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HomeMy WebLinkAboutReso 103-1978 RESOLUTION NO. 103-78 CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA A RESOLUTION APPROVING CATV SUBSCRIBER RATE INCREASES EFFECTIVE SEPTEMBER 1, 1978. ~E IT RESOLVED by the City Council of the City of South San Francisco that the Council, in a public hearing on the 16th day of August, 1978, due notice of which was given by publication on the 4th day of August, 1978, in the Enterprise-Journal, a newspaper published and circulated in the City of South San Francisco, a copy of which notice is attached hereto as Exhibit "A,"; having considered Western TV Cable's subscriber rate increase application dated August, 16, 1978, and related documents, copies of which are on file with the office of the Director of Finance; the staff report dated August 16, 1978; and the written and oral statements made at said hear- ing, determines as follows: A. The subscriber rate increases hereinafter set forth are warranted from a consideration of all the factors related to subscriber rates, includ- ing but not limited to increased costs of operation, gross revenues, projected increase or loss in number of subscribers, capital expenditures, and additional requirements of the Federal Communication Commission; and said increases or schedule of reasonable rates and charges which will prevent excessive charges and assure fair compensation to the Grantee. B. The subscriber rates as initially set forth in Section 6 of Ordi- nance No. 563, adopted June 19, 1967, as amended pursuant to Section 7 of said Ordinance by Resolution 5907 adopted August 7, 1972; Resolution 6156 adopted August 20, 1973; and Resolution 165-76 adopted November 17, 1976, should be reasonably increased. NOW, THEREFORE, THE COUNCIL ORDERS THE FOLLOWING: 1. Commencing September 1, 1978, the subscriber rates and charges shall be as follows: (a) Single-use premises- individual subscriber (residential and commercial). The monthly service charge shall not exceed $6.70 for the first single receiving set or apparatus (primary outlet) and for each receiving set or apparatus in excess of one (secondary outlet) at the location of any such subscriber, a sum not to exceed $1.80 per month. On the first day of the month after the franchisee adds five TY channels to the system, the following rates shall be effective: Primary outlet - $7.10 monthly service charge; secondary outlet - $1.90 monthly service charge. (b) Municipal and South San Francisco Unified School District. There shall be no monthly service charge for service to the occupied municipal 'properties of the City of South San Francisco or the South San Francisco Unified School District within the corporate limits of the City. (c) Hotels, motels, multiple dwellings and other buildings. The monthly service charge for hotels, motels, multiple dwellings and other buildings, as more particularly described in Section 5(c) of Ordinance No. 563, shall not exceed 40% of the primary outlet charge established for single-use premises for the first receiving set or apparatus in each living unit,and for secondary outlets a sum not to exceed the single use premises secondary outlet charge for a living unit. (d) FM monthly service charge. The monthly service charge shall not exceed $1.80 for the first single receiving set or apparatus (primary outlet) and for each receiv- ing set or apparatus in excess of one at the location of any such sub- scriber, a sum not to exceed $1.80 per month. On the first day of the month after the franchisee add~ five TV channels to the system, the charge shall be $1.90 for primary and secondary outlets. (e) Converters. Annually on or before the 1st day of January , franchisee shall file with the City Manager a schedule of converters available to subscribers, identifying same, describing the purPose, capacity and franchise cost thereof, and the subscriber's refundable deposit estab- lished within the range hereinafter set forth. Upon endorsement of approval thereof by the City Manager and the filing of a copy thereof with the City Clerk, said schedule shall be effective. The schedule may be revised in the manner heretofore described. The following range of refundable deposits for converters and monthly service charges, shall be effective as of the 1st day of September , 1978 : (1) Basic Converters.. The refundable deposit for basic converters shall be that cost which equals franchisee's cost for said converters but in no event to exceed $25.00. There shall be no monthly service charge to the subscriber for the use of the basic converter. (2) Optional Converters. The refundable deposit for optional conver- ters shall not exceed franchisee's cost thereof. The monthly ser- vice charge to the subscriber shall not exceed $1.00 per month. e 2. Publication. The City Clerk shall publish this Resolution once within fifteen days after adoption in the Enterprise-Journal, a newspaper of general circulation published in the City of South San Francisco. I hereby certify that the foregoing Resolution was regularly intro- duced and adopted by the City Council of the City' of South San Francisco at a regular meeting held on the 16th day of August 19 78, by the following vote: AYES: Councilmen Ronald G. Acosta, William A. Borba, Emanuele N. NOES' ABSENT: Damonte, Terry J. Mirri; and Councilwoman Roberta Cerri Teglia None None ATTEST' 0 EXHIBIT A TO RESOLUTION 103-78 -~ August 16, 1978 ADOPTED· Au.qust 16, 1978 · To:' ~he Honorable City Council Subject:' CABLE TV .RATE ADJUSTMENTS ACTION: Resolution · RECO~ENDATION: . It is recommended that Council adopt the attached resolutions authorizing rate adjustments, establishing deposits and service fees for converters and institute a new procedure for future rate adjustments. .. · · DISCUSSION: In March, Western 'TV Cable approached Council with a request for rate adjustments. A subcommittee was appointed consisting of Mayor Borba, Councilwoman Teglia and staff and charged with the responsibility to review Cable's proposal and to subn~it its recommendations and' findings to. Council. The subcommittee met on numerous occasions to investigate the firm's financial .status, survey surrounding commun- ities, evaluate existing and projected levels of service and .review prior rate increases. In addition to scrutinizing the. b~sic'rate':'.structure, 'consideration was als° paid to the need for establishing deposit .fees and/or charges for con- verters, and a revised methodology for establishing future rate adjustments. It has been approximately eighteen months since the last ~ate increase' was approved, January 1, 1977. In concert with that adjustment, Cable indicated its plans for 1977, which included increased channel capacity. 