(A) Generally. In addition to any requirements contained within this chapter, all MCS providers that are classified as cable operators shall be expected to abide by and comply with all applicable provisions of the Cable Communications Policy Act of 1984 and the Cable Television Consumer Protection Act of 1992. A cable operator must provide the following information to subscribers on monthly bills:
(1) A statement substantially the same as the following: “The basic service tier rates and related equipment and installation charges are regulated by the city. If you have any questions or comments regarding these rates, you may call or write the city at P. O. Box 657, Cleburne, Texas 76033 (817) 645-0901”; and
(2) The FCC community unit identifier for the cable system.
(B) Rates for the basic service tier.
(1) Basic service tier rates. Basic service tier rates are subject to regulation by the city in order to assure that they are in compliance with the requirements of 47 USC 543. Rates that are demonstrated, in accordance with this chapter, not to exceed the Initial Permitted Per Channel Charge or the Subsequent Permitted Per Channel Charge as described below, or the equipment charges as specified in this chapter, will be accepted as in compliance. The maximum monthly charge per subscriber for the basic service tier offered by a cable operator shall consist of a permitted per channel charge multiplied by the number of channels on the tier, plus a charge for franchise fees. The maximum monthly charges for the basic service tier shall not include any charges for equipment or installations. Charges for equipment and installations are to be calculated separately pursuant to this chapter.
(2) Initial Permitted Per Channel Charge.
(a) For purposes of this section, the initial date of regulation for the basic service tier shall be the date on which the city gives written notice to the cable operator that the city has been certified by the Commission to regulate rates for the basic service tier and that this chapter has been adopted by the city.
(b) For purposes of this section, rates in effect on the initial date of regulation or in effect on September 30, 1992, shall be the rates charged to subscribers for service received on that respective date.
(c) The permitted channel charge on the initial date of regulation shall be, at the election of the cable operator, either:
1. A charge determined pursuant to a cost-of-service proceeding; or
2. The charge specified in subdivisions a., b. or c. of this subdivision, as applicable.
a. If the operator's per channel charge for the basic service tier and equipment is equal to or below the benchmark per channel charge, as adjusted forward for inflation from September 30, 1992, to the date of initial regulation, then the permitted per channel charge shall be the per channel charge in effect on the date of initial regulation, adjusted for equipment.
b. If the operator's channel charge for the basic service tier and equipment in effect on the date of initial regulation is above the benchmark per channel charge, as adjusted forward for inflation from September 30, 1992, until the initial date of regulation, and the operator's per channel charge for the basic service tier and equipment in effect on September 30, 1992, was above the benchmark per channel charge is nine-tenths of the per channel charge in effect on September 30, 1992, but no lower than the benchmark per channel charge, additionally adjusted for inflation from September 30, 1992, to the initial date of regulation, for equipment, and for any changes in the number of channels offered on the basic service tiers.
c. If the operator's per channel charge for the basic service tier and equipment in effect on the date of initial regulation is above the benchmark per channel charge, as adjusted forward for inflation from September 30, 1992, until the initial date of regulation, and the operator's per channel charge for the basic service tier and equipment in effect on September 30, 1992, was below the benchmark per channel charge, then the permitted per channel charge is the benchmark rate per channel adjusted for inflation from September 30, 1992, to the initial date of regulation, for equipment, and for any changes in the number of channels offered on the basic service tier.
(3) Subsequent Permitted Per Channel Charge. After the initial date of regulation, the permitted channel charge for the basic service tier shall be, at the election of the cable operator, either:
(a) A per channel rate determined pursuant to a cost-of-service showing, or;
(b) The prior permitted per channel charge previously approved by the city, adjusted for inflation and external costs in accordance with the price cap requirements set forth in division (B)(4) of this section.
(4) Price cap requirements.
(a) Inflation adjustments. Permitted per channel charges for the basic service tier may be adjusted periodically on account of inflation. Adjustments permitted per channel charges on account of inflation shall be based on changes in the Gross National Product Price Index (GNP-PI) published by the Bureau of Economic Analysis of the United States Department of Commerce.
(b) External costs. Permitted per channel charges for the basic service tier may also be adjusted for changes in external costs measured on a per channel per subscriber basis. To the extent external cost increases are greater or less than the GNP-PI for the relevant period, the per channel charge will be adjusted accordingly. Per channel charges may not be increased if external costs other than franchise fees increase at a rate less than inflation. Permitted per channel charges also shall be decreased on account of external costs to the extent of such costs decrease from previous levels.
1. Categories. External costs shall consist of costs in the following categories:
a. State and local taxes applicable to provision of cable television service;
b. Franchise fees;
c. Costs of complying with franchise requirements, including costs of providing public, educational, and governmental access channels as required by the city. However, such costs shall not include the initial cost of providing facilities and equipment required but not heretofore provided under a Cable TV franchise in effect prior to the adoption of this chapter.
d. Retransmission consent fees; and
e. Programming costs.
