Ordinance No. 8,729Published in TheY- Baytown Sun: 991028 -1
Tuesday, November 2, 1999, and
Wednesday, November 3, 1999
ORDINANCE NO. 8729
® AN ORDINANCE REJECTING THE SCHEDULE OF RATES FOR BASIC
SERVICE TIER CABLE PROPOSED BY TEXAS CABLE PARTNERS, L.P.,
AND FINDING SUCH PROPOSED RATES UNREASONABLE;
ESTABLISHING THE MAXIMUM PERMITTED PER SUBSCRIBER PER
MONTH BASIC CABLE SERVICE RATES; ALLOWING "MARK -UP"
COSTS SUBJECT TO REFUND; SETTING FORTH OTHER PROVISIONS
RELATED TO THE SUBJECT; PROVIDING A REPEALING CLAUSE;
CONTAINING A SAVINGS CLAUSE; PRESCRIBING A MAXIMUM
PENALTY OF FIVE HUNDRED AND NO /100 DOLLARS ($500.00); AND
PROVIDING FOR THE PUBLICATION AND THE EFFECTIVE DATE
THEREOF.
*********************************************** * * * * * * * * * * * * * * * * * * * * * * * * * * * * * **
WHEREAS, the City of Baytown, Texas (the "City "), is certified to regulate basic cable
rates pursuant to the 1992 Cable Act (the "Act ") and the Federal Communication Commission
( "FCC ") rules; and
WHEREAS, on or about March 1, 1999, Texas Cable Partners, L.P. ( "TCP "), submitted
to the City an FCC Form 1240 with a schedule of rates for the basic service tier and expanded
basic service tier (hereinafter "Form 1240 "); and
WHEREAS, the FCC rules allow the City ninety (90) days to review the proposed
schedule of rates after which time the operator may implement such rates, subject to a
prospective rate reduction and refund if the City subsequently issues a written decision
disapproving any portion of such rates; and
WHEREAS, at the City's request C2 Consulting Services, Inc. ( "C2 "), reviewed TCP's
proposed schedule of rates for the basic service tier; and
WHEREAS, C2 has now completed its review of TCP's original proposed schedule of
basic service tier rates and submitted its report explaining its analysis, findings and conclusions,
which report is attached hereto as Exhibit "A" and is incorporated herein for all intents and
purposes; and
WHEREAS, C2 subsequently issued an addendum to the initial report, with a revised
recommendation based on discussions between the City and TCP, which is attached hereto as
Exhibit "B" and incorporated herein for all intents and purposes; and
WHEREAS, a public hearing was held to hear public comments on the proposed
schedule of basic service tier rates of TCP; and
WHEREAS, the City Council has now concluded its review of TCP's proposed schedule
of basic service tier rates and the report, addendum and recommendations of C2, and made
certain determinations; NOW THEREFORE
991028 -1a
® BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS:
Section 1: That the City Council hereby adopts and affirms the findings and recitals
set forth in the preamble to this Ordinance.
Section 2: That the City Council having reviewed TCP's proposed basic service tier
rates and the report and addendum submitted by C2 hereby finds and determines that TCP's
proposed inclusion of "forced relocation" costs in the determination of external costs is
unreasonable and is hereby rejected; therefore, TCP's proposed rates for the basic service tier are
unreasonable and are hereby rejected.
Section 3: That TCP is hereby ordered to reduce the rates per subscriber per month
for basic cable service to an amount not to exceed $8.97 (the "maximum permitted rate ") on and
after the effective date of this Ordinance. This rate was derived by using FCC rules, regulations
and instructions as further explained in the report from C2, attached hereto as Exhibit "A." TCP
is hereby further ordered to refund to subscribers, within forty -five (45) days of the adoption of
this Ordinance, the difference between the maximum permitted rates established herein and the
actual charges to the extent that actual charges have exceeded the maximum permitted rate, plus
interest on such amounts calculated in accordance with FCC rules.
Section 4: That the City Council finds and determines that, based upon the report and
addendum from C2, TCP's proposed "mark -up" for the channels added subsequent to January 1,
1998, is unreasonable and is hereby rejected; however TCP may include "mark -up" costs in the
rate charged per subscriber per month for basic cable service until such time as the FCC
determines that such "mark -up" costs are not allowed under FCC rules and regulations. TCP is
ordered to keep an accurate account of all sums received by reason of charging subscribers such
"mark -up" costs.
Section 5: That the City Council hereby finds and determines that the rates
established hereby are reasonable.
Section 6: In adopting this Ordinance the City Council of the City of Baytown is not
approving or acquiescing in any way whatsoever to cost data and/or methodologies not
specifically addressed in this Ordinance. Furthermore, the City Council is not waiving any rights
to which it is entitled.
Section 7: All ordinances or parts of ordinances inconsistent with the terms of this
ordinance are hereby repealed; provided, however, that such repeal shall be only to the extent of
such inconsistency and in all other respects this ordinance shall be cumulative of other
ordinances regulating and governing the subject matter covered by this ordinance.
Section 8: If any provision, section, exception, subsection, paragraph, sentence,
clause or phrase of this ordinance or the application of same to any person or the set of
circumstances, shall for any reason be held unconstitutional, void or invalid, such invalidity shall
not affect the validity of the remaining provisions of this ordinance or their application to other
4
E
991028 -1b
persons or sets of circumstances and to this end all provisions of this ordinance are declared to be
severable.
Section 9: Pursuant to the authority granted to the City under Section 76.943(a), Title
47 of the Code of Federal Regulations and Section 54.001 of the Texas Local Government Code,
should TCP fail to comply with any provision of this ordinance, TCP shall be guilty of a
misdemeanor and, upon conviction, shall be punished by a fine not exceeding FIVE HUNDRED
AND NO /100 DOLLARS ($500.00). Each act of violation and each day upon which any such
violation shall occur shall constitute a separate offense.