'It appeared as late as last September that the anticipated services would be on line by January,. 1978. However, in December Cable was advised by its legal staff to delay all plans until certain waivers were obtained from the Federal Communications Comlhission. This matter is still pending before the Federal Communications Commission and thus became an added factor to be considered. ~ During the subcommittee's deliberations, certain assumptions were made: 1) Regular but modest rate adjustments were preferred to large infrequent· increases; 2) Per- missable franchise fees will be reduced by Federal Communications Commission; To: The Honorable tit9 Council Subject: CABLE TV RATE ADJUSTMENTS August 16, 1978 Page 2 '. · 3) Federal CommUnications Commission will approve Cable's .requested waivers; 4) Rate adjustments should be, in part, tied to the delivery of planned services; 5) Deposits on all converters should be refundable, but sufficient to discourage pilferage; 6) Cost to maintain .optional converters should be borne by the user; 7) Cable should not be deregula~d.at this time but a .more fluid means for future. adjustments developed; 8) Added channel capacity should increase market saturation, The following table capitalizes Cable's proposal by depicting the existing .fees and charges, the original proposal and the subcommittee's recommendations: ITEM Single Use Premises Primary· Extra TV or FM' Muni ci pal and School · 'FEES/CHARGES Exis'tinq Requested Recommended Step I (1) Step 2 (2) $6.40 $7.25 $6.70 $7.10 1.7,5. 2.00 1.80 1.90 0 0 0 0 Hotel, Motel, Mull~iple Dwelling Primary Extra TV or FM 6.40 1.75 7.25' * (3I 2.00 *. (3 FM 1.75 2.00 1.80 1.90 Basic Converter Deposit Cost of converter not to exceed $25.00 Optional Converter Deposit Service Fee Not to exceed cost of converter 2.00 l .00 · 1.00 · *(1) Adjustment effective September 1st. *(2) Adjustment effective when additional five channel capacity is available to subscribers. . *(3) The eXisting rate schedule.provides for a fee equal to the primary resi- dential rate for service to the antennaplex or distribution system and a fee equal to the secondary (residential) rate for each outlet from the system. The proposal calls for a fee equal to'forty percent of the primary (residential)'-rate for each living unit with no charge for service connection to the distribution system. The Honorable City Council Subject: CABLE TV RATE ADJUSTMENTS Augu.~;t 16, 1978 ' Page 3 -~. The findings of. the subcommittee's investigation are as follows: , 1. ReView of financial records illustrated a reasonable distribution of costs and an acceptable return on investment. 2. Monthly s~rvice rate..adjustments for cable service have been less than the averages of increasing costs for all other goods and services {CP~ ~ since the beginning rate was established in 1976. See attached chart. · $. Current' service fees in South San Francisco are below the average of surrounding communities and will continue to be if proposed rates are approved.. See attached table.-' 4. Modification of'the Hotel, Motel and Multiple Dwelling rates will provide a more equitable cost/benefit alignment with minor impact on the subscribers. . 5. Refundable deposits on converters not to exceed replacement costs will allow Cable to provide a variety of "optional" converters consistent with consumer demands and pro,vide reasonable assurances of their· return. METHODOLOGY FOR FUTURE ADJUSTMENTS- The current procedure for adjusting rates provides for Cable to submit its proposal to Council; a review is undertak'en, a public hearing is conducted and Council estab' lishes the~rates. In-design, the process is relatively simple and expedient. It has resulted in a fine.system'which provides_a good level of service 'with.a modest· cumulative rate increase. However,-the time for review and legislative action to process the requests has negatively impacted Cable's receipts which is ultimately reflected in subsequent rate adjustments. . The subcommi~:tee's alternative procedure is structured to insure equal or better protection to the subscribers, allow Council adequate control, yet eliminate the costly delays currently being experienced. The proposal would allow Cable with prior notice to the iCity to adjust the rates upward no more than once every~·tw61've months by a percentage not to exceed seventy-five percent Of the CPI for the period between adjustments. Council has the prerogative to review the rates at any time and to modify the new rates f6r cause. The suggested increased'limit of seventy-five percent, of the CPi was 'determined to be reasonable through a comparison of prior adjustments, potential, easing of the franchise payment, physical status of the system and an anticiPateU .increase in subscribers due to improvements in optional services. · To: The Honorable City Council Subject: CABLE TV RATE ADJUSTMENTS August 16, 1978 Page 4 In essence, the procedure controls the frequency of adjustments,, limits.the increases in rates, retains Council's authority, but eliminates the delay, factor. It.further allows market conditions to play a.greater role in the establishment of rates, and ,-~provides Cable with more finite perimeters in which' to plan for future development. C. Walter Birkelo City Manager AsSistant to City Manager CWB:MAW:ad Attachment HISTORY of CABLE RATE ,ADJUSTMENTS ZOO'S8.00 I$0' - ~7.0~ 170' '). COST O~ C~U~ S~CE Monthly service rates for cable television service in South San Francisco have been continuously less than the averages of increasing Costs for all other goods and services since the beginning rate was established in 1967.