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HomeMy WebLinkAbout94-17ORDINANCE NO. 94-17 AN ORDINANCE OF THE TOWN OF DANVILLE PRESCRIBING REGULATIONS FOR BASIC SERVICE TIER RATES CHARGED TO CABLE TELEVISION SUBSCRIBERS THE TOWN COUNCIL OF THE TOWN OF DANVILLE DOES ORDAIN AS FOLLOWS: SECTION 1. The Town Council of the Town of Danville hereby finds and determines that: ao the Federal Communications Commission ("FCC") has issued rules pursuant to the Cable Television Consumer Protection and Competition Act, Pub. L. No. 102-385 (1992) ("1992 Cable Act"), implementing the regulation of cable television subscriber rates; and bo these rules allocate the regulation of rates for the basic service tier and associated equipment rates to local franchising authorities and require local authorities to become certified and adopt their own regulations governing the process of rate regulation; and c. the Town of Danville franchises cable television service for the benefit of its citizens; and d, the Town has been certified by the FCC effective October 19, 1993, to regulate the basic service tier and associated equipment of a cable system within its jurisdiction. SECTION 2. Article II of Chapter XVII, entitled "Rates", is hereby adopted and added to the Danville Municipal Code to read as follows: ARTICLE II CABLE TELEVISION RATES Section 17-16.1. Initial Review of Basic Cable Rates. a. Upon the adoption of this ordinance, the Town shall immediately notify all cable operators in the Town by certified mail, return receipt requested, that the Town intends to regulate subscriber rates charged for the basic service tier and associated equipment as authorized by the Cable Act of 1992. PAGE 1 OF ORDINANCE NO. 94-17 b. With 30 days of receiving notice from the Town, a cable operator shall file with the Town, its current rates for the basic service tier and associated equipment and any supporting material concerning the reasonableness of its rates. C. 1. If the Town is able to expeditiously determine that the cable operator's rates for the basic service tier and associated equipment are within the FCC's reasonable rate standard, as determined by the applicable benchmark, the Town Council shall: (a) hold a public hearing at which interested persons may express their views; and (b) act to approve the rates with 30 days from the date the cable operator filed its basic cable rates with the Town. , If the Town Council takes no action within 30 days from the date the cable operator filed its basic cable rates with the Town, the proposed rates will continue in effect. d. 1. If the Town is unable to determine whether the rates at issue are within the FCC's reasonable rate standard based on the material before it, or if the cable operator submits a cost-of-service showing, the Town Council shall, within 30 days from the date the cable operator filed its basic cable rates with the Town, and by adoption of a formal resolution, invoke the following additional periods of time, as applicable, to make a final determination: (a) Ninety (90) days if the Town needs more time to ensure that a rate is within the FCC's reasonable rate standard; or (b) One hundred and fifty (150) days ff the cable operator has submitted a cost-of-service showing, seeking to justify a rate above the applicable benchmark. , If the Town Council has not made a decision within the 90 or 150 day period, the Town Council shall issue a brief written order at the end of the period requesting the cable operator to keep accurate account of all amounts received by reason of the proposed rate and on whose behalf the amounts are paid. e. During the extended review period and before taking action on the proposed rate, the Town Council shall hold at least one public hearing at which interested persons may express their views and record objections. PAGE 2 OF ORDINANCE NO. 94-17 f--, f. An interested person who wishes to make an objection to the proposed initial basic rate may request the City Clerk to record the objection during the public hearing or may submit the objection in writing anytime before the decision resolution is adopted. In order for an objection to be made part of the record, the objector must provide the City Clerk with the objector's name and address. g. If a cable operator submits its current basic cable rate schedule as being in compliance with the FCC's reasonable rate standard, the Town Council shall review the rates using the benchmark analysis in accordance with the standard form authorized by the FCC. Based on the Town Council's findings, the initial basic cable rates shall be established as follows: . If the current basic cable rates do not exceed the benchmark, those rates shall become the initial basic cable rates and the future increases will be made in accordance with FCC rules. . If the current basic cable rates exceed the benchmark, the rates shall be the greater of the cable operators per channel rate on September 30, 1992, reduced by 10 percent, or the applicable benchmark, adjusted for inflation