AGENDA #5d

 

MEMORANDUM

 

TO:                  Mayor and Town Council

 

FROM:            W. Calvin Horton, Town Manager

 

SUBJECT:       Time Warner 1999 Annual Report

 

DATE:             January 8, 2001

 

INTRODUCTION

 

Attached is the Annual Report from Time Warner Cable for the calendar year ended December 31, 1999, as required by Section 2.13 of the cable franchise agreement and Section 10-107 of the Town’s cable ordinance.  The purpose of this memorandum is to review and comment on Time Warner’s Annual Report.

 

Time Warner representatives met with the Manager and Attorney on December 8, 2000, as part of a discussion of cable issues within the Town.  At that meeting, Time Warner representatives stated that publication delays and staff changes had necessitated a late report.  We have requested the 2000 Annual Report as early as possible in this calendar year.  The franchise agreement and the cable ordinance contain language requiring an annual report; however, the documents do not specify a time at which Time Warner must provide this information.  We will seek an agreement with Time Warner that annual reports shall be provided by April 1 of each year.

 

BACKGROUND AND DISCUSSION

 

Attachment 1 is Exhibit D of the cable franchise agreement, which outlines the requirements for the Annual Report.  Attachment 2 is the submitted Annual Report from Time Warner Cable.  Following are our comments related to each item in Time Warner’s Annual Report:

 

1.                  Rates and Charges (1999 list of rates and charges to cable subscribers for services).

 

We believe the rates and charges list is accurate.  The federal government relies on local governments to review basic cable rates, which the Town does on a contract basis each January.  (We expect to return to the Council on January 22 with the 2001 Basic Tier rates, after final review by cable consultant Robert Sepe.)  Changes in regulated rates are permitted only once per year. 

 

The Manager and Attorney have met with Time Warner officials regarding Council concerns about the increased number of channels in the Basic Tier.  The Manager informed Time Warner representatives of the Council’s wish to keep the Basic Tier as basic and inexpensive as possible.  We plan to meet with Time Warner officials again to discuss these issues further and will return to the Council with a follow-up report regarding the outcome of these discussions.

 

2.      Programs and Service (1999 list of programs and channel line-ups offered by Time Warner).

 

We believe the programs and services list is accurate for calendar 1999.  Please note that subscribers of Basic and Standard service tiers do not require addressable converter boxes.

 

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.       

 

  1. Public, Governmental, and Educational Access (Description of public, government, and educational access activity on three channels dedicated for each function).

 

The Peoples Channel provides public access television service through a performance agreement with the Town.  The Council received an annual report from the Peoples Channel in April 2000.  The Council raised the public access fee from 68 cents to 69 cents per customer per month on December 11, 2000, to adjust for inflation.

 

  1. Customer Service (Report on customer service from Time Warner to subscribers.)

 

    1. Summary of Complaints.  The Annual Report includes four written complaints received by Time Warner or forwarded by the Town to Time Warner regarding customer rate increases or billing errors.  In addition to the four complaints listed in the report, the Town has received two other written complaints: one regarding the charges for remote controls, and one regarding the sound quality within the Council Chamber during meetings.  Town staff referred these concerns to Time Warner and to the Town’s audiovisual technicians for investigation.   Time Warner responded to the complaints, and Town officials received no further formal complaints about these matters during the reporting period.

 

    1. System Outage Summary

 

The Annual Report states that outages were repaired no later than 24 hours after the report of an interruption.

 

    1. 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.  The Town Manager and Attorney have met with Time Warner officials regarding preparation of such a survey and are awaiting an explanation of the methodology proposed.  Time Warner expects to begin the subscriber survey in April 2001, after the Town Manager has approved the methodology to be used.

 

  1. Filings with the FCC (Report on filings to the Federal Communications Commission).

 

On January 24, 2000, the Council adopted a resolution finding Time Warner’s proposed 2000 selected Basic Service tier rates as reasonable and providing conditional approval (through FCC Form 1240). 

 

  1. Performance Test in Franchise (Report on performance tests of the cable system).

 

We believe the statement made in the December 1, 2000 letter to the Manager regarding certification and performance of the cable television system is accurate, with one comment.  The appropriate section of the cable ordinance related to this matter is not Section 10-107, but Section 10-100.

 

  1. Franchise Fee Payments (Report on cable franchise fees paid to the Town: 5% 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 5% of Time Warner’s gross revenues, paid in quarterly installments.  (Effective February 2000, the Manager has requested that these reports include additional breakout information for revenues from Internet connection services.)   

 

We believe that the reported revenues by Time Warner are accurate.  Total Town revenues from cable franchise fees for calendar year 1999 were $282,077, compared to $276,561 in calendar year 1998.

 

  1. Completion of Construction (Report on status of cable system upgrade as required by the cable franchise agreement).

 

Time Warner installed approximately 4.28 miles of new cable in 1999.

 

CONCLUSION

 

We believe that Time Warner’s 1999 Annual Report meets the requirements for such a report in the cable franchise agreement.  We plan to report to the Council during the third quarter of the fiscal year regarding Basic Tier rates and our discussions with Time Warner on Basic Tier channels and customer service issues.

 

ATTACHMENTS

 

1.      Exhibit D: Annual Report to Town (from the Franchise Agreement) (p. 4).

2.      1999 Annual Report from Time Warner (begin new page 1).