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O43Ce- ~FC~ETARY ORDINANCE NO. 43 ~ C~fGi~~ ~3 ~ ~'®PY AN ORDINANCE OF TILE CITY OF KENNEDA~E; PRESCRIBING REGULATIONS FOR RATES CHARGED TO CABLE TELEVISION SUBSCRIBERS FOR THE BASIC SERVICE TIER; PROVIDING T[IAT THIS ORDINANCE I5 CUMULATIVE; PROVIDING A SEVERABILITY CLAUSE; PROVIDING FOI2 PUBLICATION; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the Federal Communications Commission ("FCC") has issued rules pursuant to the Cable Television Consumer Protection and Competition Act, Pub. L. No. 102-3$5 (1992) ("1992 Cable Act"), implementing the regulation of cable television subscriber rates; and WHEREAS, these rules allocate the regulation of rates for the basic scrvicc 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 WHEREAS, the City of Kcnnedale franchises cable television scrvicc for the benefit of its citizens; and WHEREAS, the city has submitted its application for certification to the FCC and it is expedient to adopt the required regulations now, in order to implement regulations at the earliest possible date to obtain the most competitive rates for the city's cable ratepayers; NOW, THEREFORE, BE IT ORDAINED BY TILE CITY COUNCIL OF THE CITY OF KENNEDALE: SEC'T'ION 1. DEFINITIONS. In this ordinance: BASIC CABLE RATES means the monthly charges for a subscription to the basic service tier and the associated equipment. BASIC SERVICE TIER means 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 domestic television signals other than superstations. PAGE1 BENCHMARK means a per channel rate of charge for cable scrvicc and associated equipment which the FCC has determined is reasonable. CABLE ACT OF 1992 means the Cable Television Consumer Protection and Competition Act of 1992. CABLE OPERATOR means any person or group of persons: (A) who provide cable scrvicc over a cable system and directly or through one or more affiliates owns a significant interest in such a cable system; or (B) who other wise controls or is responsible for, through any arrangement, the management and operation of such a cable system. CHANNEL means a unit of cable service identified and selected by a channel number or similar designation. COST OF SERVICE SHOWING means a filing in which the cable operator attempts to show that the benchmark rate or the price cap is nol sufficient to allow the cable operator to fully recover the costs of providing the basic scrvicc tier and to continue to attract capital. FCC means the Federal Communications Commission. INITIAL BASIC CABLE RATES means the rates that the cable operator is charging for the basic service tier, including charges for associated equipment, at the time the city notifies the cable operator of the city's qualification and intent to regulate basic cable rates. MUST-CARRY SIGNAL means the signal of any local broadcast station (except supcrstations which is required to be carried on the basic scrvicc tier. PEG CHANNEL means the channel capacity designated for public, educational, or governmental use, and facilities and equipment for the use of that channel capacity. PRICE CAP means the ceiling set by the FCC on future increases in basic cable rates regulated by the city, based on a formula using the GNP fixed weight price index, reflecting general increases in the cost of doing business and changes in overall inflation. REASONABLE RATE STANDARD means a per channel rate that is at, or below, the benchmark or price cap level. SUPERSTATION means any non-local broadcast signal secondarily transmitted by satellite. SECTION 2. INITIAL REVIEW OF BASIC CABLE RATES. (a) Notice. Upon the adoption of this ordinance and the certification of the city by the FCC, the city shall immediately notify all cable operators in the city, by certified mail, return receipt requested, that the city intends to regulate subscriber PAGE 2 rates charged for the basic service tier and associated cquipmcnt as authorized by the Cable Act of 1992. (b) Cable operator response. Within 30 days of receiving notice from the city, a cable operator shall file with the city, its current rates for the basic service tier and associated equipment and any supporting material concerning the reasonableness of its rates. (e) Expedited determination and public hearing. (1) If the city council is able to expeditiously determine that the cable operator's rates for the basic service tier and associated cquipmcnt arc within the FCC's reasonable rate standard, as determined by the applicable benchmark, the city council shall: (A) hold a public hearing at which intcrestcd persons may express their views; and (B) act to approve the rates within 30 days from the date the cable operator filed its basic cable rates with the city. (2) If the city council takes no action within 30 days from the date the cable operator filed its basic cable rates with the city, the proposed rates will continue in effect. (d) Extended review period. (1) If the city council is unable to determine whether the rates in issue are within the FCC's reasonable rate standard based on the material before it, or if the cable operator submits