AGENDA #5b
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Response to Citizen Questions about Time Warner Service
DATE: April 28, 2003
INTRODUCTION
This memorandum responds to concerns raised by a citizen regarding Time Warner customer service.
BACKGROUND AND DISCUSSION
At the January 13, 2003 Council meeting, Dr. Harvey Krasny expressed concerns about various aspects of customer service provided by Time Warner Cable. At the Council’s request, we have corresponded with Mr. Tom Adams, President of Time Warner’s Central District, to address these concerns (Attachment 1). We have provided Mr. Adams’ response as Attachment 2.
Mr. Adams’ letter addresses the following key points in answer to Dr. Krasny’s questions:
Customer Service
Dr. Krasny raised the issue of late or missed service calls and incorrect information given by Time Warner customer service staff. Mr. Adams explained that Mr. Chris Van Name, President and General Manager, and Ms. Virginia Yopp, Public Affairs Manager, had contacted Dr. Krasny to find out where miscommunications have occurred (Attachment 2). More broadly, we will continue to monitor customer service issues with Time Warner staff and will request that Time Warner conduct a subscriber survey of its customers this summer. This is a stipulation required every two years in the Town’s franchise with Time Warner.
Bundling of Services
Dr. Krasny objected to the “bundling” of channel offerings that required customers to purchase unwanted channels as part of a package. We believe that this procedure has been corrected with the elimination of the Tier Buy-Through Requirement. An October 2002 ruling by the Federal Communications Commission (FCC) prohibits a cable television operator from requiring that a Basic-only cable customer first purchase a higher tier of service, such as “Standard” service, in order to purchase programming offered on a premium channel such as HBO. Therefore, Time Warner customers are no longer required to purchase the “Standard” tier of service, which is more expensive than Basic, in order to access premium channels. Mr. Adams’ letter refers to a February 5, 2003, billing insert informing customers of this option, and we have requested a copy of this insert (Attachment 3).
Pricing Trends
Dr. Krasny said that increasing cable prices might keep senior citizens and users who live on low and fixed incomes from accessing cable services. Mr. Adams’ letter states that Time Warner takes into account such factors as programming costs, copyright fees, and inflation when adjusting cable prices, and that the company is competitive with other video and broadband service providers.
Basic Cable service is the one area in which the Town has some limited regulatory authority of cable rates. FCC regulations allow the Council to review annually Time Warner’s Basic rates to determine whether such rates are accurately calculated and consistent with applicable rules. On January 13, the Council accepted the Town cable consultant’s conclusions that the Basic rates were accurately calculated by FCC standards.
Durham County
Following Dr. Krasny’s comments, a Council member also asked that the Manager repeat a 2002 request to allow Durham County customers to view live broadcasts of Council meetings. Under the present system, Chapel Hill residents who are served by the Durham system are not able to view Town Council meetings when they occur, although they can see a rebroadcast at 1 p.m. on Fridays following the meeting.
Mr. Adams’ letter states that there are approximately 30 customers who are currently affected because of the existing infrastructure. Mr. Adams said that Time Warner had reviewed the technical requirements needed for these customers to receive the Chapel Hill access channels and concluded that such changes are not “economically feasible or practical at this time.” Mr. Adams further stated that, as the number of Chapel Hill customers in the area continues to grow, Time Warner will review the feasibility of making these changes (Attachment 2). We have since clarified some of the numbers that Time Warner used in its calculations of the area. Although there were 30 customers in the area before Town annexation in 1986, there are approximately 380 subscribers now living in the Chapel Hill part of Durham County. We have requested reconsideration of this request (Attachment 3).
Picture-in-Picture
A Council member also requested information about the availability of “picture-in-picture” technology. This technology has been dependent on the type of television used by a customer. Some televisions have picture-in-picture capability, which allows the viewer to see one channel in a “box” format on part of the screen while watching another channel.
Effective this month, Time Warner began a service called the Digital Video Recorder (DVR), which is used with its digital cable service. The DVR enables use of picture-in-picture, even if a customer’s television does not offer picture-in-picture. Customers can rent a DVR terminal from Time Warner to receive this feature. As part of this new digital terminal, picture-in-picture is available through the cable system. More information about this feature is available at www.twcnc.com.
Competition
Dr. Krasny has expressed interest in the Town pursuing other cable access providers. Although Time Warner is the only cable service provider in Chapel Hill at present, the Town’s franchise with Time Warner is non-exclusive, meaning that another cable company can negotiate a separate franchise agreement and operate a cable system with Council approval. Based on past efforts to get cable-to-cable competition in the area, we do not believe that other cable companies have an interest in a providing a separate service in Chapel Hill, particularly since satellite dish companies provide some amount of competition for cable.
The idea of pursuing a second cable competitor was discussed in the mid-1990s, during the negotiations for the current Time Warner franchise. Analysis showed that it is unusual for two cable companies to compete in the same area. A second cable company would need to conduct an economic feasibility study of the area and obtain financing to operate a separate system. The last company to express an interest in providing a cable service in the Town was Carolina Broadband in 2000. We do not believe that Carolina Broadband is in business at this time.
CONCLUSION
We will continue to monitor customer service and rate issues with Time Warner, and will pursue other efforts as directed by the Council.
1. February 5, 2003 Letter from Cal Horton to Tom Adams (p. 4).
2. February 11, 2003 Letter from Tom Adams to Cal Horton (p. 6).
3. March 31, 2003 Letter from Cal Horton to Tom Adams (p. 8).