HomeMy WebLinkAboutOrdinance No. 98-15 � , �� - . , '
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ORDINANCE NO. 9 8-15
AN ORDINANCE REJECTTNG THE SCHEDULE OF EQUIPMENT AND
' INSTALLATION RATES PROPOSED BY TCI CENTR.AL, INC., DB/A TCI
CABLEVISION OF HOUSTON AND FINDING THAT SUCH RATES ARE
UNREASONABLE; ESTABLISHING THE IvIA�MUM HOURLY SERVICE
CHARGE TO BE USED TO DEVELOP TI� EQUIPMENT AND
INSTALLATION RATES OF TCI CENTRAL, INC., DB/A TCI CABLEVISION
OF HOUSTON; ESTABLISHING THE MAXIMUM PERMITTED RATES FOR
EQUIPMENT AND INSTALLATION CHARGES; DECLARING THE
REGULATED STATUS OF TI� INSIDE WIRE MAINTENANCE PROGRAM;
ESTABLISHING TI� MAXIMUM PERMITTED RATE FOR TCI'S INSIDE
WIRE MAINTENANCE PROGRAM; SETTING FORTH OTHER PROVISIONS
RELATED TO THE SUBJECT; PROVIDING A PENALTY OF AN AMOUNT
NOT TO EXCEED $500 PER DAY FOR EACH VIOLATION HEREOF; AND
PROVIDING FOR SEVERABILITY.
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WHEREAS, the City of Friendswood,Texas(the"City"), is certified to regulate basic cable
service rates pursuant to the 1992 Cable Act (the "Act") and Federal Communication Commission
("FCC") rules;and
WHEREAS, on or about March 1, 1998, TCI Central, Inc., d/b/a TCI Cablevision of
Houston ("TCI") submitted to the City an FCC Form 1205 with a proposed schedule of equipment �
_- and installation rates (hereafter"Form 1205"); and
WHEREAS, the FCC rules allow the City ninety (90) days to review the proposed schedule
of equipment and installation rates after which time the operator may implement such rates, subject
to a prospective rate reduction and refund if the City subsequently issues a written decision
disappro�i.�g any portion of such rates; and
WHEREAS, at the City's request, C2 Consulting Services, Inc., has reviewed TCI's
proposed schedule of equipment and installation rates and determined that the methodology used
by TCI to develop such rates did not comply with FCC rules, regulations, instructions, directives
and recent decisions rendered by the FCC; and
WHEREAS, C2 Consulting Services, Inc., based on its review of TCI's Form 1205,
submitted an alternative schedule of equipment and installation rates and its report explaining its
analysis, findings, and conclusions, which is attached hereto as Exhibit"A"; and
WH$REAS, a public hearing was held to hear public comments on the proposed schedule
of equipment and installation rates of TCI; and
Fritndswood\'98-I 205.Ord.
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WHEREAS, the City Council has now concluded its review of TCI's proposed schedule of
equipment and installation rates and made certain determinations;NOW, THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FRIENDSWOOD,
STATE OF TEXAS:
Section 1. That the City Council hereby adopts and�rms the findings and recitals set
forth in the preamble to this Ordinance.
Section 2. That the City Council, having reviewed TCI's proposed schedule of
equipment and installation rates and the report submitted by C2 Consulting Services, Inc., hereby
finds and determines that TCI's proposed equipment and installation rates are unreasonable and are
hereby rejected.
Section 3. That TCI is hereby ordered to reduce its Hourly Service Charge for
installation, maintenance and repair of equipment to an amount not to exceed $27.40 per hour,
commencing on the date of adoption of this Ordinance or June 1, 1998, whichever is later. This
Hourly Service Charge rate was derived by using FCC rules, regulations and instructions for
calculating the Hourly Service Charge as further explained in the report from C2 Consulting
Services, Inc., attached hereto as Exhibit"A" and which is incorporated herein by reference. Based
on this Hourly Service Charge, TCI is further ordered to reduce its equipment and installation rates
to an amount not to exceed the"Consultant Recommended Maximum Permitted Rates" set forth in
"Attachment A" of the C2 Consulting Services, Inc., report dated April 29, 1998, attached hereto as
Exhibit "A" and which is incorporated herein by reference (the "maximum permitted rates"). TCI
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 chazges have exceeded such maximum permitted rates,plus interest
on such amounts calculated in accordance with FCC rules.
Section 4. That the City Council hereby declares and affirms that the FCC has
determined by FCC order DA 96-2105, adopted and released December 13, 1996, that an inside
wire maixztenance program is a regulated service and,therefore, TCI is hereby ordered to reduce the
rate for its inside wire maintenance program to an amount not to exceed $.08 per month
commencing on the date of adoption of this Ordinance or June 1, 1998, whichever is later. This
rate was calculated in accordance with the recent FCC decision cited and as fiuther explained in the
report from C2 Consulting Services, Inc., attached hereto as Exhibit"A" and which is incorporated
herein by reference. TCI 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 rate and the
actual charges to the extent that actual charges have exceeded such maximum permitted rate, plus
interest on such amounts calculated in accordance with FCC rules.
Section 5. That the City Council hereby finds and determines that the rates established
hereby are reasonable.
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Friendswood�'98-1205.Ord.
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Section 6. In adopting this Ordinance the City Council of the City 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. Pursuant to the authority granted to the City under Title 47 C.F:R.
§ 76.943(a) and Tex. Loc. Gov't Code § 54.001, should TCI fail to comply with any provision of
this Ordinance, it shall be deemed guilty of a misdemeanor and, upon conviction, shall be fined in
an amount not to eYCeed$500.00. Each day of each violation shall constitute a separate offense.
Section 8. All ordinances in force when this Ordinance becomes effective and which
are inconsistent or in conflict with this Ordinance are hereby repealed insofaz as such ordinances
aze inconsistent or in conflict with this Ordinance.
Section 9. The City Council of the City of Friendswood, Texas, does hereby declare
that if any section, subsection, paragraph, sentence, clause, phrase, word or portion of this
Ordinance is declared invalid or unconstitutional by a court of competent jurisdiction then, in such
event, it would have passed and ordained any and all remaining portions of this Ordinance without
the inclusion of that portion or portions which may be so found to be unconstitutional or invalid,
and declares that its intent is to make no portion of this Ordinance dependent upon the validity of
any other portion thereof, and all said remaining portions shall continue in full force and effect.
Section 10. That the City Secretary is hereby authorized and directed to mail a copy of this
Ordinance by first class mail to TCI.
PASSED AND APPROVED on first reading this �� day of June , 1998.
- PASSED, APPROVED, and ADOPTED on second and final reading thisl5th day of
June , 1998.
CITY OF FREINDSWOOD, TEXAS
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Harold L. Whitaker
Mayor
ATTEST
PZotion: Tom P?.anison
2nd: Kim Brizendine
� 5-1 . Aline Dickey O�nosed
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Deloris McKenzie, RMC
City Secretary
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Friendswood�'98-l 205.Ord.