Section 10: This ordinance shall take effect from and after ten (10) days from its
passage by the City Council. The City Clerk is hereby directed to give notice of this ordinance
to TCP by sending a copy hereof by first -class mail and is further directed to give notice hereof
by causing the caption of this ordinance to be published in the official newspaper of the City of
Baytown at least twice within ten (10) days after passage of this ordinance.
INTRODUCED, READ, and PASSED by the affirmative vote of the City Council of the
City of Baytown, this the 28th day of October, 1999.
ATTEST:
EILEEN P: HAL1,, City Clerk
APPROVED AS TO FORM:
c: klh202\Counci]\ Ordinances\Rej ectingS cheduleCab leRate
3
PETE C. ALFARO, Mayor
}
w
~ ONSULTING SERVICES, INC.
7801 Pencross (972) 726 -7216
Dallas, Texas 75248 (972) 726 -0212 (fax)
May 11, 1999
Ms. Donna Sams
Controller
City of Baytown
2401 Market Street
Baytown, Texas 77522
Dear City Representatives:
Ms. Cheryl Wilson
Olson & Olson
3485 Three Allen Center
333 Clay Street
Houston, Texas 77002
C2 Consulting Services, Inca ( "C2 ") has completed its review of the FCC Form 1240 for
headend H0594A submitted to the City of Baytown, Texas (the "City") by Texas Cable
Partners, LP ( "TCP" or the "Company ") on or about March 1, 1998. The following report
provides a brief discussion of the issues noted during the review, and C2's
recommendations regarding potential City Council actions for TCP's proposed basic
service rates.
This study does not constitute an examination of the financial condition of TCP or its
parent company. Therefore, C2 cannot and does not express any position with regard to
the accuracy or validity of the financial information provided by TCP during the course
of the analyses.
OVERVIEW OF THE FILINGS
According to the information provided by TCP, the basic service tier includes twenty
channels, and the expanded basic service tier includes twenty-seven channels. TCP
currently charges $9.73 for basic service and $17.50 for expanded basic service. TCP
proposes to reduce the basic service rate by $32 to $9.01. The new rate year is from
June 1, 1, 999 through May 31, 2000.
There is essentially one major factor that explains TCP's proposed reduction to the basic
service rate:
1. TCP's actual number of subscribers for the true -up period were considerably
greater in number than projected in the prior filing.
City Representatives
May 11, 1999
Page 2
ANALYSES OF THE FILINGS
Project Objectives and Activities
The project objectives are three -fold:
1. Assessment of the completeness of the filings with regard to the information
and documentation that must be filed with the City.
2. Assessment of the reasonableness of the proposed computations in light of
City' prior rate decisions, FCC regulation and recent FCC rulings.
3. Assessment of the reasonableness of the proposed computations in light of the
system specific costs and subscriber data.
Given these objectives, C2 conducted the following project activities:
• Review of the filings to assess the completeness based on the FCC Form
instructions
• Review of the filings to identify any issues with respect to the data and/or
methodologies employed by TCP, particularly in light of the fact that TCP
assumed the system subsequent to the true -up period in this filing.
• Submission of follow -up data requests and subsequent review of TCP's
responses
Review of 1999 FCC decisions that clearly have an impact on TCP °s proposed
methodologies
• Development of potential alternatives available to the City in establishing
maximum permitted basic service rates
Summary of Findings
C2 identified three main issues with respect to TCP's proposed computations of basic
service rates. These issues are:
1. TCP inappropriately requested a change in "mark -up" costs for channel
changes to the basic service tier subsequent to January 1, 1998.
2. TCP did not provide supporting documentation for its proposed increase in
programming costs during the projected period.
3. TCP did not provide supporting documentation to justify the inclusion of what
it has termed as "forced relocates
City Representatives
May 11, 1999
Page 3
1. Proposed Mark -Up Costs
As originally established, the computation of the Form 1240 included adjustments to the
basic service rates for the adding or movement of channels to and/or from the tier. Based
on the total number of channels offered on the system (inclusive of all regulated
channels), an operator could add an additional "mark -up" to the rate for an increase in the
total number of channels offered on the basic service tier. In addition, an operator could
add/delete the residual costs of a channel when it was moved from/to the expanded basic
service tier.
Section 76.922(g) provided for these adjustments and was implemented with the passage
of the Thirteenth Order on Reconsideration in 1995. However, §76.922(g)(8) provided:
"Sunset Provision. Paragraph (g) of this section shall cease to be effective on
January 1, 1998 unless renewed by the Commission."
In a ruling released March 26, 1999 (FCC 99 -12), the FCC made reference to this
provision as follows:
"CATA proposes to revise this rule to clarify that the "Mark -Up Method" of
adjusting rates continues to be available to cable operators. We find that the
reinstatement of the "Mark -Up Method" of adjusting cable rates is an issue
involving rate regulatory matters and therefore is beyond the scope of this
streamlining proceeding. "[paragraph 3 1 ]
However in the ordering clauses, paragraph 37, the FCC provided that §76.922(g) be
changed only to sunset specific provisions that did not include "mark -up" and residual
cost movement.
The inconsistencies were brought to the attention of the FCC and on April 27, 1999, the
Erratum was issued that deleted paragraph 37. Thus, §76.922(g), in its entirely, sunset
on January 1, 1998.
Within the filing, TCP proposes to increase the basic service rate for the "mark -up"
related to the addition of one channel during the true -up period. C2 recommends that any
adjustment to the "mark -up" be disallowed because the channel was added subsequent to
January 1, 1998.
3. Support for Programming Cost Increases
TCP proposes to increase the programming costs per subscriber during the projected
period from $.50 to $.55 per month. When asked to provide information that
demonstrated the channels to which such increase relates, TCl' responded that the
information was confidential.
t
City Representatives
May 11, 1999
Page 4
The regulatory process established by the FCC provides for the franchising authority to
request additional information during its review of rate filings. The purpose of such
information has historically been to allow the franchising authority to determine that the
cable operator had fully justified its rate request. Without such, it is difficult for the
franchising authority to conduct its review and make final determination with respect to
the reasonableness of the rates as filed.
