AGENDA #4h

MEMORANDUM

TO:                  Mayor and Town Council

FROM:            W. Calvin Horton, Town Manager

DATE:                        October 24, 2005

SUBJECT:      Scheduling a Public Forum to Consider a Potential Change in Cablevision Public Access Fees Paid by Cable Television Customers

Adoption of the attached resolution would schedule a public forum for November 9 on a potential change in the public access fees paid by cablevision customers. 

“Public access” refers to non-commercial programming produced or submitted by citizens to be carried on the cable system.

BACKGROUND

The cable television franchise approved by the Council and accepted by Time Warner Cable in July 1996 allows the Town to have cable customers billed for a public access fee.

The Town began charging a public access fee of 65 cents under a resolution adopted by the Council on November 11, 1996, and amended that amount to:

• 66 cents on November 13, 1997
• 67 cents on November 25, 1998
• 68 cents on November 22, 1999
• 69 cents on December 11, 2000
• 70 cents on November 26, 2001
• 71 cents on December 9, 2002
• 72 cents on November 10, 2003
• 74 cents on November 22, 2004

Public access fees collected by Time Warner Cable on behalf of the Town go to The Peoples Channel to provide public access television services.  The Council authorized renewal of the performance agreement with The Peoples Channel in June 2004.  The Peoples Channel submitted its annual report (Attachment 1) to the Council at the June 15, 2005 meeting. We expect the next Annual Report for The Peoples Channel in January 2006.

The purpose of the public access fee is to help cover wages, equipment, rent and other costs for management and operation of public access cable television services.  The current 74-cent per month public access fee generated $115,002 for the fiscal year ended June 30, 2005.

Each year, the Council decides whether to increase, maintain, or reduce the public access fee.

OPTIONS

The franchise allows the Town to reduce, eliminate, or increase the public access fee once per year. The increase in a given year is limited to an inflation factor or three percent, whichever is less. The inflation factor is the increase in the most recent Gross National Product-Price Index (GNP-PI) published by the U.S. Department of Commerce, Bureau of Economic Analysis.  According to the Federal Communications Commission, the inflation factor for the previous 12-month fiscal period is 2.29.

Substantive Options:

• Direct Time Warner to increase the fee by the amount of the inflation factor.

• The franchise states that the annual adjustment will be the amount of increase in the Gross National Product Price Index (GNP-PI), subject to a limit of three percent increase per year and subject to an overall limit of $1 per month as the maximum future fee.

• A 2.29 percent change would result in an increase in the fee from 74 cents to 76 cents per customer per month, beginning January 1, 2006, which we believe is a reasonable increase.  With the increase, we estimate that revenue would be approximately $117,635, an additional $2,633.

• Make no change in the current fee.

• Reduce or eliminate the public access fee.

Procedural Options:

Call a public forum for November 9.

Take no further action and leave the fee at its present level of 74 cents per month.

RECOMMENDATION

Manager’s Recommendation: That the Council adopt the attached resolution and refer this matter to the Manager for recommendations and call a public forum on November 9.

ATTACHMENTS

1. The Peoples Channel Annual Report to the Town of Chapel Hill for Calendar Year 2004 (begin new page 1).