acost-of-service showing, the city council shall, within 30 days from the date the cable operator filed its basic cable rates with the city and by adoption of a formal resolution, invoke the following additional periods of time, as applicable, to make a final determination: (A) 90 days if the city council needs more time to ensure that a rate is within the FCC's reasonable rate standard; or (B) 150 days if the cable operator has submitted a cost-of- service showing seeking to justify a rate above the applicable benchmark. (2) If the city council has not made a decision within the 90 or 150 day period, the city 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 arc paid. (e) Public hearing. During the extended review period and before taking action on the proposed rate, the city council shall hold at least one public hearing at which interested persons may express their views and record objections. (17 Objections. An intcrestcd person who wishes to make an objection to the proposed initial basic rate may request the city secretary 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 secretary with the objector's name and address. PAGE 3 (g) Benchmark analysis. If a cable operator submits its current basic cable rate schedule as being in compliance with the FCC's reasonable rate standard, the city council shall review the rates using the benchmark analysis in accordance with the standard form authorized by the FCC. Based on the city council's findings, the initial basic cable rates shall be established as follows: (1) If the current basic cable rates are below the benchmark, those rates shall become the initial basic cable rates and the cable operator's rates will be capped at that level. (2) If the current basic cable rates exceed the benchmark, the rates shall be the greater of the cable operator's 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. (3) If the current basic cable rates exceed the benchmark, but the cable operator's per channel rate was below the benchmark on Scptembcr 30,1992, the initial basic cable rate shall be the benchmark, adjusted for inflation. (h) Cost-of-service showings. If a cable operator dots 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 a initial basic cable rates above the FCC's reasonable rate standard. The city council will review a cost-of-service submission pursuant to FCC standards for cost-of-service review. The city council may approve initial basic cable rates above the benchmark if tl~c cable operator makes the necessary showing; however, acost-of-scrvicc determination resulting in rates below the benchmark or below the cable operator's Scptembcr 30, 1992 rates minus 10 percent, will prescribe the cable operator's new rates. (i) Decision. (1) By formal resolution. After completion of its review of the cable operator's proposed rates, the city council shall adopt its decision by formal resolution. The decision shall include one of the following: (A) If the proposal is within the FCC's reasonable rate standard or is justified by acost-of-service analysis, the city 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 city council shall establish initial basic cable rates that arc within the FCC's reasonable rate standard or that are justified by acost-of-service analysis. (2) Rollbacks and refunds. If the city council determines that the initial basic cable rates as submitted exceed the reasonable rate standard or that the cable operator's cost-of-service showing justifies lower rates, the city council may order the rates reduced in accordance with Paragraph (g) or (h) above, as applicable. In addition, the city council may order the cable operator to pay to subscribers, refunds of the excessive portion of the rates with interest (computed at 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 PAGE 4 the interest rate will be in accordance with FCC regulations as directed in the city council's decision resolution. (3) Statement of reasons for decision and public notice. If rates proposed by a cable operator are disapproved in whole or in part, or if there were objections made by other parties to the proposed rates, the resolution must state the reasons for the decision and the city council must give public notice of its decision. Public notice will be given by advertisement once in the official newspaper of the city. (j) Appeal The city council's decision concerning rates for the basic scrvicc tier or associated cquipmcnt, may be appealed to the FCC in accordance with applicable federal regulations. SECTION 3. REVIEW OF REQUEST h'OR INCREASE IN BASIC CABLE RATES. (a) Notice. A cable operator in the city who wishes to increase the rates for the basic scrvicc tier or associated cquipmcnt shall file a request with the city and notify all subscribers at least 30 days before the cable operator desires the incrcasc to take effect. This notice may not be given more often than annually and not until at Icast one year after the dctcrmination of the initial basic cable rates. (b) Expedited determination and public hearing. (1) If the city 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 city council