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��N�ULTING �ERVI�E�, ING. 0ti� � ���
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7801 Pencross (972) 726-?2�6 �, �OE��fR ,,v
Dallas� Texas 75248 (972]� 726-7216 �fax)� �'
Apri129. 1998 \�
Ms. Eugenia Cano Mr. Ron Cox
City Attorney City Manager
City of Alvin City of Friendswood
216 West Sealy Street 910 South Friendswood Drive
Alvin, Texas 77511 Friendswood, Texas 77546-4856
Mr. David Sta11 Mr. Roger Carlisle
City Manager City Manager
City of Nassau Bay City of Webster
1800 Nasa Road One 311 Pennsylvania
Nassau Bay, Texas 77058 Webster, Texas 77598
The Honorable Roger Nylin The Honorable Einar Goerland
Mayor Mayor
City of El Lago City of Taylor Lake Village
98 Lakeshore Drive 500 Kirby
EI Lago, Texas 77586-6398 Taylor Lake Village, Texas 77586-5298
Ms. Carol McLemore Mr. Nick Finan
Interim City Manager City Manager
City of La Marque City of League City
1 ll 1 Bayou 300 West Walker
La Marque, Texas 77568 League City, Texas 77573
Mr. Tom Pedersen Mr. Ron Wicker
City Secretary City Manager
City of Texas City City of Seabrook
1801 9th Avenue North 1700 First Street
Texas City, Texas 77592 Seabrook,Texas 77586
Ms. Cheryl Wilson ,
Olson&Olson
3485 Three Allen Center
333 Clay Street
Houston, Texas 77002
Dear City Representatives:
C2 Consulting Services, Inc. ("CZ") has completed the evaluation of the FCC Form 1205
filed by TCI Cablevision of Houston("TCI" or the "Company") with the Cities on or
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City Representatives
April 29, 1998
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about March 1, 1998. This is TCPs second year to file an "aggregated" filing regarding
its proposed increases in equipment monthly lease rates and installation and maintenance
charges. Because it is, theoretically, an aggregation of costs of all systems owned and/or
managed by TCI Communications, Inc. ("TCIC"), franchising authorities that regulate
TCPs operations receive identical rate filings.' As you recall, the Form 1205 is filed
once each year, is based on the most recent fiscal year costs/data and is filed
simultaneously with the Form 1240. The Cities have ariginal jurisdiction with respect to
the review and regulation of charges resulting from the Form 1205 computations.
This study does not constitute an examination of the �nancial condition of TCI or its
parent company. As such, C2 cannot and does not express any position with regard to the
accuracy or validity of the financial information provided by TCI during the course of the
analyses.
BACKGROUND
In its 1998 Form 1205 filing, TCI proposes a significant increase in its maximum
permitted equipment installation, maintenance and lease rates for the year June, 1998
through May, 1999. Although TCI has committed to "operator selected rates" that are
lower than its proposed maximum permitted rates, in most instances, these operator
selected rates still reflect an average increase over 1997 rates of appro�mately eight
percent.�
Consistent with the 1997 aggregated filing,the 1998 filing has the following components:
• The computation of the Hourly Service Charge ("HSC") based on the
averaging of calculations made for forty sample systems as applied to the total
number of systems that have the same sample characteristics (subscriber
counts).
• An allocation of common TCIC costs to each of the sample systems based on
the number of subscribers
• The computation of individual installation activities based on the HSC times
an averaging of the time requirements reported by the forty sample systems
• The computation of equipment rates based on TCI's inclusion of certain costs
at the TCIC level
' Pursuant to FCC Order 96-257, TCl filed an"aggregated"equipment basket for all of its owned and/or
manager systems(approximately 441). In general, proposed capital costs for converters and remotes are
aggregated at the TCIC level,and the proposed operating expenses(and associated hours)aliocable to the
development of the hourly service charge are based on a sampling of forty TCIC systems. Additional
installation activities conducted at all systems that offer digital services(approximately 161 systems)are
included in the development of the HSC.
2 It is C2's understanding that in certain Texas jurisdictions, TCI is proposing to continue to charge
"operator selected rates"for installation and maintenance activities that are equal to the 1997 rates. In
these jurisdictions, onlv the non-basic converter lease rate is proposed to increase as of June 1, 1998.
However,this offer does not appear to apply to the Cities.
04;30;'98 TIIt' 23: 12 FAfi 972 726 '7'L16 C2 CONSL'I.']'ING >-� 3 FRIEND�VOOD C�jOQ2
City R`presentative:s
April ?9, t 99$
Page 3
• The computation of c.c�nv�rt�r r�.xe ca#egories tha.t ar� dependent on the type of
se��ice rather than the type of ec�uipment
The major difference beriaeen the rr3etho�ology employe� b}� TCI in its 1997 ag�regated
filing and that us�d rn the 1998 aggre�ated filing appears to�e the inclusion of additional
installatiun costs and hQUrs related til riew digital services offerings. TCI did nc�t use a
sampling of these systerns, but rather annualized a rnonth of data for�11 systems that offer
these services.
Th� follov��ing table provides a comparison of TCI's prapc�s�d 1997 rates, the Citits'
apprc��ed rates and TCI's proposed I998 rates:
COlVIPAR(30111 OF EQU{PMENT AND i�1STALLATilON RATES
TCt Proposed TCE Proposed City Ordered TCI Proposed TCI Proposed
1887 MPR' 1997 OSR"' 4997 MPR� 1998 MPR" 1988 C1SR"
Huuriy Servic�Charge $30.18 $29.00 �22.51 $35.90 $32.00
Senaice
lr�stall-Unwired�orne $47.30 �4�.9� $35.27 $53.16 546.95
Instakf-Frewired home $26-62 524.95 $19.85 $28.44 $24.95
lnstall-Additicnal aonnect initial $t4.31 $12.50 $t4.67 $16.58 $13.95
instalf-Additiona{r,vnnect separate $7�".d3 518.75 $16_73 $26.42 $21.95
Move QuJet $22,28 $18.75 $16.6i $25.48 $21.95
Upldowngrade 51.99 $1.99 $1.99 $i.S9 $1.99
Upgrade non-addressab9e �94.37 512.95 �a10.72 334.D1 $13.95
Qowngrad�non-addres3abEe $7.55 $6.95 55.63 $11.17 $8.85
Gha�ging Tiers �t4.37 $12.55 �u10.72 �3A.01 N1A
GonnectVCRis�itiaf �7.52 $6.95 $5.60 $8.i2 $E.95
ConnECtVCRseparate 514.82 $12.95 �11.05 $17.25 513.95
Field Collectivn Charge �lIA N!A !V/A $17 77 $15.Q0
Month�y Lease Rates
Rema#es $0.35 $0.34 $0.3Z 5U.40 50.30
Basic only eanverters $2,27 S1.54 �4.4q $2.59 $1.55
Nan-basic anly converters $3.54 33.Q0 $2.72 �3.78 $3.25
'Mazirnum permitted rates
"O erator selecied rates
Although "I'�I's praposed 1998 rates are b�sed Qn a sin�le Fonn 120� calculation, the
compranenis that are required to r�eveDop the HSe and certasn proposed 5chedule C
capz#a1 casts are based on individual I�orm 1?OSs for ea�h of the farty sample systems.
