AGENDA #5b

 

MEMORANDUM

 

TO:                  Mayor and Town Council

 

FROM:            W. Calvin Horton, Town Manager

 

SUBJECT:       Time Warner 2000 Annual Report

 

DATE:             May 21, 2001

 

INTRODUCTION

 

Attached is the Annual Report from Time Warner Cable for the calendar year ended December 31, 2000, 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.

 

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 (2000 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.  On January 22, 2001, the Council held a public hearing and adopted a resolution finding that Time Warner’s Basic Tier rates were in accordance with federal regulations.  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 have met with Time Warner several times to discuss these issues and expect to complete our review of the issues before the Council’s summer break.  We will return to the Council with a follow-up report regarding the outcome of these discussions.

 

2.      Programs and Services (2000 list of programs and channel line-ups offered by Time Warner).

 

We believe the programs and services list is accurate for calendar 2000.  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 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.  The Council received an annual report from the Peoples Channel on April 9, 2001.  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 a summary table of complaints received by Time Warner or forwarded by the Town to Time Warner regarding such issues as customer rate increases, billing errors, or outages.  Town staff referred these concerns to Time Warner.   Time Warner responded to the complaints, and Town officials generally received no further formal complaints about these matters during the reporting period.  Town staff also compiled a table of recorded complaints.  We have included this table as Attachment 3.

 

    1. System Outage Summary

 

The Annual Report describes no major outages requiring more than 24 hours of repair.  The Year-to-Date average outage resolve time was 1.23 hours.

 

    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 the survey.  Time Warner proposed a methodology for the survey, which we referred to faculty at the UNC School of Journalism and Mass Communication for review.  After receiving comments from a faculty member, including some proposed wording changes, we presented these comments to Time Warner.  Company officials agreed to consider incorporating those changes into the survey.  Time Warner expects to begin the subscriber survey this spring.

 

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

 

On January 22, 2001, the Council held a public hearing and adopted a resolution finding that Time Warner’s Basic Tier rates were in accordance with federal regulations (as provided through FCC Form 1240). 

 

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

 

We believe the statement made in the April 2, 2001 letter to the Manager (included with Attachment 2) regarding certification and performance of the cable television system is accurate.

 

  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.  Per our request, these reports include additional breakout information for revenues from Internet connection services since February 2000.   

 

We believe that the reported revenues by Time Warner are accurate.  Total Town revenues from cable franchise fees for calendar year 2000 were $317,444, compared to $282,077 in calendar year 1999.  Increased revenues can be explained by increased customer subscription to the Internet connection service.

 

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

 

Time Warner installed approximately 6.51 miles of new cable in 2000.

 

CONCLUSION

 

We believe that Time Warner’s 2000 Annual Report meets the requirements for such a report in the cable franchise agreement.  We plan to report to the Council before the Council’s summer break regarding Basic Tier rates and our discussions with Time Warner on Basic Tier channels.

 

ATTACHMENTS

 

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

2.      2000 Annual Report from Time Warner (p. 5).

3.      Staff Summary of Time Warner Complaints Received (p. 29).