HomeMy WebLinkAbout06/07/1999 . � �
Telecommunications Advisory Committee
City of Apple Valley
June 7, 1999
7:00 P.M. City Hall
Minutes
1. Call to Order
The meeting was called to order at 7:00 p.m. by Chairperson Bib(e.
Members Present: Rollin Bible, Jerry Brown, Scott Hugstad-Vaa, Dale Rodell,
David Westbrook
Members Absent: John Magnusson
Others Present: Charles Grawe, Dennis LaComb, Rob Roeder, Mike Bradley,
Michael Steiner
2. Minutes of March 1, 1999
Mr. Westbrook moved, second by Mr. Hugstad-Vaa to approve the minutes of March 1,
1999. Motion passed unanimous.
3. Minutes of March 15, 1999
Mr. Rodell moved, second by Mr. Westbrook to approve the minutes of March 15, 1999.
Motion passed unanimous
4. Rate Increases
Mr. Bible asked Mr. Steiner if he had any comments for the Committee. Mr. Steiner said
he had a complaint about the rate increase. He distributed an article from USA Today for
the Committee to read. Mr. Steiner said he was unable to get information from Charter
about the value of the company. He said he talked with Mr. Roeder who told him the
average increase over the past few years had been around 8.6%. Mr. Steiner said he
wanted additional data and requested the City look into the rate increase. Mr. Steiner
said he estimated the cost of the rate increase to be $150,000 to $200,000.
Mr. Roeder clarified that only the rates for basic service and equipment rental are subject
to the City's review. Mr. Bible also reiterated the City's ability to review the rates is
limited to the basic rates and equipment rental rates. Mr. Steiner responded that the state
of the industry and sale of the system should be considered. Mr. Bible again clarified the
City's authority to review the rates.
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Mr. Bible asked Mr. Roeder for his response. Mr. Roeder said the FCC forms were
completed prior to the sale of the system. He said both Marcus and Charter reviewed the
filings and agreed that the rate increases were appropriate. Mr. Roeder said Charter's
regulatory division stands behind the number in the forms and has indicated to him the
rates could actually be higher. Mr. Roeder said one additional channel, ZDTV, is offered
in the basic service but was not reflected in the rate calculation.
Mr. Bible asked if Mr. Bradley has any comments as the City's attorney on such matters.
Mr. Bradley said the rates are derived by completing specific formulas. He then went
through the memo he wrote explaining the review process. He said there are two tiers--
basic and CPST. As of April 1999, CPST services are not subject to any regulation.
Regulatory authority was maintained for basic service and equipment rental rates. The
company is allowed to increase its rates from three factors--inflation, increased costs, and
increased channels in the service. He said the equipment rental rates are also calculated
through a specific formula set by federal law. Mr. Bradley said the City has 90 days
from the notification to issue a rate order prior to the new rates going into effect. After
the rates go into effect, the City has one year to request a rate adjustment. He said the
review itself would require the use of experts to evaluate the forms. Bernick & Lifson
could do a cursory investigation and check to see if the calculations on the forms are
accurate. He estimated the cost of the review to be $10,000 to $15,000.
Mr. Steiner requested clarification as to what rates can be regulated and asked how the
City could review the accuracy of the forms if the contract costs are not public
information. Mr. Roeder clarified the contract rates in question are for CPST services,
not basic services, and are therefore not subject to review.
Mr. Bible said the question is does the City expect it will find reason to reverse the
increase in the rates in an amount that is greater than the amount it will cost the City to do
the legal review. Mr. Hugstad-Vaa said he believes the chances of finding an error in the
filings are very small, especially since it was reviewed by regulatory specialists in two
companies.
Mr. Steiner argued the City has no way to determine if the company is filing the forms
accurately unless it does the investigation. He questioned how the City can know the
company is not deliberately filing the forms inaccurately knowing the City has not done a
review of the rates. Mr. Roeder responded that company can charge what ever it wants
for the CPST rates. He asked why the company would risk detection of falsifying
information on the small part which is reviewable and regulated when it can add
whatever charges it wants to the portion which is not subject to regulation.
Mr. Hugstad-Vaa said he didn't believe the likelihood of finding a filing error justified
the cost of the review. Mr. Brown noted the company has not charged,the legal
maximum for rates in the past. Mr. Brown said the Committee could table the issue for
the next meeting. Mr. Rodell asked for more information about the review process. Mr.
Bradley said the City can initiate a study and then decide if a rate issue should be issued.