2. The permitted per channel charge for the basic service tier shall be adjusted on account of programming costs and retransmission consent fees only for programming or broadcast signals offered on that tier.
3. The permitted per channel charge shall not be adjusted for costs of retransmission consent fees or charges in those fees incurred prior to October 6, 1994.
4. The starting date for adjustments on account of external costs for the basic service tier shall be the initial date of regulation for 180 days from September 1, 1993, if the initial date of regulation occurs on or after 180 days from September 1, 1993.
5. Changes in franchise fees shall not result in an adjustment to permitted per channel charges, but rather shall be calculated separately as part of the maximum monthly charge per subscriber for the basic service tier.
6. Adjustments to permitted per channel charges on account of increases in costs of programming obtained from affiliated programmers shall be the lesser of actual increases or the previous permitted rate level increased by the amount of inflation.
7. Adjustments to permitted per channel charges on account of increases in costs of programming shall be further adjusted to reflect any revenues received by the operator from the programmer.
(C) Rates for equipment and installation used to receive the basic service tier.
(1) Scope.
(a) The equipment regulated under this section consists of all equipment in a subscriber's location that is used to receive the basic service tier, regardless of whether such equipment is additionally used to receive other tiers or regulated programming service and/or unregulated service. Such equipment shall include, but is not limited to:
1. Converter boxes;
2. Remote control units;
3. Connections for additional television receivers; and
4. Other cable home wiring.
(b) Subscriber charges for such equipment shall not exceed charges based on actual costs in accordance with the requirements set forth below.
(2) Unbundling. A cable operator shall establish rates for remote control units, converter boxes, other customer equipment, installation, and additional connections separate from rates for basic service tier. In addition, the rates for such equipment and installations shall be unbundled one from the other.
(3) Equipment basket. A cable operator shall establish an Equipment Basket, which will include all costs associated with providing customer equipment and installation under this section. Equipment Basket costs shall be limited to the direct and indirect material and labor costs of providing, leasing, installing, repairing, and servicing customer equipment, as determined in accordance with the cost account and cost allocation requirements of this chapter. The Equipment Basket shall not include general administrative overhead including general marketing expenses. The Equipment Basket may include a reasonable profit.
(4) Hourly service charge. A cable operator shall establish charges for equipment and installation using the Hourly Service Charge (HSC) methodology. The HSC shall equal the operator's annual Equipment Basket costs, excluding the purchase costs of customer equipment, divided by the total person hours involved in installing, repairing and servicing customer equipment during the same period. The purchase of customer equipment shall include the cable operator's invoice price plus all other costs incurred with respect to the equipment until the time it is provided to the customer. The HSC is calculated according to the following formula:
HSC = EB - CE
H
Where EB = annual Equipment Basket Cost;
CE = annual purchase cost of all customer equipment; and
H = person hours involved in installing and repairing equipment per year.
(5) Installation charges. Installation charges shall be either:
(a) The HSC multiplied by the actual time spent on each individual installation; or
(b) The HSC multiplied by the average time spent on a specific type of installation.
(6) Remote charges. Monthly charges for rental of a remote control unit shall consist of the average annual unit purchase cost of the type of remote leased, including acquisition price and incidental costs such as sales tax, financing and storage up to the time it is provided to the customer, added to the product of the HSC times the average number of hours annually repairing or servicing a remote, divided by 12 to determine the monthly lease rate for a remote according to the following formula:
Monthly = UCE + (HSC x HR)
Charge 12
Where HR = average hours repair per year; and
UCE = average annual unit cost of remote.
Separate charges shall be established for each significantly different type of remote control unit.
(7) Other equipment charges. The monthly charge for rental of converter boxes and other customer equipment shall be calculated in the same manner as for remote control units. Separate charges shall be established for each significantly different type of converter box and each significantly different type of other customer equipment.
(8) Additional connection charges. The costs of installation and monthly use of additional connections shall be recovered as charges associated with the installation and equipment cost categories, and at rate levels determined by the actual cost methodology presented in the foregoing divisions of this section. An operator may recover additional programming costs and the costs of signal boosters on the customers premises, if any, associated with the additional connection as a separate monthly unbundled charge for additional connections.
(9) Charges for equipment sold. A cable operator may sell customer premises equipment to a subscriber. The equipment price shall recover the operator's cost of the equipment, including costs associated with storing and preparing the equipment for sale up to the time it is sold to the customer, plus a reasonable profit. An operator may sell service contracts for the maintenance and repair of equipment sold to subscribers. The charge for a service contract shall be the HSC times the estimated average number of hours for maintenance and repair over the life of the equipment.