Although concerning limited information provided by an operator to justify equipment
basket cost, a recent FCC ruling is on point:
"... it has not submitted sufficient information to assure the City that the cost
experience or costing methodology it used represents a fair determination across
its systems. Commission rules do not place the burden of determining the costs
for the sampled systems on the City. The City has no way of ascertaining the
kinds of costs that went into the TCI's sampling average... TCI also has not met
its burden of justifying how its averaging methodology produces reasonable
equipment and installation rates. "'
TCP has not provided sufficient information to determine that its total programming costs
per subscriber (S.55) is reasonable for the projected period. Therefore, C2 recommends
that this increase in programming costs be disallowed without further supporting
documentation.
3. Insufficient Support for "Forced Relocation" Costs
TCP has included the amortization of costs that were incorporated into TCI's earlier
filings as "franchise related costs" on Worksheet 7 - External Costs. Based on
information provided in the filing package, the costs were reported as "forced" relocation
of cable. Such costs were incurred prior to TCP acquiring the system (1995) and are
apparently being amortized over a five -year period. TCP has assigned all of the
amortization to the basic service tier.
In C2's opinion, TCP had not met its burden of proof to include the amortization of these
costs in the development of basic service rates. FCC regulations allow for external cost
recovery of increases in costs due to "...costs of removing cable from utility poles and
placing the same cable underground. ,2 In §76.922(e)(11*)(A), which resulted from FCC
Order 95 -397, the increases in external costs are to be included based on the following:
"Permitted charges for a tier may be adjusted annually to reflect changes in
external costs experienced but not yet accounted for by the cable system..."
[emphasis added]
1 DA 98 -1642, released August 17, 1998, paragraphs 28 -29.
2 See 47 C.F.R. §76.925
City Representatives
May 11, 1999
Page 5
Therefore, in order to allow the inclusion of such costs, the Company has to support its
proposal that the forced relocation costs represent increases over the amounts already
included in the programming services rates. Without a showing that only increases are
being requested, or a corresponding adjustment to the programming rates to exclude any
double recovery, any change from "residual" treatment to "external cost" treatment
should be disallowed.
Even if TCP could support that its proposed "franchise related" costs reflect only
increases over the costs included in the residual portion of the rates, TCP's assignment of
all of these costs to the basic service tier is not in compliance with the FCC's regulations.
In §76.924(a), the FCC provides for allocation among regulated and non - regulated
services for certain types of costs, and specifically identifies "external costs."
The instructions for the Form 1240 provide that franchise related costs other than those
incurred due to providing public, educational and governmental access should be
assigned to the appropriate tier of service.' Therefore, even if the costs proposed by TCI
were justifiable, they should be allocated among all tiers of service.
TCP indicated during C2's analysis that it did not have the data concerning the original
gross expenditure to demonstrate that these costs are reflective of only cost increases.
Therefore, C2 recommends that the City disallow the inclusion of these costs in the
development of the basic service rates.
SUMMARY OF RECOMMENDATIONS
Based on the above findings, C2 recommends the following adjustments be considered
by the City in determining the maximum permitted monthly basic service rates:
1. The proposed "mark -up" for the channel changes subsequent to January 1,
1998 should be disallowed.
2. The requested increase of approximately $.05 in programming costs per
subscriber should be disallowed without additional supporting documentation.
3. The City should disallow the inclusion of "forced relocation" costs in the
determination of external costs.
4. The City should order a maximum permitted basic service rate of $8.9046 as
compared to TCP's proposed $9.0099.
3 See FCC Form 1240 Instructions for Worksheet 7.
1
City Representatives
May 11, 1999
Page 6
C2 greatly appreciates having this opportunity to work with the City. If you have any
questions regarding this report, the project activities, or any of the recommendations,
please contact Ms. Connie Cannady at (972) 726 -7216.
Very truly yours,
C2 Consulting Services, Inc.
Federal Communications Commission Approved by OMB 3060 -0685
Washington, DC 20554
S. Status of Previous Filing of FCC Form 1210 (enter an -x- in the appropriate box)
YES NO
as an FCC Form 1210 been previously filed with the FCC?
If yes, enter the date of the most recent faing: (mm/ddlyy)
YES NO
b. Has an FCC Form 1210 been previously [fled with the Franchising Authority?
If yes, enter the date of the most recent faing: (mm/dd/yy)
9. Status of FCC Form 1200 Filing (enter an 'x' in the appropriate box)
YES NO
a Has an FCC Form 1200 been previously Riled with the FCC?
If yes, enter the date filed (mmlddlyy)
YES NO
b. Has an FCC Form 1200 been previously filed with the Franchising Authority?
If yes, enter the date filed: (mm/ddlyy)
10. Cable Programming Services Complaint Status (enter an "x- in the appropriate box)
YES NO
a. is this form being filed in response to an FCC Form 329 complaint?
If yes, enter the date of the complaint (mmlddtyy)
YES NO
11. Is FCC Form 1205 Being Included With This Filing
12. Selection of "Going Forward- Channel Addition Methodology (enter an -x- in the appropriate box)
=Check here if you are using the original rules [MARKUP METHOD].
=Check here if you are using the new, alternative Hiles [CAPS METHOD].
If using the CAPS METHOD, have you elected to revise recovery for YES NO
channels added during the period May 15, 1994 to Dec. 31,1994?
13. Headend Upgrade Methodology
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=Check here if you are a qualifying small system using the streamlined headend upgrade methodology.