and any change in the number of channels occurring between September 30, 1992 and the initial date of regulation. . If the current basic cable rates exceed the benchmark, but the cable operator's per channel rate was below the benchmark on September 30, 1992, the initial basic cable rates shall be the benchmark, adjusted for inflation and the number of channels added to the basic service tier. h. If a cable operator does not wish to reduce the rates to the permitted level, the cable operator shall have the opportunity to submit a cost-of-service showing in an attempt to justify an initial basic cable service rate above the FCC's reasonable rate standard. The Town Council will review a cost-of-service submission pursuant to FCC standards for the cost-of-service review. The Town Council may approve initial basic cable rates above the benchmark if the cable operator makes the necessary showing; however, a cost-of-service determination resulting in rates below the benchmark or below the cable operator's September 30, 1992, rates minus 10 percent, will prescribe the cable operator's new rates. i. 1. Formal resolution. After completion of its review of the cable operator's proposed rates, the Town Council shall adopt its decision by formal resolution. The decision shall include one of the following: PAGE 3 OF ORDINANCE NO. 94-17 j0 (a) If the proposal is within the FCC's reasonable rate standard or is justified by a cost-of-service analysis, the Town Council shall approve the initial basic cable rates proposed by the cable operator; or (b) If the proposal is not within the FCC's reasonable rate standard and the cost-of-service analysis, if any, does not justify the proposed rates, the Town Council shall establish initial basic cable rates that are within the FCC's reasonable rate standard or that are justified by a cost-of-service analysis. . Rollbacks and refunds. If the Town Council determines that the initial basic cable rates are submitted exceed the reasonable rate standard or that the cable operator's cost-of-service showing justifies lower rates, the Town Council shall give the cable operator prompt written notice of its determination. Within 30 days after receipt of this notice, the cable operator may request reconsideration or modification. Upon receipt of a request for reconsideration or modification, the Town Council will, within 30 days, hold a hearing at which the cable operator is given an opportunity to be heard. If, after such hearing, the Town Council determines either that its original determination shall stand, or to modify its original determination while still finding that the initial basic cable rates exceed the reasonable rate standard or that the cost of service showing justifies lower rates, the Town Council may order the rates reduced in accordance with Paragraph G or H above, as applicable. In addition, the Town Council may order the cable operator to pay to subscribers, refunds of the excessive portion of the rates with interest (computed as applicable rates published by the Internal Revenue Service for tax refunds and additional tax payments), retroactive to September 1, 1993. The method for paying any refund and the interest rate will be in accordance with FCC regulations as directed in the Town Council's decision resolution. . Statement of reasons for decision for public notice. If rates proposed by a cable operator are disapproved in whole or in part, or it there were objections made by other parties to the proposed rates, the resolution must state the reasons for the decision and the Town Council must give public notice of its decision. Public notice will be given by advertisement once in a newspaper of general circulation printed and published in the County of Contra Costa and distributed in the Town of Danville. The Town Council's decision concerning rates for the basic service tier or associated equipment, may be appealed to the FCC in accordance with applicable federal regulations. PAGE 4 OF ORDINANCE NO. 94-17 Section 17-16.2. Review of Request For Increase In Basic Cable Rates. a. A cable operator who wishes to increase the rates for the basic service tier or associated equipment shall file a request with the Town and notify all subscribers at least 30 days before the cable operator desires the increase to take effect. Any increase taken by the cable operator shall be in accordance with FCC policy. b. 1. If the Town Council is able to expeditiously determine that the cable operator's rate increase request for basic cable service is within the FCC's reasonable rate standard, as determined by the applicable price cap, the Town Council shall: (a) hold a public hearing at which interested persons may express their views; and (b) act to approve the rate increase within 15 days from the date the cable operator filed its request with the Town. . If the Town Council takes no action within 30 days from the date the cable operator filed its request with the Town, the proposed rates will go into effect. C. . If the Town Council