(10) Promotions. A cable operator may offer equipment or installation at charges below those determined under subdivisions (C)(5) through (7) of this section, as long as those offerings are reasonable in scope in relation to the operator's overall offerings in the Equipment Basket and not unreasonably discriminatory. Operators may not recover the cost of a promotional offering by increasing charges for other Equipment Basket elements, or by increasing programming service rates above the maximum monthly charge per subscriber prescribed by this chapter. As part of a general cost-of-service showing, an operator may include the cost of promotions in its general system overhead costs.
(11) Franchise fees. Equipment charges may include a properly allocated portion of franchise fees paid to the city.
(D) Cost accounting and cost allocation requirements.
(1) Applicability. The requirements of this section are applicable for purposes of rate adjustments on accounts of external costs for cost-of-service showings.
(2) Generally accepted accounting principles. Cable operators shall maintain their accounts in accordance with generally accepted accounting principles, except as otherwise directed in writing by the city.
(3) Accounts required. Cable operators shall maintain accounts in a manner that will enable identification of appropriate costs and application of the city's cost assignment and allocation procedures, to cost categories necessary for rate adjustments due to changes in external costs and for cost-of-service showings. Such categories shall be sufficiently detailed and supported to permit verification and audit against the company's accounting records.
(4) Accounting level. Except to the extent indicated below, cable operators shall aggregate expenses and revenues at either the franchise, system, regional, or company level in a manner consistent with practices of the operator as of April 3, 1992. However, in all events, cable operators shall identify at the franchise level their costs of franchise requirements, franchise fees, local taxes, and local programming and shall maintain all records as required by § 112.022.
(5) Cost allocation requirements.
(a) For purposes of establishing expenses at the franchise level, cable operators shall allocate expenses and revenues aggregated at higher levels to the franchise level based on the ratio of the total number of subscribers served at the franchise level to the total number of subscribers served at the higher level.
(b) Except to the extent indicated below, all categories of costs allocated to, or identified at, the franchise level shall be allocated to the basic service tier based on the ratio of channels in the basic tier to the total number of channels offered in the franchise area, including nonregulated and leased commercial access channels. These costs shall be allocated to each tier of cable programming services based on the ratio of channels in that tier to the total number of channels offered in the franchise area.
(c) Costs of programming and retransmission consent fees, however, shall be allocated only to the tier on which the programming or broadcast signal at issue is offered.
(d) Costs of franchise fees shall be allocated among equipment and installations, program service tiers and subscribers in a manner that is most consistent with the methodology of assessment of franchise fees by the city.
(e) Costs of public, educational, and governmental access channels carried on the basic tier shall be directly assigned to the basic tier where possible.
(6) Common costs. Expenses which cannot be assigned to any single expense or service category shall be described as common costs. Common costs shall be allocated to expense categories as follows:
(a) Wherever possible, common costs are to be allocated to service cost categories based on direct analysis of the origin of the costs themselves.
(b) When direct analysis is not possible, common costs shall, if possible, be allocated to service cost categories based on an indirect, cost-causative linkage to other costs directly assigned or allocated to the service cost category.
(c) When neither direct nor indirect measures of cost allocation can be found, common costs shall be allocated to each service cost category based on the ratio of all costs directly assigned and attributed to a service cost category over total costs directly assignable and attributable.
(7) Unrelated expenses and revenues. Cable operators shall exclude from cost categories used to develop rates for the provision of basic service tier and equipment, any direct or indirect expenses and revenues not related to the provision of such services. Common costs of providing basic service tier and equipment, and unrelated activities shall be allocated between them in accordance with Subdivision (D)(6) of this section.
(8) Part-time channels. In situations where a single channel is divided on a part-time basis and is used to deliver service associated with different tiers or with pay-per-channel or pay-per-view service, a reasonable and documented allocation of that channel between services shall be required along with the associated revenues and costs.
(E) Channel quantity and quality.
(1) Further, as an additional requirement, before the second anniversary of the effective date of this chapter, any MCS provider classified as a cable operator and providing cable service within the city shall have designed and activated a multi-channel system with a minimum capability of providing 60 full time video services.
(2) Further, the Council/franchising authority is committed that the goal of the CCPA, as set forth in Section 601(4) of the Act, codified at 47 USC 521(4), is met at all times. As a result, the Council/franchising authority expressly requires that upon the advent, implementation, and transmission of high definition television (HDTV), its functional equivalent, or any subsequently developed technological advancement affecting channel capacity or needed bandwidth for any video programming source or service, the cable operator shall not lessen, dilute, or decrease the mix, level, quality, or quantity of programming services carried on the cable system for reasons of lack of adequate channel capacity.
(Ord. 4-1994-20, passed 4-12-94) Penalty, see § 112.999