The Cities toak issu� �vith a number of these s�mme �camponents dur�in� evaloaatian of
' It inust be remembered that the City-ordered ra:�s are only wirll re;pect to the maximum permitted*ates
and should not be cc,rnpare�' w�ith the aperator seiected rates f'o;purposes of detetrnining the regu[atory
impacts offranchise authority decisions.
City Representatives
April 29, 1998
Page 4
TCI's 1997 aggregated filing because the individual Form 1205s for the sample systems
included cost categories considered by the Cities to be inappropriate in prior, local system
related Form 1205 evaluations. TCI argued on appeal of many Cities' decisions, that,
because the filing was now at an aggregated level, Cities could not justify making
adjustments that had been made for purposes of setting rates based on a local system
filing.4 However, C2 points out that because TCI aggregates on the basis of Form 12QSs
performed at the "system" level for forty sample systems, adjustments to remove
inappropriately included costs at this level before aggregation are justified.
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 infortnation
and documentation that must be filed with the Cities.
2. Assessment of the reasonableness of the proposed computations in light of
Cities' prior rate decisions, FCC regulation and recent FCC rulings.
3. Assessment of the reasonableness of the proposed computations in light of
TCPs proposed method of aggregation.
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 andlor
methodologies employed by TCI
• Submission of follow-up data requests and subsequent review of TCI's
responses
• Review of recent FCC decisions that may have an impact on TCI's proposed
methodologies or the Cities' alternative actions
• Development of potential alternatives available to the Cities in establishing
maximum pertnitted equipment and installation rates
Summary of Findings
C2 identified eight main issues with respect to TCI's proposed computations of
equipment and installation rates. The issues are:
• The computations of the HSC and the converter lease rates inappropriately
include the costs and hours related to converter retrieval.
4 Most recently, see Appeal of Local Kate Order, Communications Services, Inc. d/b/a TCI Cablevision of
North Texas,filed March 5, 1998 with respect to McKinney, Texas.
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City Representatives
April 29, 1998
Page 5
• The computation of the HSC inappropriately includes the costs related to
activities for disconnects.
• The computation of the HSC inappropriately includes the costs related to "tap
audits."
• The computations of the HSC and the converter lease rates inappropriately
include the asset and operating costs related to security devices.
• The computation of the HSC within the forty sample systems inappropriately
includes certain self insurance related costs.
• The computations of the HSC in several of the forty sample systems and
several of the digital systems include inappropriate levels of certain state and
local taxes.
• TCI's proposed Schedule C capital costs for remotes are not reflective of the
supporting documentation.
• TCI's proposed development of a"Field Collection Charge" is inappropriate.
A. Converter Retrieval Costs/Hours in HSC and Converter Lease Rates
As discussed in C2's evaluation of TCI's 1997 filing, TCI had included a"new" category
of costs in its computation of the HSC and the converter lease rates: converter retrieval.5
C2 determined that (1) these costs (and hours) were not related to "new activities," but in
fact, were related to activities conducted during the period of"unbundling" in the Form
1200/1205 process; and (2) TCI had not unbundled the costs related to these activities
into the equipment basket (thereby continuing to recovery them from the monthly
programming services rates). C2 concluded that allowance of these costs in the
equipment basket in 1997 would provide for a double recovery.
The same conclusion holds for TCI's 1998 filing. The forty sample systems' Form 1205s
include additional estimated hours (and associated costs) spent by technicians to retrieve
converters from subscribers' premises. These additional hours increase the allocation
factor to be applied to the total costs for technician labor, thereby increasing the amount
of costs assigned to the equipment basket for the forly sample systems. The results are
further aggregated by assuming the average of the sample systems within each stratified
grouping applies to all other non-sampled systems within that grouping.
The FCC has found that converter retrieval costs are probably more appropriately treated
as equipment basket costs (either directly with a separate rate, or indirectly as a
component of Schedule B operating costs) than as general system operating costs to be
recovered through the monthly programming services rates.6 The FCC has not mandated
that such costs be considered, but has allowed the operator to make the decision. What
must be pointed out, however, is that the FCC has determined that inclusion of costs in
both the monthly programming services rates and the equipment and installation rates
produces a double recovery of the costs.
5 See C2 Report dated May 9, 1997, pp. 8-9.
6 For example, see DA 76-1712, released October 18, 1996.
City Representatives
April 29, 1998
Page 6
In its decision DA 96-1753, the FCC found with respect to the issue of double recovery:
`Because TCI did not include these costs in its previous Form 1205 used for the
Form 1200 unbundling, including the costs now would result in a double recovery
of the costs, once in the monthly programming service rates and again in the
converter charges themselves. Allowing these costs permits an operator to
identify `overhead' costs for the equipment basket it had not unbundled when the
initial rates for monthly programming services were established."'
In DA 97-2099, the FCC went further to establish that if TCI desired to include costs in
the equipment basket that had not been unbundled(and therefore were included in the
monthly programming services rates), then there had to be some adjustment made to the
monthly programming services rates to ensure that a double recovery would not occur.g
Therefore, the inclusion of the converter retrieval costs and hours by TCI in its sample
systems (and thereby aggregated for all of its 441 systems) should be disallowed in
determining the HSC. In addition, the labor costs assigned to the repair and maintenance
of converters should not include the hours related to the retrieval of converters from the
subscribers' premises.
B. Disconnect Costs Included in the HSC
Similar to TCI's computations with respect to converter retrieval, TCI has included the
costs for disconnects in the development of the HSC. However,the hours associated with
disconnects have not been included because TCI has treated these costs as "indirect"
without a separate charge for the activities.
Again, these costs were being incurred during the unbundling process. Because they
were not unbundled by TCI, they are already included in the monthly programming
services rate. Inclusion in the equipment basket without some offsetting adjustment to
the monthly programming services rates would result in a double recovery of such costs.
Therefore, C2 recommends that the costs included by TCI in its forty sample systems
related to service disconnects be excluded from the development of the HSC.
C. Costs Related to "Tap Audits"
In the 1997 filings, TCI included costs for "tap audits" for the first time. According to
information provided by the Company, these costs were related to installers' time spent
verifying the work performed at the subscribers premises and verification of the services
being received.
�TCI Cablevision of Nevada,Inc.,Consolidated Order DA 96-1753,released October 30, 1996, paragraph
16.
g 7C1 Cablevision of St.Louis Order DA 97-2099,released September 29, 1997,paragraph 20.
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City Representatives
Apri129, 1998
Page 7
In the 1997 review, C2 questioned the extent to which these "tap audits" included
activities that involve repair, maintenance, or installation of customer premises
equipment.9 Subsequent to C2's review, TCI representatives were quoted as having
implemented "tap audits" to determine the existence of authorized service.10 Therefore,
TCI has clearly not met its burden of proof that"tap audits" are activities which results in
equipment basket costs rather than monthly programming services costs.