Par( I: Preliminary Information
Module A: Maximum Permitted Rate From Previous Filing
a b e d e
Line Line Description Basic Tier 2 Tier 3 Tier 4 Tier 5
Al Current Maximum Parmiued Rate $9.7281
Module B: Subscribership
a b e d e
Line Line Description Basic Tier 2 Tier 3 Tier 4 Tier 5
B1 Average Subscribership For True -Up Period 1
12 889
B2 Average Subscribership For Tnre-Up Period 2
$0.6924
113 Estimated Average Subscribership For Projected Period
14,033
Module C: Inflation Information
Module D: Calculating the Base Rate
a b c d c
Line Tine Description Basic Tier 2 Tier 3 Tier 4 Tier 5
DI Current Ilcadend Upgrade Segment
$0.0000
02 Current 1 :xternal Costs Segment
$0.6924
Current Caps Method Segment
$0.0000
Cumin \tarl,up \lcthod Segment
50.0100
05 Current Channel Movemenl and Deklion Segment
50.6397
1)6 CurrentTrix•UpSegment
50.7122
FCC l orm 1240
Page 2 Microsoft Excel 4.0 Version July 19%
Federal Communications Commission
Washington, DC 20554
D7 Current Inflation Segment SO.1174
Base Rate [AI- Dl- D2- D3- D4- D5- D6-D7j $7.5568
Part II: True -Up Period
Module E: Timine Information
Approved by OMB 3060 -0685
Line
Line Description
E1
What Type of True -Up Is Being Performed? (Answer '1'. '2', or "3'. See Instructions for a description of these (ypes.) 2
11 '1', go to Module 1. If "2', answer E2 and E3. If '3'. answer E2. E3. E4. and E5_
E2
Number of Months in the True -Up Period 1
12
E3
E4
Number of Months between the end of True -Up Period 1 and The end of the most recent Projected Period
Number of Months in True -Up Period 2 Eligible for Interest
6
0
E5
Number of Months True -Up Period 2 ineligible for Interest
0
Module F: Maximum Permitted Rate For True -Up Period 1
a b c d e
Line Lim Description Basic Tier 2 Tier 3 Tier 4 Tier 5
Fl Caps Method Segment For True -Up Period 1 (Wks 21
F2 Markup Method Segment For True -Up Period I [Wks 31
$0.0100
F3 Chan Mvnlw Delela Segment For True-Up Period I [Wks' 4t5j
50.6397
F4 True -Up Period I Rate Eligible For Inflation IDS+FI +F2 +F31
$8.2065
FS Inflation Segment for'Frue -Up Period 1 ((F4'C3 }F4]
$0.0842
F6 ffeadend Upgrade Segment For True -Up period l (Wks 61
1-7 External Costs Segment For True -Up Period I [Wks 71
$0.7174
F8 True Up Segment For Tnbe Up Period l
$0.6177
F9 Max Perm Rate for Tnre -Up Period 1 [F4+FS+F6+F7 +F8j
$9.6258
Module G: Maximum Permitted Rate For True -Up Period 2
■ b c d e
Line Line Description Basic Tier 2 Tier 3 Tier 4 Tier 5
G1 Caps Method Segment For True-Up Period 2 [Wks 21
G2 Markup Method Segment For True -Up Period 2 j Wks 31
G3 Chan Mvmm Deletn Segment For True -Up Period 2 [ Wks' 475)
G4 TU Period 2 Rate Eligible For Inflation ID8+F5 +Gl +G2 +G3]
GS Inflation Segment for Truc -Up Period 2 [(G4'C4) -G41
G6 Ileadcnd Upgrade Segment For True -Up Period 2 ( Wks 61
G7 External Costs Segmem For True -Up Period 2 (Wks 71
G8 True-Up Segment For True -Up Period 2
G9 Max Perm Rate for True -Up Period 2 [G4 +G5 +G6+G7 +G81
FCC Form 1240
Page 3 Microsoft Excel 4.0 Version July 19%
C
Federal Communications Commission
Washington, DC 20554
Module H: True -Up Adjustment Calculation
Approved by OMB 3060 -0685
a b c d e
Line Deseri Don Basic Tier 2 Tier 3 Tier 4 Tier 5
djustmenl For True -Up Period 1
HI Rcvcaue From Period 1
I
$1,511.106.36
12 Markup Method Segment For Projected Period [Wks 31
H2 Revenue From Max Permitted Rate for Period 1
$1.488.796.7231
13 Chan Mvmnl Dekta Segment For Projected Period [Wks 4(51
113 True-Up Period I Adjustment 1H2 -11 11
($22,309.6369)
14 Proj. Period Rate Eligible For Inflation ID8 +FS+G5+11 +12+131
114 Interest on Period l Adjustment
($2.580.4232)
IS Inflation Segment for Projected Period 1(14'CS )441
Adjustment For True -Up Period 2
115 Revenue From Period 2 Eligible for Interest
16 Ilearknd Upgrade Segment For Projected Period [ Wks 61
116 Revenue From Max Perm Rate for Period 2 Eligible For Interest
17 External Costs Segment For Projected Period I Wks 7]
$0.6788
IV Period 2 Adjustment Eligible For Interest (H6 -1151
18 True -Up Segment For Projected Period
($0.1478)
118 Interest on Period 2 Adjustment (See instnulions for formula)
19 Max Permitted Rate for Projected Period (14+15+16+17 +161
$8.9046
fig Revenue From Period 2 Ineligible for Interest
110 Opentor Selected Rate For Projected Period
$9.01
H IO Revenue From Matt Perm Rate for Period 2 Ineligible for Interest
Fit 1 Period 2 Adjustment Ineligible For Interest 1H10 -H91
Total'rrue -Up Adjustment
1112 Previous Remaining True -Up Adjustment
1113 Total True -Up Adjustment[ 113+114+1`1`7+118+ 1111 +11121
($24,890.0601)
H14 Amount of True -Up Claimed For This Projected Period
($24.890.0601)
1115 Remaining True -Up Adjustment [if 13-H 141
$0.0000
Part III: Projected Period
Module I: New Maximum Permitted Rate
a b e d e
Line Line Description Basic Tier 2 Tier 3 Tier 4 Tier 5
11 Caps Method Segment For Projected Period [Wks 21
12 Markup Method Segment For Projected Period [Wks 31
$0.0100
13 Chan Mvmnl Dekta Segment For Projected Period [Wks 4(51
$0.6397
14 Proj. Period Rate Eligible For Inflation ID8 +FS+G5+11 +12+131
581907
IS Inflation Segment for Projected Period 1(14'CS )441
$0.0829
16 Ilearknd Upgrade Segment For Projected Period [ Wks 61
17 External Costs Segment For Projected Period I Wks 7]
$0.6788
18 True -Up Segment For Projected Period
($0.1478)
19 Max Permitted Rate for Projected Period (14+15+16+17 +161
$8.9046
110 Opentor Selected Rate For Projected Period
$9.01
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roverradrrhirrdo rarrob4 rzIloatometesuchrefaadseeraif1heper= 11cdnkishghrr thjw 1hrcoo/rArdn/rcr,rawnmenlrote.
