operaIing oonditioo.s, the customet will receive a busy signal less than
tI1ree (3) pe«:etl1 of the time.
(E) CustomeT service oeoter and bill paymen: locations will be opeIl alleast during oormaJ
busiDeos hours and .. 'ill be OOIIveWemly kx:aIed,
(II) InstaUarioas, omage. and SetVice calls -Under oormaI operating ccoditious, each of the
followiDg four standards will be met DO! less than nin<ty five (95) percent of the lime
measured on • quanerly basis:
tAl St1mdanl instaII·rions will be performed within seveo (7) bosineos days after an order
has been placed. ·Standani· instaIlatioos are !hose that are kx:aIed up to 125 reel
from the existirIg disttibutioD system.
(B) Ilxcludlng conditions beyond the control of the opemtor, the cable opemtor will begin
working on "service interruptiOllS' promp'Jyand in II<) event later than 24 hours after
j
I li
j •
~
(C)
(D)
(E)
the imerruption bocvmes known. The cable operator must begin actions to correl .. .'!
other setvlce problems the nellt business day after notification of the service problem.
Tbe -appointment winoo",'· alte:mrives for installa.tions, serviced calls, and other
.i:nstalWion activities will be cither a sped!1c time or, at maximum, a [cotlf-hour time
block during normal business boo". (The operator lruIy schedule service calls and
other instaIlatioo activities outside of normal business hours for the expres.s
COD\Ienience of t.be c.usromer.)
An openJor may not cancel an appointment lJ,jl~ a ctJstomer a:fter the close of
business OD the business day prior to !be scheduled appointment.
If a cable cper.uor representative is ruruting late fOT 2JI appointment with !i customer
and will not be obk to Ic<q> !be appointment as 5Cbeduled, !be cuStOmer ",ill be
COflIaClod. The appointment will be rescheduled, as ne<:esSaI)', a! • time wbich is
CO!IVOlJient fur the cwtomer.
(III) Communications between cable operaton and cable subscribe" •
(A) NoIiix:ations to subiiCIlbers .
(1) The <:able operator sbaIl provide writteo information 00 eacb of the following
areas at the time of in stalla600 of service, at least annuaUy to an suMcriber.s,
and a! any tim. upoo ,.quest:
(a) products and services offered;
(b) prices and optioas foo: progmruning services and conditions of subscription
to programIIIiDg and otber se<Vica;
(c) irulallation and service maintenan<:e policies;
(d) instructiOllS 01] bow to use the cable .. rvice;
(e) cbanDeI positions ofprogmnming catried 01] !he sySlem; and
(f) billing and complaill! procedures, including !he addr= and telqlbone
number of the Ioc3I fr.,!Cruse authority's cabie offke.
(2) Customers will be notified of any cbanges ill rates, programming services or
clwlnol positior.s as saoD as J>O'S,ble through announcements on the cable
system and in writing. Notice must be given to subscn"bcm I minimum of
thirty (30) days ill advance of such clJanges if the change is within the cootroI
of !he cable operaJor. III addition, the cable operato< sbaD notify subscn1>er.;·
2
. "
--." .. ,
thirty (30) days in arl\'=\ of any signlf>Can1 changes in til< other information
"'luired by ~ preceding paragraph.
(8) Billing-
(I) Bills will be clear, oonrue and understandable. Bill, must be fuDy i.emized,
with itemizations including. but not limited co, basic and premium service
charges and "'l'lipment clwges. Bills ",ill also clearly delineate all ><tivil)l
during the billing period, including optional cbarges, rebaJes atld credits.
(2) In case of billing cfuputes, !be cable operato, must respond 10 a ",ritte"
cornplalnt from a subscnbe, within thirty iJO) days.
(C) Refunds -Refund checks will be issued promptly, bu. 00 !arer !han ei!ber -
(I) !he customer's next billing cycle fonowing resolution of !be request or thir!y
(30) days, whichever is earlier, or
(2) !be reIUIll of !be equlpmeru supplied by !be cable operator if service is
termlnated.
(D) CIedlt.s -Credits for service ,.ill be issued 110 later !han !be customer', next billing
cycle following !be detetminaIio!! tbaI a credit is ...... 'Tallted.
(IV) Definitions-
(A) Normal Business Hoors -The term "oormal business hours" mOODS _ boors during
which most sil!lilar busIDesses in !be community are opeD 10 serve customers. In all
"""", "normal business boon' IJlUSI include some evening boon; at least one night per
week ondIor some weekend hours.
(8) Normal Operating CooWtions -IDe term "ootmal operating conditions' mean, those
service conditions which are wrthln the cont:ro: of the cable operatcr. Those
conditior .. which are Dill wiIhin !be control of !be cable operator include, but are DOl
limited to, oatwal cfuasters, civil dislurl>ances, powe, ou!ages, telephone DCtworl<
OUIages, and severe or unuscal wealber conditions. Those conditions which II!;
onfinariIy within !he control of !be cable opera!or include, but are no! limited to,
spccial promotions pay-per-vlew events, rate increases, regular peak 0' seasonal
demand periods, and maintenance or upgrade of !be cable system.
(C) Service Interruption -The term "service interruption" means !be loss of picture or
sound on one or more cable chamiels.
3