shall: (A) hold a public hearing at which interested persons may express their views; and (B) act to approve the rate incrcasc within 30 days from the date the cable operator filed its request with the city. (2) If the city council takes no action within 30 days from the date the cable operator filed its request with the city, the proposed rates will go into of f cct. (c) Extended review period. (1) If the city council is unable to determine whether the rate incrcasc is within the FCC's reasonable rate standard based on the material before it, or if the cable operator submits acost-of-service showing, the city council shall, by adoption of a formal resolution, invoke the following additional periods of time, as applicable, to make a final dctcrmination: (A) 90 days if the city council needs more time to ensure that the requested incrcasc is within the FCC's reasonable rate standard as determined by the applicable price cap; and (B) 150 days if the cable operator has submitted acost-of- service showing seeking to justify a rate increase above the applicable price cap. (2) The proposed rate incrcasc is tolled during the extended review period. PAGE 5 (3) If the city council has not made a decision within the 90 or 150 day period, the city 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 incrcasc and on whose behalf the amounts are paid. (d) Public hearing. During the extended review period and before taking action on the requested rate increase, the city council shall hold at least one public hearing at which intcrestcd persons may express their views and record objections. (e) Objections. An intcrestcd person who wishes to make an objection to the proposed rate increase may request the city secretary 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 secretary with the objector's name and address. ((7 Delayed determination. If the city council is unable to make a final dctcrmination concerning a rcqucstcd rate incrcasc within the extended time period, the cable operator may put the incrcasc into effect, subject to subsequent refund if the city council later issues a decision disapproving any portion of the incrcasc. (g) Price cap analysis. If a cable operator presents its request for a rate incrcasc as being in compliance with the FCC's price cap, the city council shall review the rate using the price cap analysis in accordance with the standard form authorized by the FCC. Based on the city council's findings, the basic cable rates shall be established as follows: (1) If the proposed basic cable rate incrcasc is within the price cap established by the FCC, the proposed rates shall become the new basic cable rates. (2) If the proposed basic cable rate increase exceeds the price cap established by the FCC, the city council shall disapprove the proposed rate incrcasc and order an increase that is in compliance with the price cap. (h) Cost-of-service showings. If a cable operator submits acost-of-service showing in an attempt to justify a rate incrcasc above the price cap, the city council will review the submission pursuant the FCC standards for cost-of-scrvicc review. The city council may approve a rate increase above the price cap if the cable operator makes the necessary showing; however, a cost-of-scrvicc dctcrmination 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. (i) Decision. The city council's decision concerning the rcqucstcd rate incrcasc, 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 incrcasc, the resolution must state the reasons for the decision. Objections may be made at the public hearing by a person requesting the city secretary to record the objection or may be submitted in writing at anytime before the decision resolution is adopted. (j) Refunds. (1) The city council may order refunds of subscribers' rate payments with interest if: PAGE 6 (A) the city 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 incrcasc at the end of the extended review period; and (C) the city council determines that the rate incrcasc as submitted exceeds the applicable price cap or that the cable operator failed to justify the rate increase by acost-of-service showing, and the city council disapproves any portion of the rate increase. (2) The method for paying any refund and the interest rate will be in accordance with FCC regulations as directed in the city council's decision resolution. (k) Appeal. The city 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 4. CABLE (f :'ERATOR INFORMATION (a) City may require. (1) In those cases when the cable operator has submitted initial rates or proposed an increase that exceeds the reasonable rate standard, the city council may require lac cable operator to produce information in addition to that submitted, including p. oprictary information, if needed to make a rate determination. In these cases, a cable operator may request the information be kept confidential in accordance with t1~is section. (2) In casts where initial or proposed rates comply with the reasonable rate standard, the city council may rcqucst additional information only in order to document that the cable operator's