In addition, TCI did not support the time requirements proposed to perform such
activities. Within the same Multichannel News article, the representation was made that
"tap audits" only require a"few extra moments each day"to perform. However, TCI has
computed the costs of "tap audits" with a required labor time of between fifteen and
thirty minutes per audit.
Finally, even if TCI could demonstrate that "tap audits" are related to equipment repair,
maintenance and installation, these costs were never unbundled from the monthly
programming services rates during the Form 1200/1205 process. As with the converter
retrieval and disconnect costs, without such unbundling, inclusion in the equipment
basket rates would provide for a double recovery. Therefore, C2 continues to
recommend that the Cities disallow these costs in the development of equipment and
installation rates for 1998.
D. Security Devices CapitaUServicing Costs
In the 1997 "aggregated" Form 1205s, TCI included security device capital costs in the
development of its proposed converter lease rates.l� The aggregated filing also included
the labor costs of servicing these devices in the development of the HSC. Many
jurisdictions, including the Cities, took issue with the inclusion of these costs for the
following reasons:
� Security devices do not appear to meet the FCC definition of customer
premises equipment.
• Treatment of such devices requires the establishment of a separate and distinct
rate from the converter lease rates.
• The costs related to security devices were not previously unbundled from the
monthly programming service charge.
As you recall, security devices are used to either allow a subscriber to receive certain
pro�-amming or ensure that a subscriber does not receive programming to which he/she
has not subscribed. Not all TCIC owned and/or managed systems use security devices.
TCI determined the amount of its proposed security device capital costs and servicing
y See C2 Report,May 9, 1997,pp. I0-11.
'o Multichannel News, August 11, 1997, "One System's Fight Against Cable Theft."
'� TCl also included the capital costs related to security devices in its 1996"system"Form 1205s in those
jurisdictions where such devices are used. Security devices are not used within the Cities;therefore,this
issue did not impact the Cities until the 1997"aggregated"filing.
City Representatives
April 29, 1998
Page 8
expense based on the result of the forly sample systems. In the 1997 filing , twenty-two
of the sample systems employed security devices. In the instant filing, fifteen of the
sample systems use security devices to ensure that subscribers are receiving the
appropriate programming services.
TCI argues that security devices are a component of the customer premises equipment
and should be included in the converter lease rates. Based on the purpose and use of such
devices, it does not appear that they should be considered customer premises equipment
pursuant to the FCC regulations. The regulations concerning the definition of customer
premises equipment are found in 47 C.F.R. Section 76.923. Section 76.923(a) reads:
"The equipment regulated under this section consists of all equipment in a
subscriber's home, provided and maintained by the operator, that is used to
receive the basic service tier, regardless of whether such equipment is additionally
used to receive other tiers of regulated programming service and/or unregulated
service. Such equipment shall include,but is not limited to:
(i) Converter boxes;
(ii) Remote control units; and
(iii)Inside wiring." (emphasis added)
TCI argues that it has met the requirements of the FCC definition in that the Company
has only included a percentage of the costs that relate to devices that are located within
twelve inches outside the point at which the cable enters the subscribers' homes.
However, TCI has not provided a clear explanation as to how such a determination of
costs was made.
Even if TCI were to demonstrate that its proposed limited inclusion of security devices
meets the FCC definition of customer premises equipment,these costs clearly should not
be included in the determination of converter lease rates. Section 7b.923(b) of the FCC
regulations reads:
"A cable operator shall establish rates for remote control units, converter boxes,
other customer equipment, installation, and additional connections separate from
rates for basic tier service. In addition,the rates for such equipment and
installations shall be unbundled one from the other."(emphasis added)
Additional reference can be made to the regulations regarding the use of the
"aggregation" methodology in Section 76..923(c)(1):
"Costs of customer equipment included in the Equipment Basket may be
aggregated, on a franchise, system, regional , or company level, into broad
categories. . . provided that each category includes only equipment of the same
type, regardless of the levels of functionality of the equipment within each such
broad category."(emphasis added)
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City Representatives
April 29, 1998
Page 9
Based on the requirement of"equipment of the same type," security devices should not
be included in the same category as converters.1z
Recently, TCI has argued that inclusion of security device costs as a component of the
converter lease rate was supported by the FCC in its decision DA 97-2591. In this case,
the FCC found that the costs of a new type of descrambler device could be recovered in
the equipment basket.�� However, two important distinctions must be made. First, the
FCC allowed the costs on the basis that these devices would be substitutes for converters
and that in the interim, if both were in use, the converters would be offered at no charge.
Second, the FCC specifically stated that the allowance was on the basis of promoting
"new technologies" in providing advanced broadband descrambling to provide benefits to
subscribers and operators.14
The most compelling rationale for disallowing the security device capital costs and
servicing expense, however, is the fact that TCI never unbundled these costs from its
monthly programming services rate in the Form 1200/1205 process. As provided above,
the FCC has ruled that should double recovery is not appropriate and if certain costs are
allowed in the equipment basket (that were not unbundled) then a corresponding
reduction to the monthly programming service rates should be made.
E. Self Insurance Costs
As with the security device related costs, TCI included costs for self insurance for many
of its 1996 "system" Form 1205 filings and in its 1997 "aggregated" filing. The Cities
took issue with the inclusion of these costs for the following reasons:
• The self insurance costs were never unbundled from the monthly
programming services rates under the Form 1200 methodology and, if
included, would result in a"double recovery" of the costs.
• The self insurance expenses are general and administrative expenses;
specifically excluded by the FCC rules for purposes of determining equipment
basket rates.
TCI has again included these costs in its 1998 Form 1205 filing. The costs are based on
the aggregation of the self insurance costs assigned to each of the forty sample systems
and to those systems that offer digital services.
During C2's review, several inconsistencies were noted Included in the "aggregated"
total Company costs on Schedule B, TCI determined a total self insurance expense
12 Security devices are not always used in conjunction with converters and are not required in systems that
have other means of scrambling services not specifically subscribed to by the subscriber(even though
converters may be in use in these latter configurations).
t' See Motorola's HomeClearTM System, Order DA 97-2591,released December 11, 1997.
la Id. Paragraph 10. Based on the Order,this new descrambling device would eliminate the need for a
converter on each television set within the customer premises.
City Representatives
April 29, 1998
Page 10
(before allocation to the equipment basket) which purports to represent only the amount
of self insurance expense that is "new" since the unbundling process. In other words,
TCI has provided a level that potentially would not result in a double recovery of the
costs.
However, in the computations within each of the sample systems (which ultimately
establish the amount included in the equipment and installation rates), TCI has included
total self insurance costs (inclusive of the amount not previously unbundled). Therefore,
TCI's allocation to the equipment basket results in an amount that is in excess the
Schedule B total Company self insurance expense.
In addition to the reduced amounts on Schedule B, the Company has employed the same
reduced computations for purposes of determining self insurance related to the digital
installation activities.'S TCI has provided no rationale for such inconsistencies, but
continues to take the position that the inclusion of the total expense within the sample
system computations is appropriate.