is unable to determine whether the rate increase is within the FCC's reasonable rate standard based on the material before it, or if the cable operator submits a cost-of-service showing, the Town Council shall, by adoption of a formal resolution, invoke the following additional periods of time, as applicable, to make a final determination; (a) Ninety (90) days if the Town Council needs more time to ensure that the requested increase is within the FCC's reasonable rate standard as determined by the applicable price cap; and One hundred and fifty (150) days if the cable operator has submitted a cost-of-service showing, seeking to justify a rate increase above the applicable price cap. 2. The proposed rate increase is tolled during the extended review period. . If the Town Council has not made a decision within 90 or 150 day period, the Town Council shall issue a brief written order at the end of the period requesting the cable operator to keep accurate account of all amounts received by reason of the proposed rate increase and on whose behalf the amounts are paid. PAGE 5 OF ORDINANCE NO. 94-17 d. e. f. g. h. i. During the extended review period and before taking action on the requested rate increase, the Town Council shall hold at least one public hearing at which interested persons may express their views and record objections. An interested person who wishes to make an objection to the proposed rate increase may request the City Clerk to record the objection during the public hearing or may submit the objection in writing anytime before the decision resolution is adopted. In order for an objection to be made part of the record, the objector must provide the City Clerk with the objector's name and address. If the Town Council is unable to make a final determination concerning a requested rate increase within the extended time period, the cable operator may put the increase into effect, subject to subsequent refund if the Town Council later issues a decision disapproving any portion of the increase. If a cable operator presents its request for a rate increase as being in compliance with the FCC's price cap, the Town Council shall review the rate using the price cap analysis in accordance with the standard form authorized by the FCC. Based on the Town Council's findings, the basic cable rates shall be established as follows: o If the proposed basic cable rate increase is within the price cap established by the FCC, the proposed rates shall become the new basic cable rates. . If the proposed basic cable rate increase exceeds the price cap established by the FCC, the Town Council shall disapprove the proposed rate increase and order an increase that is in compliance with the price cap. If a cable operator submits a cost-of-service showing in an attempt to justify a rate increase above the price cap, the Town Council will review the submission pursuant to the FCC standards for cost-of-service review. The Town Council may approve a rate increase above the price cap if the cable operator makes the necessary showing; however, a cost-of-service determination resulting in a rate below the price cap or below the cable operator's then current rate will prescribe the cable operator's new rate. The Town Council's decision concerning the requested rate increase, shall be adopted by formal resolution. If a rate increase proposed by a cable operator is disapproved in whole or in part, or if objections were made by other parties to the proposed rate increase, the resolution must state the reasons for the decision. Objections may be made at the public hearing by a person PAGE 6 OF ORDINANCE NO. 94-17 requesting the City Clerk to record the objection or may be submitted in writing at anytime before the decision resolution is adopted. . The Town Council may order refunds consistent with Section 17-16.1i(2) of subscribers' rate payments with interest if: (a) The Town Council was unable to make a decision within the extended time period as described in Paragraph (c) above; and (b) the cable operator implemented the rate increase at the end of the extended review period; and (c) the Town Council determines that the rate increase as submitted exceeds the applicable price cap or that the cable operator failed to justify the rate increase by a cost-of-service showing, and the Town Council disapproves any portion of the rate increase; and (d) the Town Council shall initiate an order as outlined in CFR 76.933(c). . The method for paying any refund and the interest rate will be in accordance with FCC regulations as directed in the Town Council's decision resolution. k. The Town Council's decision concerning rates for the basic service tier or associated equipment, may be appealed to the FCC in accordance with applicable federal regulations. Section 17-16.3. Cable Operator Information. a. 1. In accordance with CFR 76.938, a franchising authority may require the production of proprietary information to make a rate determination in those cases where cable operators have submitted initial