rates are in accord with the standard. (b) Request for Confidentiality. (1) A cable operator submitting information to the city 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 cover all of the inforu~ation and all copies of the information to which it applies. (2) 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 rcqucst applies shall be identified. (3) Each request shall contain a statement of the reasons for withholding inspection and a statement of the facts upon which those reasons arc based. (4) Casual requests which do not comply with the requirements of this subsection, shall not be considered. (c) City council action. Requests which comply with the requirements of Subsection (b), will be acted upon by the city council. The city council will grant the PAGG 7 request if the cable operator presents by a preponderance of the evidence, a case for nondisclosure consistent with applicable federal regulations. If the rcyucst is granted, the ruling will be placed in a public file in lieu of the information withheld from public inspection. If the rcqucst does not present a cast for nondisclosure and the city council denies the rcqucst, the city council shall take one of the following actions: (1) If the information has been submitted voluntarily without any direction from the city, the cable operator may rcqucst that the city return the information without considering it. Ordinarily, the city 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 city council, the information will be made available for public inspection. (d) Appeal. If the city council denies the rcqucst for confidentiality, the cable operator may Beck review of that decision from the FCC within five working days of the city council's decision, and the release of the information will be stayed pending review. SECTION 5. AUTOMATIC RATE ADJUSTMENTS (a) Annual inflation adjustment. 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 index. (b) Other external costs. (1) 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 exceeds the GNP-PI. These factors include retransmission consent fees, programming costs, state and local taxes applicable to the provision of cable tclevis:on service, and costs of franchise requirements. The total cost of an incrcasc in a franchise fcc may be automatically added to the base per channel rate, without regard to its relation to the GNP-PI. (2) 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 not be adjusted for costs of retransmission consent fees or changes in those fees incurred before October 6, 1994. (c) Notification and review. The cable operator shall notify the city at least 30 days in advance of a rate incrcasc based on automatic adjustment items. The city shall review the incrcasc to determine whether the item or items qualify as automatic adjustments. If the city makes no objection within 30 days of receiving notice of the increase, the increase may go into effect. PAGE 8 SECTION 6. ENFORCEMENT (a) Refunds. The city 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 bccn 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 city. (b) Fines. If the cable operator fails to comply with a rate decision or refund order, the cable operator shall be subject to a fine of $500 for each day the cable operator fails to comply. SECTION 7. CUMULATIVE CLAUSE This ordinance shall be cumulative of all provisions of ordinances and of the City of Kennedale, as amended, except where the provisions of this ordinance are in direct conflict with the provisions of such ordinances, in which event the conflicting provisions of such ordinances are hereby repealed. SECTION 8. SEVERABILITY It is hereby declared to be the intention of the city council that the phrases, clauses, sentences, paragraphs, and sections of this ordinance arc severable, and if any phrase, clause sentence, paragraph or section of this ordinance is declared unconstitutional by the valid judgment or decree of any court of competent jurisdiction, that unconstitutionality shall not affect any of the remaining phrases, clauses, sentences, paragraphs and sections of this ordinance, since the remainder would have bccn enacted by the city council without the incorporation in this ordinance of the unconstitutional phrase, clause, sentence, paragraph or section. SECTION 9. PUBLICATION The City Secretary of the City of Kenncdalc is hereby authorized to publish this ordinance in book or pamphlet form for general distribution among the public, and the operative provisions of this ordinance as so published shall be admissible in PAGE 9 evidence in all courts without further proof than the production thereof, as provided in Section 52.011 of the Local Government Codc. SECTION 10. EFFECTIVE DATE This ordinance shall be in full force and effect from and after its passage and publication as required by law, and it is so ordained. PASSED AND APPROVED THI5 11 DAY OF tvovEMBER , 1993. MAYOR ATTEST: -- ~~l ~_ ~t' ---------- CITY SECI"ZETARY APPROVED AS TO FORM AND LEGALITY: City Attorney Date:---------------------------- ADOPTED:_ Nov_ember_ 111_ 19 9 3______ EFFECTIVE:_______________________ PAGE 10