Clearly, TCI must be required to be consistent in its application of a particular
methodology. Is the Company proposing to include only those costs that reflect increases
in the expense already included in the programming services rates? If so, then C2 would
recommend that the Cities accept such an approach.lb If TCI's position is that it intended
to include all of the self insurance expense, then C2 would recommend that the Cities
consider only that portion of the expense that reflects the estimated increase in the costs
since 1994; any additional amounts would provide for a double recovery.
With respect to the classification of self insurance, the FCC has ruled that certain self
insurance expenditures can be linked with providing customer service equipment. These
include worker's compensation, hazard protection and liability coverage on vehicles used
for maintenance of equipment " However, within the same ruling, the FCC noted:
"When TCI-SL files Form 1205, in 1994 and 1995, TCI-SL did not include these
insurance costs in its calculation of equipment basket costs. These costs,
therefore, were recovered in program service rates. In assigning these costs now
to its equipment basket, TCI-SL should have deducted them from its program
service rates, otherwise TCI-SL would be recovering these costs twice."'A
Is Within the forty sample systems, TCI has included total self insurance costs(prior to allocation to the
equipment basket)of $1,664 per employee. In the digital system computations,the total self insurance
costs are$334 per employee for the same number of employees. TCI's supporting documentation shows
the$334 amount to represent increases in self insurance expense that have occurred since the unbundling
process.
16Although C2 does not entirely agree that each of the proposed insurance types are relevant to equipment
and installation activities,the vast majority of the categories and associated costs appear justifiable.
17 TCI Cahlevision of St.Louis Order DA 97-2009,released September 29, 1997,paragraph 20.
'S ld.
' �
, � , _ -�-W . , ,
City Representatives
April 29, 1998
Page 11
Given TCPs alternative computation of increases in self insurance, and given the FCC's
position on whether certain insurance costs can be considered equipment basket related,
C2 recommends that the Cities consider allowing only the increases in self insurance
expense over that which was being incurred during the time of unbundling.
F. Inappropriate Amount of State and Local Taxes
Within the forty sample systems, one expense item allocated to the equipment basket is
"other license/taxes." Generally, this amount represents less than one percent of the total
Schedule B costs that may be applicable to the development of installation and equipment
rates. However, TCI erred in several of the sample system computation by
inappropriately including additional state and]ocal taxes.'�
The errors were identified specifically within the Washington systems because the "other
license/tax" amounts for these systems represented between eleven and fifty-five percent
of the total Schedule B costs. TCI has stated that this is in error. It is C2's understanding
that TCI attributes these errors to a change in accounting systems, and has indicated that
the errors in the Washington systems may not account for all of the necessary
adjustments. However, as of the writing of this report, C2 can only adjust for the known
errors. Therefore, C2 has adjusted the level of "other license/taxes" expense to reflect
more appropriate annual expenses as determined by TCI.
G. Inconsistencies in the Computations Related to Remotes
Components of the Schedule C capital costs relate to remotes. TCI itemizes the gross
book costs, accumulated depreciation, deferred taxes, and annual depreciation expense
based on the total TCIC costs. However, based on responses to requests for information,
C2 noted several inconsistencies between TCI's reported amounts and the supporting
documentation. Upon review, C2 determined that the more appropriate costs were those
reported in TCI's workpapers. C2 adjusted the accumulated depreciation, the annual
depreciation expense, and the amount of deferred taxes shown on Schedule C to reflect
these corrected amounts.
H. Proposed "Field Collection Charge"
In the instant filing, TCI is proposing to use the HSC to charge for activities related to
"Field Collection." In TCI's initial response to requests for information regarding this
proposal, TCI stated that such activity was:
19 Systems that operate in the State of Washington are charged a business and occupation taxes that are
generally itemized separately on customers bills as they relate to installation and equipment charges.
Therefore,these amounts should not be included in the development of the equipment and installation
rates.
� , - �-� � ,
City Representatives
April 29, 1998
Page 12
". . . provided where a technician and truck are dispatched to a customer premise
(referred to as a `truck roll'), delinquent moneys are collected, and the level of
service received by the customer is adjusted, as necessary."20
However, TCI's response to the same request on behalf of other jurisdictions is as
follows:
"The "field collection charge", although reflected on Forrn 1205, is not a
regulated charge and is not subject to review. Our intent in including the
computation in the Form 1205 was to provide us with a reasonable estimate of our
costs of this activity."21
It is C2's understanding that the field collection is essentially performed as a "final step"
for collecting on delinquent accounts, retrieving converters, adjusting the service or
disconnecting the subscriber. C2 points out that TCI has already attempted to include
these types of activities in the HSC (e.g., converter retrieval costs and disconnect
activities}.22 Therefore, even under TCI's methodology, it appears that any additional
field collection charge would provide for a double recovery of these activities.
TCI's second argument that the Cities have no authority over such a rate begs the
question as to why TCI is proposing to use the HSC as the rate for performing field
collection activities. If TCI is assuming that the field collection charge should be treated
similarly to a late fee, (and not regulated pursuant to FCC Form 1205 regulations) then
the Company must be aware that the FCC has determined that late fees can be regulated
by the local franchising authority;just not pursuant to the Cable Act.23
In C2's opinion, neither of TCI's explanations satisfies the question of whether the costs
for such activities are already included in the programming services rates. If the
activities are related to disconnects and/or converter retrieval/service payment, then these
types of costs were not previously unbundled as discussed above. Therefore, establishing
a separate rate for these activities now would result in a double recovery.Z4
20 TCPs response to C2's First Request for Information, Cities of Alvin and Friendswood, Texas, Item#36,
dated March 23,1998.
21 TCI's response to C2's First Request for Information, City of Allen,Texas, Item#39, dated April 24,
1998.
22 TCI has included the converter retrieval hours in the development of the converter rates and has included
costs related to disconnects in the development of the HSC. (It should be remembered that C2 has
recommended that such costs be excluded on the basis that there would be a double recovery because of the
"unbundling" issue.)
23 See Cablevision Industries, Order DA 95-713,released April 5, 1995.
z4 And potentially a triple recovery if the field collection activities duplicate the disconnect and converter
retrieval activities included by TCI.
City Representatives
Apri129, 1998
Page 13
I. Inside Wire Maintenance Program (IWMP)
TCI continues to take the position that the inside wire maintenance program is an
unregulated service as no infortnation is provided within this filing, nor is any regulated
rate proposed. The FCC has ruled on numerous occasions that the rate for this service is
regulated in those instance where the subscribers own the inside wiring(which is the case
in the systems operating within the Cities).
TCI continues to argue its position, and has petitioned the FCC for reconsideration of all
rulings that have involved the IWMP rate charged by the Company. C2 recommends that
the most recent ra.te established by the Cities of $0.08 continue to be the maximum
permitted rate that can be charged by the Company within your respective jurisdictions.