Mr. Westbrook commented it appears to him the rate increase is (ess than the legal
maximum, but added the forms require professiona( review. Mr. Rodell asked when the
next rate adjustment would take effect. Mr. Roeder said it would be in June of 2000.
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Mr. Bible noted this is the first time the Committee has received an official request to
challenge the rate increase. Mr. Bible said the Committee has generally tried to work
cooperatively with the company holding the franchise. He noted other cities with
adversarial relationships have wasted tax dollars on costly court battles. He said it is his
personal opinion the residents receive good cable service at a fair value. He said
residents may also choose satellite service as an alternate to cable.
Mr. Steiner said he believes a rate review would be good, even if it was only an initial
investigation. He said the City can't know the rates are appropriate unless the rates are
investigated. He said if the rates haven't been challenged in twenty years, then it might
be time to challenge them since the City has an exclusive franchise. Mr. Bible clarified
that the franchise is non-exclusive and other companies are allowed to operate in the
City. Mr. Steiner said he would like to challenge the equipment thresholds. He said he
thought the City should invest part of the 5% franchise fee to investigate the rates and
possible issue a$200,000 rate order.
Mr. Bible asked for a motion. Mr. Hugstad-Vaa said he saw no need for a rate review.
Mr. Brown said both Charter and Marcus had the ability to issue greater increases. Mr.
Westbrook said the Committee could consider tabling the issue. Mr. Bible requested
staff prepare a list of the rates and rate increases for other cable systems in surrounding �
communities. Mr. Steiner requested that staff be directed to compile a ten-year history of
rate increases in Apple Valley. Mr. Bible noted that past increases are tied to contracts
and other variables which make it difficult to evaluate the merit of the increase. Mr.
Grawe explained information on the rate increases may not exist in the City files for
some years. Mr. Bible requested a cursory look into the files for the rate increase
information.
Mr. Brown moved, second by Mr. Rodell to table the issue until the next meeting.
Motion passed unanimous.
5. Joint Powers Agreement for Government Access
Mr. Grawe said the Administrators of Apple Valley, Farmington, and Rosemount have
been meeting to discuss how public access will be provided for the three communities.
He reminded the Committee that under the previous franchise, public access was
provided by Marcus at their facility. Under the new agreement, the City relieved the
company of its obligation to provide the service. He said the City's are discussing ways
in which public access and some government access services can be provided jointly.
Mr. Bible said it is his understanding from past committee discussions that this position
would be limited to cable duties and would not be responsible for web site maintenance
or other non-cable-related duties. He asked why government access was also being
discussed.
Mr. Grawe explained that until now, the Cities of Farmington and Rosemount had no
cable operations or staff. He explained he currently programs the bulletin board and sets
the tape timers for Apple Valley. He said four part-time positions are used to record
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meetings. He said it is likely the public access duties will not require a full-time position.
The government channels for Farmington and Rosemount will require some technical
staffing, but they have no resources for a dedicated staff person. He said the three cities
are looking at a model used by the northern suburbs in which a single signal is sent to all
the participating communities most of the time. However, each community can over-ride
the signal at any time and play its own programming. This would allow certain
resources, such as the bulletin board to be shared.
Mr. Grawe said the City Council will be discussing the completion of the Municipal
Government Complex this week. If the project goes forward, the old City Hall may be
used in part as a public access studio. Mr. Grawe said the cost-sharing for the
government programming would be in-part based on hourly use, not just on a per capita
basis.
Mr. Bible said staff should continue to investigate a joint powers agreement for
government access and public access at a minimal level.
6. 2nd Quarter Complaint Log
The Committee reviewed the complaint log for the second quarter.
7. Other
Mr. Roeder announced there are 896 internet customers since May 1. There have been
some speed issues which are being addressed through a full duplex. The system is
monitored on a 24 x 7 basis which ensures problems are spotted quickly. Digital cable
will be launched on July 1 and Charter intends to offer video-on-demand next year. He
said Charter also plans to offer internet service without the need for a pc next March and
is considering limited telephony services for the third quarter of 2000.
Mr. Roeder said Charter intends to drop the FX channel this year. Charter intends to
offer a preview period to allow viewers to sample possible replacement channels.
Charter tracks requests for new channels and may also use a survey tool.
8. Adjourn
Mr. Westbrook moved, seconded by Mr. Rodell to adjourn the meeting. Motion carried ,
unanimous. The meeting was adjourned at 8:34 P.M.. ',