rates, or have proposed rate increases, pursuant to an FCC Form 393 (and/or FCC Forms 1200/1205) filing or a cost-of-service showing. The franchising authority shall state a justification for each item of information requested and, where related to an FCC Form 393 (and/or FC Forms 1200/1225) filing, indicate the question or section of the form to which the request specifically relates. Upon request to the franchising authority, the parties to a rate proceeding shall have access to such information, subject to the franchising authority's procedures governing non-disclosure by the parties. Public access to such proprietary information shall be governed by applicable state or local law. PAGE 7 OF ORDINANCE NO. 94-17 b. Co d. . In case where initial or proposed rates comply with the reasonable rate standard, the Town Council may request additional information only in order to document that the cable operator's rates are in accord with the standard. . A cable operator submitting information to the Town Council may request in writing that the information not be made routinely available for public inspection. A copy of the request shall be attached to and over all of the information and all copies of the information to which it applies. . If feasible, the information to which the request applies shall be physically separated from any information to which the request does not apply. If this is not feasible, the portion of the information to which the request applies shall be identified. . Each request shall contain a statement of the reasons for withholding inspection and a statement of the facts upon which those reasons are based. . Casual requests which do not comply with the requirements of this subsection, shall not be considered. Requests which comply with the requirements of Subsection b above, will be acted upon by the Town Council. The Town Council will grant the request if the cable operator presents by a preponderance of the evidence, a case for nondisclosure consistent with applicable federal regulations. If the request is granted, the ruling will be placed in a public file in lieu of the information withheld from public inspection. If the request does not present a case for nondisclosure and the Town Council denies the request, the Town Council shall take one of the following actions: lo If the information has been submitted voluntarily without any direction from the Town, the cable operator may request that the city return the information without considering it. Ordinarily, the Town will comply with this request. Only in the unusual instance that the public interest so requires, will the information be made available for public inspection. 2. If the information was required to be submitted by the Town Council, the information will be made available for public inspection. If the Town Council denies the request for confidentiality, the cable operator may seek review of that decision from the FCC or a court of competent jurisdiction within five working days of the Town Council's decision, and the PAGE 8 OF ORDINANCE NO. 94-17 release of the information will be stayed pending review. Section 17-16.4. Automatic Rate Adjustments. a. In accordance with FCC regulations, the cable operator may adjust its capped base per channel rate for the basic service tier annually by the final GNP-PI (Gross National Product fixed weight price index). b. o The FCC regulations also allow the cable operator to increase its rate for the basic service tier automatically to reflect certain external cost factors to the extent that the increase in cost of those factors exceed the GNP-I (Gross National Product-index). These factors include retransmission consent fees, programming costs, state and local taxes applicable to the provision of cable television service, and costs of franchise requirements. . For all categories of external costs other than retransmission consent and franchise fees, the starting date for measuring changes in external costs for which the basic service per channel rate may be adjusted will be the date on which the basic service tier becomes subject to regulation or February 28, 1994, whichever occurs first. The permitted per channel charge may be adjusted for costs of retransmission consent fees or changes in those fees incurred before October 6, 1994. C. The cable operator shall notify the Town at least 30 days in advance of a rate increase based on automatic adjustment items. The Town shall review the increase to determine whether the item or items qualify as automatic adjustments. If the Town makes no objection within 30 days of receiving notice of the increase, the increase may go into effect. Section 17-16.5 Incorporation of FCC Cable Regulation. FCC cable regulations implementing the Cable Act of 1992 (47 U.S.C.521 et seq.), including but not limited to those rules and regulations regarding rate regulation as set forth in 47 CFR 76.900-76.985 and regarding customer service standards as set forth in 47 CFR 76.309 are adopted and incorporated by