SUMMARY OF RECOMMEDATIONS
Based on the above findings and conclusions,the Cities should consider taking the
following actions:
1. Establish an Hourly Service Charge of$27.40 to be used in the
development of the installation and equipment rates.
2. Adopt installation and equipment rates as shown on Attachment A.
3. Reaffirm the regulated nature of the IWMP and reaffirm the maximum
permitted monthly rate of$0.08 for the IWMP.
C2 appreciates having this opportunity to work with the Cities in review of the Form
1205 rates. If you have any questions regarding this report or need clarifications as to the
recommendations, please contact Ms. Connie Cannady at(972) 726-7216.
Very truly yours,
�� C�� �� ��
� �
C2 Consulting Services, Inc.
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Federel('ammunicationx Cortunws�on A�rov�i by IIMB 306P-0703
Wavhmgtoq D.C. 2U554
S(:l�:DI'LE A:CAPffAL COSTS ON SER�ICF:INSCALLATION ANU MAINTENMCE OF'EQUII'M�NT AND PI,AN't'
Mainteoance (Hher i. (n6er 2.
A &u�knent ar�A Plarn Vehiclee Twis Frcilitira (ti ciI below) (Specify beluw)
13 Gnxs Baak Valuc 32ft2,R7x,071 Axl 5210,xNfi,4?x lN) $N,242,69u�xi $O.On $O.Uo
C Acnmulated iauun S1ti4,166,374.0U 5103,467,37fi.00 $I,it54,2tiZ�M) SO.UU $O.lkl
U lleCerredl'aces $15,133,1u7.� $20,13QI51�Nl $571,366.1M1 $u.00 3u.00
E Net Book Val�[&IC+D1] SI03.578,59Q00 587,2$R,891-W $6.507>057.00 $0.(q �00
F Rate of Retum 0.I 125
G CalculationofGross-upRate
�il Fzderal Inwme Taz Ra[c 03S .
ti? State Inwme Tar}tate �.�ifi44
G3 Net To�al fnwme Taz Hete[Ilil*fi2}(Gl x G2)] 03919
GA Ad�uavnem�o ReOect Inieresl IkAuciihilif
G4u Actuallniere.v�Amowit $1,159,SSU,3771N)
Gib ToultieiAsyets $?3,658p1'_,378D0
u4c Hase Itenun on Inveshnent Amount[G46 x FJ $2,661,525,342.525
ua:l hvc.r.:s�Ikduccibilu�Fectur�G4�a/uA.;� 0.4357
(i5 EQ tive Tac Rzte[43 x(1�4d)��C-Corps skip to G7] Q:211
C�fi AJ��irvnnny(IvunL atiom
G6a Basa Retum on lm�estment Amount[G4c] $2,661,526,392.525
ii66 ll�xmtnt�ons �t�.W
Cfic �'..ontnbwions(ma not ezccec1656) $(�.(Nl
G6d Renuru Sub�ect to Income Tax�G6a-G66�GCx:� S'.'.,6b�,526}92.525
�76e Retum Perce e Su6�ect to Income Tu[CGd/(i6a] 1.
G7 Gaav-UpRute[C-(:orps7/(I�'i5)O�herUp{GSx(36e))] 1�839
H Gmred-Up lia�e of Retum�F x G7� U.1444
1 Renun on Inveatment Crossed-Up for 1'ues[E z H] $14,960,96O.4732 $1?,60�,065.SOF45 $939,R2Li 6437 $U.00 $0.0(/
J CurrentProvisionforDe eciation 543,834,587.0(� SI8,332,32900 $1,042J795.fK1 $0.(Nl ;p.lkl
K Annual Capital Costr[I+7] $58.795,547.4732 $30,y4i1,394.5�kS5 $1 981.978.6437 �O.UO $0.(i0
L GRAND TOTAL�sum of Lioe K eniria� 591,717,920.6257
ISox l.
SpaciCy:Othcr l.
Specify:O!}�er 2.
SCFIEUtiLE B:ANNUAL OPERATING EXYEIYSYS FOR SERV[CE 11VSTALLATIUN AND MAINTF.NANCE OF�QUIPM1iF.N'C
Salanen �?�l�er l. i�lher'_.
k I3eneftn Su�liey Utiliiics t Nier 7'a�cs iS�rcd�lk•luwl tS xclly Lxluwi
.1 Annwl Cip_�pnnwy Cor Svc.tnsrall ar�d Mumt.oCEywp. 55i0,694,X4U 0U $q6.442.672.W $iJ W $37.J69,14G.W $1?5,?q7,778.UU $94.31i6,471W
B GSU:\'D TOTAI.�aum of Line A mMn� 585:1,7;Oy10.00
Boi 2.
Spocify:U1her I.
S�ecify:Other 2.
FCC Fortn 1205
�'�Z lixcel 4 u lur W mduwa Jime 19�X+
Fedetal Cortununications Commus�on .�ppruved by:��MB 3Q6�10703
Washugtoq D.G 20554
SCIIEDULE C:CAPITAL COSTS OF LEASED CUSTOMER EQUIPhitiNT
A Ey ment Remole 1 Remule 2 Remote 3 Converter 1 Cmrverter'_ Conve�tsr 3 Other E ui.
B TuielMnunciw��/Service}luurs(AtwchEx>larm�ioni 209fi84.15 57G0?.G833 3914996-16C7
C Towl a o(Uni�s in Service 6765177_ 1 I 6263. 788561 N.
U (iross33ookValw: $NS.SU,hUi�Xi $6,114,01).W $709;148;1560U
E AccurtmlatedDeprxation $41,829,206.OU S3,SIG,775.W 5367,644,230.W
F Deterted'fases $551.14100 1�56,W1 l70) $2,4U4,682W
G Net Book Value(UIE+FII 542,737,258 rJp SU.OG SU.IX) 12,653,245.qi 5339.3J9,339.(K� 40.1X1 SO.IY�
H Grosced-U Itate oC Retum�Hrom Scheei.A,Line}i] 0.1449
1 Retwr on Invastment Orossed-U for Ta<es[G x Hl $6,7 72,99�988 $0.(Nl $0.00 13R3,.36.4936 549,0?3,c)66.40^. $O.i� &).�)
1 CurtentYmviswnCwlJe xiauun $15,749,829.W $7'J2,634W 5142,693,ISS.W
F: Annual Capiul Costs�I+7� $21.92=826.1A8 $0.(M"i $0.(� SI.175 ft75.4�ifi $191 716,2t1.4M_ S�i.011 $0.(10
L GitANU TOTN,�sum uf Liue K eolrieY� S214Jq4,YS3.i1GS6
Bo:].
SCfiEDULE D:AYF.RAGE HOURS PER INSTALLA770N
A. .4rrr e Hourx r Unwued Home InsWlation(attach aei ex lanntion� 1.�1959
B. Ave e Hours r Pre-Wvecl Home h�stallauon(attach an ez lar�ationj OSIXII
t'. ,l��zr a Ilwus r Adiitional Cow�ection Lutallation at Time o(Initial Inatallation(attach an aa larwtion� U.4664
D. .4v e Houn Additional Connection Lutallation R uvin Se re Installation(attach an e lana[ion) (l.'434
�. Gtl�ar Luinllui�o��(L f�ern T �e)�.
