AGENDA #5c
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TO: |
Roger L. Stancil, Town Manager |
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FROM: |
Catherine Lazorko, Town Information Officer |
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SUBJECT: |
Time Warner Cable 2006 Annual Report |
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DATE: |
May 7, 2007 |
This report summarizes the Time Warner Annual Report for the calendar year ended December 31, 2006, as required by Section 2.13 of the cable franchise agreement and Section 10-107 of the Town’s Cable Television Regulatory Ordinance (Attachment 1). The purpose of this memorandum is to review and comment on the report.
The Annual Report is provided in the format required by the Cablevision Franchise Agreement and Ordinance (Attachment 2). Because of the size of the report, we have provided a summary to outline the key information. The full report is available for inspection in the Town Manager’s Office at Town Hall, 405 Martin Luther King Jr. Blvd.
Below are our comments related to each item in the report:
1. Rates and Charges (list of rates and charges to cable subscribers for services).
Time Warner provided the current (2007) list of rates and charges for the Chapel Hill-Durham area, and not the 2006 list, which we retrieved and supplied (Attachment 3).
The Federal Communications Commission (FCC) allows local governments to review basic cable rates, which the Town does on a contract basis and provides to the Council each January. For this time period, Council rate consideration was held on January 10, 2005, when the Council adopted a resolution accepting the Town cable consultant’s report finding Time Warner’s 2006 Basic Service Tier Rates to be accurately calculated according to FCC rules and regulations. Changes in regulated rates are permitted only once per year.
In 2006, the Basic Cable Service Tier rates were set at $10.60 per month for Chapel Hill customers and $14.50 per month for Durham customers. Rates for Tier 2 and the Digital Tier were $61.30 per month for Chapel Hill customers and $64 per month for Durham customers.
2. Programs and Services (list of programs and channel line-ups offered by Time Warner).
Time Warner provided the current (2007) list of channels for the Chapel Hill-Durham area, and not the 2006 list, which we have retrieved and provided (Attachment 4). In 2006, there were 21 Basic Tier channels and 52 Standard Tier channels. Subscribers of Basic and Standard service tiers do not require addressable converter boxes. The complete channel line-up is also available on-line at www.timewarnercable.com/NC/
Under federal law, and as outlined in Section 4.1 of the franchise agreement, the Town does not have the authority to regulate the types or organization of programming offered by Time Warner.
3. Public, Governmental, and Educational Access (Description of public, government, and educational access activity on channels dedicated for each function).
Time Warner no longer operates governmental and educational access channels. The Peoples Channel provides public access television service through a performance agreement with the Town. On November 20, 2006, the Council received the 2005-06 Annual Report from The Peoples Channel. The Council raised the public access fee from 76 cents to 78 cents per customer per month on November 20, 2006, to adjust for inflation.
4. Customer Service (Report on customer service from Time Warner to subscribers).
a. Summary of Complaints. In 2006, the Town recorded 9 service complaints, which we forwarded to Time Warner and also discussed with the customer. Complaints included the following categories:
§ Cut, disconnected, or unburied cable lines – 4
§ Billing errors, rate or service – 4
§ Damage to property by cable installers – 1
The Town’s practice is to follow-up with Time Warner in the event that a customer service complaint is unresolved.
b. System Outage Summary
Time Warner reports that there were 21 “planned” (for repair or utility work) outages in the area, and 303 “unplanned” outages in 2006, with an average repair response time of 29 minutes. We do not dispute these figures. In 2005, Time Warner reported that there were 103 “planned” outages in the area, and 390 “unplanned” outages in 2005, with an average repair response time of 57 minutes.
c. Subscriber Survey
Section 4.3 of the franchise agreement specifies that Time Warner “shall conduct a random survey of a sampling of its subscribers within Chapel Hill” upon the Town’s request every two years. Time Warner conducted such a survey in June 2006, and a summary of its findings was presented to the Council on September 11, 2006.
5. Filings with the FCC (Report on filings to the Federal Communications Commission).
Time Warner Cable filed two FCC Forms 1240, and one FCC Form 1205 with the Town. On January 10, 2005, the Council adopted a resolution accepting the Town cable consultant’s report, and finding Time Warner’s 2006 Basic Service Tier Rates to be accurately calculated according to FCC rules and regulations.
6. Franchise Fee Payments (Report on cable franchise fees paid to the Town: five percent of Gross Revenues).
Section 2.2 of the franchise agreement and Section 10-98 of the cable ordinance require Time Warner to submit to the Town an amount equal to five percent of Time Warner’s gross revenues, paid in quarterly installments.
Total Town revenues from cable franchise fees were:
§ 2006: $554,041
§ 2005: $545,530
§ 2004: $484,741
§ 2003: $419,124
§ 2002: $430,202
§ 2001: $404,141
North Carolina State Session Law 2006-151 deregulated the video service provider industry in North Carolina. The law became applicable on January 1, 2007. SL2006-151 establishes the Office of the Secretary of Sate as the state’s sole authority to grant new video franchises to both new and current video providers. Current local franchises remain in effect until either they expire, or an incumbent operator files a qualified application for, and receives, a state-issued franchise.
A state-administered sales tax replaced franchise fee payments on January 1, 2007. The revenues that are forwarded by the state to municipalities are based on the revenue pool derived from applicable sales tax receipts.
Under the Act, percentages of the sales tax collections on telecommunications, sales tax collections on cable service, and sales tax collections on home satellite television service will be distributed to North Carolina on a proportional basis. Cities and counties will share portions of these three state taxes to replace lost revenue from the local cable franchise fee.
Projections indicate that cities and counties will be kept whole under this plan, although at the time of this report, Chapel Hill has not yet received its allocation from the State to make a determination as to its overall impact.
7. Completion of Construction (Report on status of cable system upgrade as required by the cable franchise agreement).
Time Warner installed 3.37 miles of new cable in 2006, including some work in these areas:
§ Morgan Estates
§ Governors Lake
§ Legend Oak
§ Rosemary Village
8. Performance Test in Franchise (Report on tests of the cable system).
Time Warner performs regular tests of the system at designated test locations and is required to provide certification to the FCC that the system meets FCC requirements. A recent review of the Time Warner test data and FCC filings indicate that Time Warner is meeting technical performance standards required by the FCC.
We believe that Time Warner’s 2006 Annual Report meets the requirements of the cable franchise agreement with the following exceptions:
§ The Rates and Charges list (Section 1) refers to 2007 charges and not to 2006 charges. We retrieved the 2006 version (Attachment 3) for inclusion.
§ The Programs and Services list (Section 2) refers to the 2007 Channel Line-up. We retrieved the 2006 version (Attachment 3) of this document for inclusion.
No further action is required by the Council on these matters.