Certification Statement
WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE PUNISHABLE BY FINE AND /OR IMPRISONMENT
(U.S. CODE TITLE 18, SECTION 1001), AND /OR FORFEITURE (U.S. CODE, TITLE 47, SECTION 503).
I certify that the statements made in this form are true and correct to the best of my knowle a and belie( and are made m good faith.
Signature Date
Name and Title of Person Completing this Form:
Telephone number Fax Number
FCC Form 1240
Page 4 Microsoft L'xcel 4.0 Version July 19%
Federal Communications Commission Approved By OMB 3060 -0685
Washington, DC 20554
® Worksheet 1 - True -Up Period Inflation
For instructions, see Appendix A of Instructions For FCC Form 1240
Line
Period
FCC Inflation Factor
101
102
103
104
105
106
107
108
109
Ito
111
112
113
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month t l
Month 12
Avenge Inllalion Factor for Truc-Up
Period I
1.43%
1.14%
1.14%
1.14%
0.82%
0.82%
0.82%
1.00%
1.00%
1.000/0
1.001/6
1.00%
1.0103
114
115
116
117
118
119
120
121
122
123
124
125
126
Month 13
Month 14
Month 15
Month 16
Month 17
Month 18
Month 19
Month 20
Month 21
Month 22
Month 23
Month 24
Average Inflation Factor for Truo -Up
Period 2
FCC Form 1240
Page I Microsoft Excel 4.0 Version July 1996
Federal Communications Commission
Washington, DC 20554
® Worksheet 3 - Markup Method
True -Up Period, Basic Tier
For instructions, see Appendix A of Instructions For FCC Forth 1240
Question 1. Indicate the period for which this worksheet is being used. (Put an "X" in the appropriate box.)
Question 2. Indicate the tier for which this worksheet is being used. (Put an "X" in the appropriate box.)
Approved By OMB 3060-0685
True-Up Period Projected Period
X
Basic Tier 2 Tier 3 Tier 4 Tier 5
Question 3. How long is the first period, in months, for which rates are being set with this workshcet'? 12
Question 4. How long is the second period, in months, for which rates are being set with this worksheet? 0 El
315 Month 13
316 Month 14
317 Month 15
318 Month 16
319 Month 17
320 Month 18
321 Month 19
322 Month 20
323 Month 21
324 Month 22
325 Month 23
326 Month 24
321 Average Period
2 Caps Method Adjustment
FCC Form 1240
Page 1 Microsoft Excel 4.0 Version July 1996
l
Federal Communications Commission
Washington, DC 20554
Worksheet 3 - Markup Method
Projected Period, .Basic Tier
For instructions, sac Appendix A of Instructions For FCC Form 1240
Question 1. Indicate the period for which this worksheet is being used. (Put an "X" in the appropriate box.)
Question 2. Indicate the tier for which this workshoet is being used. (Put an "X" in the appropriate box.)
Approved By OMB 3060-0685
True -Up Period Projected Period
X
Basic Tier 2 Tier 3 Tier 4 Tier 5
X
Question 3. How long is the first period, in months, for which rates are being set with this worksheet? 12
Question 4. How long is the second period, in months, for which rates arc being set with this worksheet? 0
E
FCC Form 1240
Page 1 Microsoft Excel 4.0 Version July 1996
Federal Communications Commission
Washington, DC 20554
Approved By OMB 3060-0685
0 Worksheet 5 - Channel Movement and Deletion
True -Up Period, Basic Tier
For instructions, we Appendix A of Instructions For FCC Form 1240
Question 1. Indicate the period for which this worksheet is being used. (Put an "X" in the appropriate box.)
True -Up Period Projected Period
X
2. Indicate the tier for which this worksheet is being used. (Put an "X" in the appropriate box.)
Question 3. I low keg is the first period, in months, for which rates are being set with this worksheet? 12
Question 4. How long is the second period, in months, for which rates are being set with this worksheet? 0
515 Month 13
516 Month 14
517 Month 15
518 Month 16
519 Month 11
520 Month 18
521 Month 19
522 Month 20
523 Month 21
524 Month 22
525 Month 23
526 Month 24
521 Average Period 2 Channel
Movement and Deletion Adjartment
17_�
FCC Form 1240
Page I Microsoft Excel 4.0 Version July 1996
i
Federal Communications Commission Approved By OMB 3060-0685
Washington, DC 20554
® Worksheet 5 - Channel Movement and Deletion
Projected Period, Basic Tier
For instructions, see Appendix A of Instructions For FCC Form 1240
Question 1. Indicate the period for which this worksheet is being used. (Put an "X" in the appropriate box.)