Item l. (S C :)
Av e Houn Installauon lattach an ex larietion) oJ I oI
Item 2.(S i �.)
Average Houn Installat�on(anach an ex lananon) �J.9569
ltem 3.(S � �)
Average Howa r 4�vtallation(atrnch ar�explariation) (13143
FCC Fa�m 1205
Pagz 3 Excel 4A Cor WmJuws Juua 199G
Fedcral Cqmnwtiwt�ons Crnnmission Approvcd by OTM1g 3(Kx1-0703
Waxhington,D.C. 20554
WOIifLSNEET FOR('ALCULATING P�RMI17'ED EQIiIPhIEIYT AND INSTALLATION('l1ARGtiS
STEP A Aourly Servim C4o'ge
I. Total Ca ital Cos�s oCIn3Wlation and Maintenar�ce[Schedule A.Hox 11 591,?17.9?0.6?53
7btal.Umual Operating Es nszs for Installation and Mafnt�iancz�Schcdula B.Box?) $1{54.740.11 au0
3. Towl G iwl Crn�x and( C Ex Cor Inutallaiion und Mainlerinnm[I,ine I+Luie 2]. $94(>,45tl,R3p.6'.53
4 CLs-toma fiyuipmenl and Inslellation Percentage laMCh an explanation). U.3'1
5 Annual Cusmmer F{ui ment Maintenance and Installation Cosrs,Excludin Costs of Leased P,uipment�l.me 3 z Line 4� Y303,796,372.W
(. ToW[�Iwr Hours(ur Meurte�nce and Lurallatiun oCCustumer w ment w�d Servl�(auech e lau�iu�q I I OFi71(5.
� Howl ServiceChare(}{�ilLrtieS/LuicS� $'74ip7
I1�T[IOD OF BII.LING FOR INSTAI.I.A110NS(plaa ao":"in t6e appropria/e bo:)
Installationa billed by the ho�a based on the HSC cslculated m Line 7.
I Ii�stellauons bdled es a standard charge.
STEP B.In�tallytioo Charge
!1. Uniform HS('Cor all in.vtallations(From Step A,line 7� �da
f�R
9. Avzaqt('ha�e for Instnllauon T
a�'nw�veA Home invtallation
al.HSC[Lina 7� $?7.4p1q
a2. Average Howa per Iinwved Home Installation(Schedule D,Line Aj Lq<J5g
a3(�wrge rx�1�nwveA Hume hnrzllaUUn�al x a2f $4U.9X8'
b.Ae-wved Home Inxtalla[ion
b� ttsc�cNe�] a��.a�mv
b?.Average Huurs per Pre-wuui Home Invrallation(Schedule D,Line 6) i�B�A)I
63.�l�e per Pre-wueJ Fiome Installation�bl x 62] S?1.9?33
c Addnionul Com�ection lnsullaiion at Time otlnitial Installation
cl H5C(Lu�e7J Y27AOU7
c'.:iver,�e Hours per AdAitional Connection Installation at Time of init. L�stall.[Schedule D,Line C] 0.46H7
c3.�1�arge pzr Additional Com�ectioo lnswllation at Tune of Irtitial Installanon[cl s c2� $12.??9?
d.Aciditionai Coiuiection Inslallation Rer d� Se unte L�vtallation
dl HSC�I.uie�] ;�7 4u07
d?.Avg.Howa per Additionul Co�mection Installation Req.Sep.Install.�Schedule R Gne Dj u.7434
d3.Charge�r Addrtional Connection inutallauun Requinng Sepazate Iavtalla�ion�dl x d2] $^23fi97
e.Cnher Installanons(As s -ified in Schedule D,Line E):
zi F�sr�t.���e�] szi nan
e?.Avernge Hu�us per Instul Intion oCItem I [Schedule D,Luie E,Item I] OJ I 69
e3.�l�arge per Imrallntion of Item I�el x e2� $�y.(r136
e4.HSC�Line 71 $.7AW7
e5.Average Hours per Installation of ltem 2[Schedule U,L�ue E,[tem 2j U.9S6J
rC,.Ctwrgz per Instellation oC Icem 2[eJ z e5] y^�?�yg
� FISC[Line 71 S27A007
e8.Avecage Houes pzr h�vtnilation ofllem 3[Schedule D,L�e E,Item 3J 9_3143
eY Cfwge per[nswllation of Itzm 3[e7 s e8) $8.61?
FCC FWm 1205
P�4 �xcei 4A Ca WwJuwa Jw�e 151y6
F�derel Comm�m�cations Commisswn Approvad by:OMB 3060-0703
Waat�u�gtton,D.C. 2U554
S7'EP C.C6atges for leaaed Remotea a b
(Col<ulau u ntel for each si ificaaG ditfcrcn[ ) Remoia l Remotc 2 Remote 3
10. Tota)Maintenana/Service Havs[Cortes coliunn Gom Schadule C,Line Dj 2CK�O8q.l 5 0. 0.
11. HS('�Lme'1 �7.4(1(�7 S27_AW7 $�7.4001
12. Toul blumterwicc/Servicc Cmt�Lu�e 1 U z Line 11] $5,729,05�.537� SU.00 SU.lkl
13. Annual C� ital Costs�Corte� nd- colwnn Gom Schedule C.Line K] $21,J?2,}12G.JNkt $U.W SU UO
14. 'CotalCostofRemote�Lme12+Lme13� 327,551,N84.5255 SOW YU.W
I 5. Num6er oC U�u�.c m Jem«[Cufres miv wlumn Bum Schedde C,Line C] G7G5172 Q 0.
i F_ u�n can p.u��i vi.�e i s� sa os�.� �u�� ���x�
17. HnteperMo�M�Lme16!(1211 yV94Uti SUUU SU.�4�
STEP D.Chnrges for leaaed Cooverler Bosea u b
(Caleulale x nte for each si ifinnd diRereot ) Conrener I Comertar? Com�rner 3
1 kS. Total Maintenancei5emce Hours(Colres ding column Gum Schedule C,Line d] 57E�:n_�>833 3914�.16C7 0.
19. HSC[Lme7] S?7A007 $27.4G17 S?7.dlYY7
2U. 'Potal lfaintennn«�SernaCost[Line IS x 19� 8L57g.355.3516 $10'�'3.?37.SC�(1i3 SU.OU
^_l /vmual�:npital��rscv[�ae»pmdu�column Gom Schulula C.Lfne K� 51.175,fr75A73G $191.�16,251.4V? $��lql
22. Total Cost of Convener�Line 2frr Line 2I] S2,?$A,230.82$? 3^_�,989,989.?6?!i 50.00
'_3. Number of Ihiits in Service(Cortes n wlurtm Gom Schedule C,Lme C] 116?63 713N561 tl. 0.