reference in this chapter. Amendments to FCC rules and regulations implementing the Cable Act of 1992 made after the effective date of this Section shall also be incorporated by reference without further legislative action by the Town. In the event that the Cable Act of 1992 or the rules and regulations adopted by the FCC regarding rates or customer service standards are inconsistent with this ordinance, the Cable Act of 1992 and FCC rules and regulations shall control. PAGE 9 OF ORDINANCE NO. 94-17 Section 17-16.6 Enforcement. a. The Town may order the cable operator to refund to subscribers a portion of previously paid rates under the following circumstances: 1. A portion of the previously paid rates have been determined to be in excess of the permitted tier charge or above the actual cost of equipment; or 2. The cable operator has failed to comply with a valid rate order issued by the Town. b. If the cable operator fails to comply with a rate decision or refund order, the cable operator shall be subject to the maximum permitted fines as provided for in Government Code Section 53088.2(0). SECTION 3. The following definitions of words and phrases are hereby adopted and added to Section 7-1.3 of the Danville Municipal Code. "Basic Cable Rates" shall mean the monthly charges for a subscription to the basic service tier. "Equipment Rates" shall mean the monthly charges for the rental of equipment associated with the provision of the basic service tier. "Basic Service Tier" shall mean a separately available service tier to which subscription is required for access to any other tier of service, including as a minimum, but not limited to, all must-carry signals, all PEG channels, and all local television signals other than superstations. "Benchmark" shall mean a per channel rate of charge for cable service and associated equipment which the FCC has determined is reasonable. "Cable Act of 1992" shall mean the Cable Television Consumer Protection and Competition Act of 1992. "Cable Operator" shall mean any person or group of persons: (a) who provide cable service over a cable system and directly or through one or more affiliates owns a significant interest in such a cable system; or (b) who otherwise controls or is responsible for, through any arrangement, the management and operation of such a cable system. PAGE 10 OF ORDINANCE NO. 94-17 "Cost of Service Showing" shall mean a filing in which the cable operator attempts to show that the benchmark rate or the price cap is not sufficient to allow the cable operator to fully recover the cost of providing the basic service tier and to continue to attract capital. "Initial Basic Cable Rates" shall mean the rates that the cable operator is charging for the basic service tier, including charges for associated equipment, at the time the Town notifies the cable operator of the Town's qualification and intent to regulate basic cable rates. "Must-Carry Signal" shall mean the signal of any local broadcast station (except superstations) which is required to be carried on the basic service tier. "Peg-Channel" shall mean the channel capacity designated for public, educational, or governmental use, and facilities and equipment for the use of that channel capacity. "Price Cap" shall mean the ceiling set by the FCC on future increases in basic cable rates regulated by the Town, based on a formula using the GNP (Gross National Product) fixed weight price index, reflecting general increases in the cost of doing business and changes in overall inflation or any such successor to the FCC approved formula. "Reasonable Rate Standard" shall mean a per channel rate that is at, or below, the benchmark or price cap level. "Superstation" shall mean any non-local broadcast signal secondarily transmitted by satellite. SECTION 4. If any provision or clause of this chapter or the application thereof to any person or circumstances is held to be unconstitutional or to be otherwise invalid by any court of competent jurisdiction, such invalidity shall not affect other provisions or clauses or applications thereof which can be implemented without the invalid provision or clause or application, and to this end the provisions and clauses of this chapter are declared to be severable. SECTION 5. The City Clerk shall either a) have this Ordinance published once within 15 days after adoption in a newspaper of general circulation or, b) have a summary of this ordinance published twice in a newspaper of general circulation once five days before its adoption and again within 15 days after adoption. PAGE 11 OF ORDINANCE NO. 94-17 SECTION 6. Section two and three shall be codified in the Danville Municipal Code. Section one, four and five shall NOT be codified in the Danville Municipal Code. The foregoing Ordinance was introduced and first read on July 19, 1994 and was adopted 9/20/94 by the following vote: AYES: Ritchey, NOES: None ABSENT: None ABSTAIN: None Greenberg, Doyle, Shimansky, Waldo APPROVED AS TO FORM: ATTEST: CITY CLERK PAGE 12 OF ORDINANCE NO. 94-17