2. Indicate the tier for which this worksheet is being used. (Put an "X" in the appropriate box.
True -Up Period
Projected Period
X
Question 3. How long is the first period, in months, for which rates are being set with this workshoet? 12
Question 4. How long is the second period, in months, for which rates are being set with this workshcct? 0
v
FCC Form 1240
Page t Microsoft Excel 4.0 Version July 1996
`
Federal Communications Commission Approved By OMB 3060-0685
Washington, DC 20554
Worksheet 7 - External Costs
True -Up Period
For instructions, ace Appendix A of Instructions For FCC Farm 1240
Question 1. For which time period are you filling out this wo[kshcct? [Put an 'X" in the appropriate box.j
Question 2. How long is the Dust period, in montlu, for which rates are being ed with this worksheet?
Question 3. How long is nice second period, in months, for which rata are being set with this worksheet?
True -Up Period Projected Period
X
I2
0
Y e it e
Lne UM Description Basic Tier 2 Tier 3 Tier 4 Tier S
Period 1
External Costs Eligible for Markup
Cost of Pmgrmmming For Chmmela Added Prior to 5/15/94 or
701
ARer5/15/94 Using Markup Method For Period
574,404.67
702 Retrarmnission Consent Fees For Period
$0.00
703 Copyright Fees For Period
$14,631.97
704 External Costs Eligible For 7.5% Markup
$89,036.64
705 Marked Up External Costa
595,714.3880
External Costs Not Eligible for Markup
706 Cable Specific Taxes For Period
50.00
707 Franchise Related Costs For Period
$8,271.19
708 Cotnmisaion Regulatory Fen For Period
56,967.27
709 Total Extemal Costa For Period
$110,952.8480
710 Monthly, Per- Subscriber External Cosa For Period 1
$0.7174
Period 2
External Costs Eligible for Markup
711 Cost of Programming For Channels Added Prior to 5/15194 or
Alter 5/15/94 Using Markup Method For Period
712 Retrmmnission Consent Fees For Period
713 Copyright Fees For Period
714 Fxtornal Co" Eligible For 7.5% Markup
713 Marked Up External Cow
External Costs Not Eligible for Markup
716 Cable Specific Tessa For Period
717 Franchise Related Casa For Period
718 Cammimion Regulatory Fm For Period
719 Total External Cow For Period
720 Monthly. Pcr- Subscriber External Cow For Period 2
I'CC Form 1240
Page 1 Microsoft 1:.xce14.0 Version July 19%
Federal Communications Commission
Washington. DC 20554
Worksheet 7 - External Costs
Projected Period
For instructions, see Appendix A of Instructions For FCC Form 1240
Question 1. For which time period are you filling out this worksh«t? [Put an ",X" in the appropriate box.[
Question 2. How long is the find period, in months, for which rates are being sd with this worksheet?
Question 3. How long is the second period, in months, for which rates arc being ad with this worksheet?
Approved By OJIB 3060 -0685
Truo•Up Period Nojcctul Period
X
12
0
y b e d e
I�ne Une Description Basic Tier 2 Tier 3 Tier 4 Tier 5
Period t
Eitemal Costs Eligible for Markup
701 Cost of Programming For Chamrcls Added Prior to 5/15194 or
After 5115/94 Using btarkup Method For Period
$94,653.67
702 Rctrmranission Convent Fees For Period
$0.00
703 Copyright Fees For Period
S15,930.45
704 External Costs Efigible For 7.5% Markup
5190 584.12
705 Msrk d Up Esernal Cana
S108,127.9339
External Costs Not Eligible for Marker
706 Cable Specific Taxes For Period
50.00
707 Frmchisc Related Cads For Period
50.00
708 Commission Regulatory Fm For Period
56.196.39
709 Total F–m—W Cana For Period
$114 .3143239
710 Monthly. Per- Subscriber Exbmuil Casa For Period 1
50.6788
n
KC I'mm 1240
Page 2 Microsoft Excel 4.0 Version July 19%
Federal Communications Commission
Washington, DC 20554
Worksheet 8 - True -Up Rate Charged
For instructions, we Appendix A of Instructions For FCC Form 1240
Question 1. How long is the True-Up Period I, in months?
Question 2. How long is the True -Up Period 2, in months?
Approved By OMB 3060-0685
12
0
8 b c a e
Line Line Description Basic Tier 2 Tier 3 Tier 4 Tier 5
801 Month 1
802 Month 2
803 Month 3
804 Month 4
805 Month 5
806 Month 6
807 Month 7
808 Month 8
809 Month 9
810 Month 10
811 Month 11
812 Month 12
1813 Period I Average Rate
$9.8100
$9.8100
$9.8100
$9.8100
$9.8100
$9.8100
$9.7300
$9.7300
$9.7300
$9.7300
$9.7300
$9.7300
$9.7700
814 Month 13
815 Month 14
816 Month 15
817 Month 16
818 Month 17
819 Month 18
820 Month 19
821 Month 20
822 Month 21
823 Month 22
824 Month 23
825 Month 24
826 Period 2 Average Rate
FCC Form 1240
Pape I Microsoft Excel 4.0 Version July 1996
FCC Form 1240
Pape I Microsoft Excel 4.0 Version July 1996
ONSULTING SERVICES, INC.
7801 Pencross (972) 726 -7216
Dallas. Texas 75248 (972) 726 -0212 (fax)
September 24, 1999
Ms. Donna Sams
Controller
City of Baytown
2401 Market Street
Baytown, Texas 77522
Dear City Representatives:
Ms. Cheryl Wilson
Olson & Olson
3485 Three Allen Center
333 Clay Street
Houston, Texas 77002
C2 Consulting Services, Inc. ( "C2 ") issues the following addendum to the report dated
May 11, 1999 based on discussions held between the Cities, Texas Cable Partners, LP
( "TCP" or the "Company ") and AT &T Cable Services representatives.
With respect to the projected programming costs, TCP did provide supporting
documentation dated June 21, 1999. Therefore, C2 recommends that this issue be
considered resolved.