'_1 UnitCost[Line'_2il.me'_3� $�3.hH97 $3'.915y $O.tN�
25 7�kperMonrh[Luia?-0Ip21J $19741 S3.lSg1 $p.00
S'PEP F..Chargra for Other[saYed F, ui ro<ot
26. Total Maintenance/Serv�ce Hows[Corres d� colwnn Gom Schedule C,Line B] 0.
?7 HY' Lme' $^7.9�q7
28. Toial!vfnintenance/Service Cost[Line?6 x Line 27f $(1.0(�
29. .'vu�ussl Ca rcul Costs�Corres nd- column Gom Schedule C,Line A� �.W
30 Toial Crn�o(E u ent�Line 28+Line29� $O,Of.i
31. NmnLcr uf Uni�v m Service�Curres ond� culumn Gom Schedule C,l.ine CJ U.
32. Unit Cost[Lme 30/Line 3I] $O.pU
33. Rzte per Monih�Line 32/(12)] $0.00
A4;THOD OF BII.IJNG FOR CFIANGING SF.RVICE 77ERS OR EQ[TIPMENT�place an":"ie the appropriate bo:�
es a Nontinal C9iarge(En[er the nomuial charge in Line 34)
as a Unifortn Howly Service Charge
I as an Ave`age Charqe(Enter ihe Ave�age Hours for(.'I�ar�gir�g Service Tiere in Line 36b.) .
STEP F.Chyrges for Chaogi Service Tien or F ui et
34. Nominal e tor Service Tiers
If ou use an eycala- scale of c s, lace an"x"in the box at the � t.
OR
35. UniC mi Huurl Serv�ce Char e �dn
OR
3! Averege C}mr e(or(Tw - Service Tierr
36a.HSC�Line 7) 527.4007
36L.Average Huurs to(.Tiar�ge Serv�ce'Piers 1�.y56y
3(.Average Charge Cor('liar�ing Service Tiers�I,ine 35a z Line 3!b] s2c.zi�
ecc Fo�i zos
Pagc 5 Ezcel 4.0 for Winduwv Juna 1996
Federal C.o�mnunications Co�mni aioo Apprrned by OMB 3060-0703
Wavtw�qwq D.C. 2G554
K'ORliSHEET FOR CALCIl[.ATQVG TO'CAL EQUIPMENT AND INSTALLATION COSTS
1. Total Ca rtal Costs of Insrallation and Maunanance(Schedule/ti Hox 1] $91,7I7,930.6253
2. 7'otel Annual C��atu�g F.x nres(lnsullation and Maintenance�Schedule A,Box 21 $FS54.74u,910.(K)
3 Total.Mnunl Ca ital C�sa oClru�allation and Maintenance[I.ine 1+Line 2J $946,45g,A1p.6�53
4. Customzr Equi ent and Irntallation Percen e(a[WCh ezplariation).
5. Armual Custom� ern Mnintenar�ce arid Iminlletion Costs,ExcludiryS Cosis o(I.an.red �ment 5(7.(X1
[Luie 3 x I.Ine 4���
6. Taal Ca�tal Cos�o(l.eased Customer ent(Schedule C,E3ox 3� $214,814,953.8636
"/. Annual Clismmer� �menl and Installazion Costs[Line 5+Line 6� S?��.��A,J53.N1,36
S. Fercentege Allocaticm m FrancF�ise Mea(see inwtnictions)
9. Alloca�ed Annual t ar�d Ins�allation Cost[Line 7 z Lme 8J $U.00
10. Monthl -meru and Ins�allation Cw[�Lina 5/(I 2)� SO.Oi�
I 1. Number oCHa.sic Subamhers in F'ranchise
12. MonUJ F u� rnt and Inatallatim�Coat r Sut�scnber�Line 10/Lme i l� JtDN/0!
13. Indation Ad ucl�nent Factor(See InYVUCtions]
14 Adjus�ed Mcmtlil ard InsWlation Cost Subscri6er[Line I:x Lvie 13] NDNl01
FCC Focm 1205
P�6 Gxce14.0 Cur Wui�ws Julw 1996
Federal Coaummicazioro Cortunisnion APprrned by OMB 30l6-0703
W'avhhgton,D.C. 20554
SUbU.fARY S('HEl)ITLE
Curreat'ui eat rad LsfaWtloo Itates Pemtitted Actual
1. zs(or Cable Sarvice Ins�allations
a Hourly Rate[Ste A,Lmc 7J ���
b.A ]nstallation(. es�
I.InvW lation of Unwved Hcm�en�Ste H,Line 9�i] S4U.99
�.Lutallation of Prewired Homes[St B,Lme 963] g2�,9'+
3 IruWlation of Additional ConMCtans at Time of Inrt�al Installation[Step�,Line<JC3j $12.7f4
4.fnsWlatirni o(Ad�iitional Crnu�eaions R uw ue Irw�all(5 $Line 9d31 520.37
5.uher Lu�IWtirnis( )[ >B.Luua'h3,9e6,9e'J]
SI9.64
b. $?G22
c YRbl
2. Moni1J (or I,eare oFRemote Cuntrols[S C,Linc V,columns a<]
Reaw�e Co�wol T 1�. yU.3A
Remote Convol'I' 2: yp pp
Remote Control T 3: gp.pp
3. Mor1ttJ � e for I.eau of Converter Boxes�Sm U,Lme 25,colwnns a-c�
Converter Box T 1: SI.97
Com�erter Box T g;��
��onverter}3ox 7ype 3: ��w
4. Munthl Cor Icase of Glher nt[S E,Lme 33]
Cnher uipment( � ) SO_00
5. (or Tim(if j[St F,Line 34.35 or 36cJ 52622
LABOR COST MiD POLICY CHANGFS
Udicete your enswu to the Collowing three questions by placing an"x"in the epproprie[e box
1.Have yw ixUded the labor coats associated with subscriber cable dro�n m yaa chargea Cor wtial ins�allation?
8 YES
NG
"}fave yo�capealved ihe labor cosu easociated wi�h aubecriber cable drops?
tBS
�NG
3.If you have filed thia Cam beCae,have you changed arry policy,e.g.,coet accwmtirig or cost allocetion thet cauees an inerexee in the costs
uicluded m the computauon of eqwpment anA vi.vW lauonv ct�gee?
YES(Yuu munt auacF�a Cull expinneuw�)
NO
CERTffTCAT10N STATEMF.NT
WIl.LFUL FALSE STA7F.Iv1QJ'1'S MADE ON"I'HIS FORM ARE YUNISI�I.4BLE BY FINE AND/OR IMYRISONMENT
(U.S.CODE"PI'I'I.6 18,SECTION 1001),AND/OR FORFETfURE(U.3 CODE,7'fCI.E 47,SECCION 503).
I cenify that the s�atemeuts made in this fomi are true and oorrxt to ihe best of my{�wwladge arid betie�and are��ade in good[eith.
Name o(the Cable Gperetor Sigiu[ure
llate Citle
FCC Fonn 1205
P�� Excel 4A for Wmdows ���q