City of Hermosa Beach -- 05-29-97


CENTURY CABLE RATE INCREASE FOR BASIC CABLE SERVICE


Recommendation


It is recommended by staff that Council approve the following steps as the City's response to the 22 percent rate increase for basic cable service:


  1. Draft an Accounting Order as provided in Attachment C.
  2. Direct the City Attorney to file a protest with the FCC for the rate increase based on consumer complaints.


Background


On May 1, 1997, Century Cable drafted a letter to the City Manager indicating that they will be raising basic cable rates from $20.08 to $24.61 per month. This letter followed their filing of forms 1240 and 1205 which provided their justification for the increase.


Pursuant to the Cable Television Act of 1992, the City has limited ability to set and review basic rates (the City has no authority with regards to premium channels). This means that within FCC guidelines, the City has the ability to set initial basic cable rates and the right to review and protest subsequent increases.


Attachment D identifies the basic cable rate of $19.88 set by the City in July, 1995 as contained in the resolution to approve the transfer of the cable franchise from MultiVision to Century Cable.


Century proposes to raise basic cable rates in the three beach cities as follows:

Present Basic Cable Rates

Rates effective July 1, 1997

Hermosa Beach:

$20.08

$24.61

Manhattan Beach:

$21.08

$24.83

Redondo Beach:

$26.07

$27.29


Analysis


While this would initially seem to provide the City with authority over rate increases, in practice, the FCC allowable increases have become the framework cable television companies use to maximize their basic rates independent of any City authority.


Recognizing this (and the substantial costs associated with analyzing rate increases), the City has uniformly responded to forms 1240 and 1205 with:


  1. A request for a 90 day review period (which delays the implementation of the rate increase by 90 days); and
  2. An Accounting Order (which protects consumers if the FCC should identify any problems with the rate increase).

Staff would recommend the same approach be implemented for the July 1, 1997 rate increase. In addition, since the proposed increase is substantial, the City would file a protest with the FCC based solely on consumer complaints. In that way, the cost of rate analysis falls with the FCC (instead of with the City) who make the ultimate decision about rate increases.
Fiscal Impact: None