Concerning the "mark -up" issues, the FCC has initiated rule making proceedings, but no
official change has been made in the sunsetting of the previous mark -up allowances.
Although C2 continues to take the position that cable operators are not allowed mark -up
pursuant to the current regulations, it is conceivable that the FCC could reinstate such
cost allowances at the conclusion of these proposed hearings. Therefore, one additional
approach that could be considered by the City is to allow the mark -up for purposes of
this rate filing, providing for refund of such charges if the FCC rules that mark -up is not
reinstated as a cost component.
However, concerning the "forced relocates" issue, C2 continues to take the position that
the Company has not supported the inclusion of such costs in the rate filing. AT &T
Cable Services provided information that was insufficient to determine the extent to
which the costs were "increases" to those included for such activity at the time the initial
rates were established. Therefore, C2 does not alter its original recommendation with
respect to this issue.
City Representatives
September 24, 1999
Page 2
In summary, if the City agrees to allow the mark -up costs with refund provisions, then
the filing submitted by TCP on March 1, 1999 should be adjusted for the projected forced
relocates. The resulting basic service rate of $8.97 should be adopted. If you have any
questions, please contact Ms. Connie Cannady at (972) 726 -7216.
Very truly yours,
Tsx�� CA--.V / JYLC- -
C2 Consulting Services, Inc.
U
Federal Communication, Commission
Washington, DC 20554
Approved by OMB 3066-0685
3. States of Previous Filing of FCC Fora 1.210 (cater an 'x- in the appropriate box)
YES NO
FCC Form 1210 been previously filed with the FCC7
If yes, enter the date of the most recent filing: (mm/dd/yy)
YES NO
b. Has an FCC Form 1210 been previously filed with the Franchising Authority?
If yes, enter the date of the most recent filing: (mm/dd/yy)
9. Status of FCC Fora 1200 Filing (enter an -x' in the appropriate box)
YES NO
a Has an FCC Form 1200 been previously f led with the FCC?
If yes, enter the date filed: (mm/dd/yy)
YES NO
b. Has an FCC Foam 1200 been previously fled with the Franrltisrttg Authority?
if yes, enter the date filed: (mm/dd/yy)
10. Cable Programming Services Complaint Status (eater an -x- in the appropriate box)
YES NO
a- Is this form being filed in response to an FCC Form 329 complaint?
If yes, enter the date of the complaint (mod Vyy)
Y!•S NO
11. Is FCC Fora 1205 Being Included With This Filing
12. Selection of -Going Forward- Charnel Addition Methodology (enter an 'x' in the appropriate box)
=Check here if you are using the original rules IMARKUP METHOD].
=Check here if you are using the new, alternative rules (CAPS METHOD).
If using the CAPS METHOD, have you elected to revise recovery for YES NO
channels added during the period May 15, 1994 to Dec. 31,1994?
13. Headead Upgrade Methodology
'NO7E Op wars must unity f0 the COAUaLWOV 1he"hS1hrloy10 use this uppack meihoo6kyy and Nbrh ta egwpjww4sf wdrkproriitian sche duk.
=Check here if you arc a qualifying small system using the streamlined headend upgrade methodology.
Part I: Preliminary Information
Module A: Maximum Permitted Rate From Previous Filing
a - b c d e
Line Lint Dexri lion Ilasie Tier 2 Tier 3 '1 "tar 4 Tier 5
Al Cu—nt Maximum Permitted Rate $9.72f45
Iye Lire Description Basic Tier 2 Tier 3 Tier 4 Tier 5
BI Average Subscriber -hip For True-Up plrriod 1
12.889
Ill Average Subscribership For True -Up Period 2
Sn.6924
63 F sumaie! Average Subxribership Far Protected Period
14.033
Lice - Lim Description
I Unciaimcd Inflation: Operator Switchiog From 1210'ro 1240
:2 Unclaimed Inflation: Unregulated Operator Responding to Rate Complaint
3 Inflation Factor For True-Up Period I [Wks I I
.4 Inflation Factor For True -Up Period 2 [ Wks I I
5 Current FCC Inflation Factor
Mrsrrnle r'• Intlarrnn Inlormalion
Moaulc U: u, alculaun tnc Dasc r(atc
a It c d c
Line I.iae Descri lioa Italic Tier 2 Tier 3 Tier 4 Tier 5
DI Current Headend Upgrade Scgmeut
$0.0006
D2 Current External Costs Segment
Sn.6924
D3 Current Caps Metbod Segment
S0.6(X7ll
Current Markup Method Segn,nt
$0.6100
D5 Current Channel Movement and Deletion Segment
So.b397
D6 Current True -Up SeVacal
56.7122
FCC Form 1240
Page 2
Mirrosott Excel 4.0 Versioa July 1996
Federal Commumications Cow -ion
` w..hinaua DC 20554
r"
Approved by OMB 30640685
D7 Current ldlation Segment $0.1174
fuse Kale [AI- DI- D2- D3- D4- U5 -D&D7] $7.5568
Part TT- True-M) Period
Line
Line Description
E
What Type of True -Up Is Being Performed! (Answer'I'.'2'. or'3'. See Instructions for a description of these types.) 2
U '1'. go to Module L If '2', answer E2 and E3. 11"31". answer E2, E3.11.4. and E5.
