§ 65.003  INITIAL FILINGS BY FRANCHISEES
   (A)   Filings; when made.  A franchisee that is notified that its basic service and equipment rates are subject to regulation must file a submission (“the rate filing”) within thirty (30) days of the notification, justifying its then-existing basic service and equipment rates.  All rates for all customer classifications must be justified.  Once a franchisee has been notified by the city that its rates are subject to regulation, it may not thereafter increase its rates for basic service or equipment without the prior approval of the city.  This requirement applies in all cases, including with respect to increases in rates announced prior to the date the operator was notified its rates were subject to regulation, where the increases were not implemented prior to the date of notice.  A franchisee must submit a rate filing to justify any increase in basic service or equipment rates or any new basic service or equipment rate (collectively referred to herein as “rate increases”).  An increase occurs when there is an increase in rates or a decrease in program or customer services.  Rate filings proposing and supporting rate increases must be filed for review at least thirty (30) days in advance of the proposed effective date of the increase.  This requirement does not alter or eliminate any other notice requirement.
   (B)   Filings; where made.  Every rate filing must be submitted to the City Manager.  A rate filing shall be considered filed for review on the date the required rate filing and all required copies are received by the City Manager.  Five (5) copies of each rate filing, including all supporting materials, must be submitted.  If the operator claims any part of the filing is proprietary, it shall additionally file five (5) copies that omit the proprietary information.
   (C)   Filing; contents.  Subject to any FCC regulations governing the burden of proof, a rate filing submitted by a franchisee must show that the rates the franchisee proposes to charge for basic service and equipment are reasonable.  Except as inconsistent with FCC rules:
      (1)   Every rate filing must clearly state, in a cover letter, whether it justifies existing rates or proposes an increase in rates.  The cover letter must also identify any rate that is derived, in whole or in part, based upon cost of service and identify any pages of the rate filing that contain information the franchisee claims is proprietary.  It must state whether any part of the proposed increase is based on an inflation adjustment or an alleged increase in external costs.  The cover letter should also contain a brief narrative description of any proposed changes in rates or in service.
      (2)   The pages of each rate filing must be numbered sequentially.
      (3)   The rate filing must contain all applicable FCC forms, and these forms must be correctly completed.
      (4)   If different rates are proposed for basic service for different classes of customers, the filing must show that the classifications and the differences in the rates charged are reasonable and consistent with federal law.
   (D)   If the franchisee seeks to support a rate based upon a cost of service, the city will establish a rate that provides the franchisee an opportunity to recover the reasonable costs associated with providing basic cable service, including a reasonable profit.  An expense or investment is not presumed reasonable merely because the franchisee has incurred or made it.  A franchisee is not entitled to recover monopoly profits in any form.
   (E)   In addition to the information the city requires the franchisee to provide, and unless the city grants a waiver of this provision, a franchisee who seeks to justify all or any part of its rates based upon its cost of service must submit a complete cost of service analysis that shows all expenses it incurs and all revenues derived from the system, directly or indirectly, by the franchisee or any person that constitutes a cable operator of the system within the meaning of 47 U.S.C. § 522(4).  The cost of service must identify the accounting level (as that term is used in the FCC’s regulations) at which each expense or revenue identified was aggregated and show clearly how the expense or revenue was allocated.  The franchisee may not include costs at an accounting level unless it also includes all revenues from that same level attributable to the system or to a group of systems of which the system services the city as a part.  The replacement cost of a comparable system must be identified and supported.  The franchisee must identify the name and address of any entity with which it has a contract, other than a programmer, which derives revenues from the system and must state whether and how the revenues of that entity were included in the cost of service.  In addition, the cost of service shall clearly show the derivation of a proposed charge per channel and the application of that charge to yield a basic service rate.  It must also show and support the derivation and allocation of any amounts included in the derivation of the rate for:
      (1)   Operation and maintenance expenses;
      (2)   Administrative and general expenses;
      (3)   Programming expenses (identifying retransmission consent costs and copyright fees separately);
      (4)   Costs for PEG access and any institutional network;
      (5)   Franchisee fee expenses;
      (6)   Investment in the system and associated depreciation;
      (7)   Other expenses, including federal, state, and local taxes, itemized; and
      (8)   The proposed return on equity and actual interest expense paid by the franchisee.
   (F)   Notwithstanding the foregoing, a franchisee is not required to submit the cost of service specified in subsection (E) for equipment rates but instead initially shall complete, submit, and support the costs of equipment using applicable FCC forms.  Any cost of service submitted to justify basic service rates must show that the cost of service does not include equipment costs.
(Ord. 93-44, passed 9-19-93)
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Cross reference:
   Proprietary information, see § 65.009
   Penalties; forfeitures, see § 65.999