E2
12
Number of Mombs in the True -Up Period I
E3
Number of Months between the end of True -Up Period 1 and the end of the most recent Projected Period
E4
Number of Mouths in True-Up Period 2 Eligible for Interest
ES
Number of Months True—Up Period 2 Ineligible for Interest
1laVVY•�.
a b c d e
Line L� Dew •a Buie Tier 2. Tier 3 Tier 4 Tier 5
FI Caps Method Segment For True -Up Period I [ WLs 21
F2 Markup Method Segment For True-Up Period 1 [Wts 31
$0.0125
F3 Chan Mvmat Delete Segment For True -Up Period 1 [ Wks' 4r51
$0.6397
F4 True -Up Period I Rau Eligible For Inflation [D8+FI +F2 +F3]
$8.209
F5 Inflafioa Segment for True Up Period 1 [(F4'C3 )-F41
$0.0842
F6 Beadend Upgrade Segm vA For True -Up Puiod 1 [Wks 61
1.7 External Costs Segment For True-Up Period 1 [Wks 71
$0.7174
F8 True -Up Segment For True -Up Period 1
$0.6177
F9 Max Perm Rate for True -Up Period t (F4+FS+F6+F7 +F81
$9.6283
s...r A —.w•_1 In {'Inns �
a b c d e
Liat Lim Description Italic Tier 2 Tier 3 Tier 4 Tier 5
GI Caps Metbod Segment For True-Up Period 2 (Wks 21
G2 Markup Method Segment For True -Up Period 2IWks 31
G3 Cban Mvmm Dektn Segment For True -Up Period 2 ( Wks' 4/5]
G4 TU Period 2 Rau Eligible For Inflation [D8+F5+G1 +G2 +G3]
G5 Inflation Segment forTrue -Up Period 2 [(G4'C4)-G4]
G6 flea end Upgrade Segment For True -Up Period 2 I Wks 61
G7 Ertermal Costs Segment For True -Up Period 2 I W ks 71
G8 Truc -Up Segment For True -Up Period 2
C9 %tae Perm Rate for True -Up Period 2 (G4 +GS+G6+G7 +G81
FCC Form 1240
Page 3 Microsoft Esce14.0 Version Judy 1996
t
Federal Communication Commission Approved by 0MB 3060 -0685
Washington, DC 20554
Module H: True Up Adjustment Calculation
a b c d e
Lime Descriptiost Basic Tier 2 Tier 3 Tier 4 Tier 5
lsudaeal For True -Up Period 1
HI Revenue From Period l
$1.511.106.36
12 Markup Method Segment For Projected Prriad [Wks 31
H2 Revenue From Max Permitted Rate for Period I
$1.489,187.3597
13 Chsa Mvmat Delew Segment For Projected Period IWtr 4151
113 True -Up Period 1 Adjusimeat IH2 -1111
($21,919.0003)
14 Pro,. Period Rate Ebgibk For Wlatwo IDS+FS+G5+11 +12 +131
H4 Interest oa Period 1 Adjustment
($2.5352406)
15 tuflat:oa Segment for Projected Period 1(14'CS )-141
Adjustaeat For True -Up Period 2
H5 Revenue From Period 2 Eligible for Interest
16 HeadenP Upgrade Segment For Projected Period [Wks 61
H6 Rtvemn From Max Perot Rare for Period 2 Eligible For Interest
17 Guaaal Costs Segment For Projected Period [Wks 71
50.734
117 Period 2 Adjustment Eligible For Inkmst [H6 -H51
t
($0.1452)
1
H8 Interest on Period 2 Adjusfinem (See i..aawima for formula)
19 Max Permitted Raw for Projected Period (14+15 +16+17 +181
$8.9725
H9 Revenue From Period 2 Ineligible for Interest
110 Opemor Selected Raw For Projected Period
$9.01
Hill Revenue From Max Perm Rate for Period 2 Ineligible for lawtsi
H11 Period 2 Adjustment lrcligible For lnwrest [H10 -H91
ToW True Up Adjustaseat
1112 Previous Remaia4 True -Up Adjustment
H13 TdalTaw- UpAdjuslmrN [H3+1P4+H7 +118+Hll +H121
($24.4542409)
1114 Amount of True -Up Claimed For This Projected Period
($24.454.2409)
H15 Remaining Ttve- UpAdjustmeof[H13 -H141
s0im
Part III: Projected Period
1td..rir.1� f- V&ur Maximum Permitted Rate
Liss! Lim Dcscriptiow Basic Tier 2 Tier 3 Tier 4 Tian 5
11 Caps Metbad Segment For Projected Period [Wks 21
12 Markup Method Segment For Projected Prriad [Wks 31
$0.0200
13 Chsa Mvmat Delew Segment For Projected Period IWtr 4151
$0.6397
14 Pro,. Period Rate Ebgibk For Wlatwo IDS+FS+G5+11 +12 +131
58.3007
15 tuflat:oa Segment for Projected Period 1(14'CS )-141
$0.083
16 HeadenP Upgrade Segment For Projected Period [Wks 61
17 Guaaal Costs Segment For Projected Period [Wks 71
50.734
18 True -Up Segment For Projecled Period
($0.1452)
19 Max Permitted Raw for Projected Period (14+15 +16+17 +181
$8.9725
110 Opemor Selected Raw For Projected Period
$9.01
Note.• 7br muimumpuwikdixre/ 41rorsdoo dlateIWO "oualinyirlundAtA&y)'ovauy6eve. lTyav6e.rprs:ixadyLrncoarAvrr / bvl6eCommrcvae cr- ear. OrdlranrhxuWrdbuyl'romr�ero�uadc
you err ad mire t eda ryorr a6h. -s iaa io aWe surd 1r/uads a veer Y46e paariaedrxre ti' hither rhea the rowestedMe ar.vrirr- rurrrarrzr/e.
Ccxtiftcatiou Statca cut
WILLFUL FALSE STATEMENTS MADE ON THIS FORM ARE PUNISHABLE BY FINE AND /OR IMPRISONMENT
(U.S. CODE TITLE 18, SECTION 1001), ANDIOR FORFEITURE (U.S. CODE, TITLE 41, SECTION 503).
P cent' that the statements ade in tha.form are true d correct to a best o m knowle a and belief, and are made in ood laith.
Sec ate
Name and Title of Person Completing this Form:
Telephone number Fax Number
FCC Form 1240
pie 4 Microsofl Excel 4.0 Version July 1996