95-21548 Reso
RESOLUTION NO. 95-21548
A RESOLUTION OF THE MAYOR AND CITY COMMISSION
OF THE CITY OF MIAMI BEACH, FLORIDA PROVIDING
FOR ADOPTION OF THE ATTACHED RATE ORDER
REGARDING RATES ASSOCIATED WITH THE BASIC TIER
OF CABLE TELEVISION SERVICE IN THE CITY OF MIAMI
BEACH CHARGED BY RIFKIN NARRANGASETT SOUTH
FLORIDA CATV D/B/A GOLD COAST CABLEVISION.
WHEREAS, the City of Miami Beach (the "City") has authorized Rifkin Narrangasett
South Florida CATV d/b/a Gold Coast Cablevision ("Gold Coast") to operate a cable
television system in the City pursuant to a franchise granted under Ordinance No. 86-2500
and amendments thereto; and
WHEREAS, on September 2, 1993 the City applied for Federal Communications
Commission ("FCC") certification to regulate rates in FCC Community Unit FL 0860; and
WHEREAS, the FCC granted this certification automatically on October 2, 1993;
and
WHEREAS, on September 22, 1993, the City adopted Ordinance No, 93-2876,
adopting cable television rate regulation standards and criteria as promulgated by the
FCC; and
WHEREAS, the City gave notice to Gold Coast on March 31, 1994, of its intent to
regulate rates for basic cable service and equipment; and
WHEREAS, Gold Coast has submitted FCC Form 393, 1200, 1205 and a Cost of
Service showing to justify its rates for its basic service and equipment and installation
charges to customers; and
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH FLORIDA 33139
CITY OF MIAMI BEACH
OFFICE OF THE CITY MANAGER
TELEPHONE: (305) 673-7010
FlU(: (305) 673-7782
COMMISSION MEMORANDUM NO. ~ t~ I J1S
TO:
Mayor Seymour Gelber and
Members of the City Commission
Roger M. Carlton/J " A/:\ ,
CityManager 1IM'~
Laurence Feingoldi...., ~
City Attorney I
DATE: April 5, 1995
FROM:
SUBJECT:
ADOPTION OF A RATE ORDER WITH RESPECT TO RATES ASSOCIATED
WITH THE BASIC TIER OF CABLE TELEVISION SERVICE IN THE CITY OF
MIAMI BEACH CHARGED BY RIFKIN NARRANGASETT SOUTH FLORIDA
CATV D/B/A GOLD COAST CABLEVlSION,
RECOMMENDATION
It is recommended that the City Commission adopt the attached Resolution providing for
adoption of the Rate Order with respect to the rates charged by Rifkin Narrangasett South Florida
CATV d/b/a Gold Coast Cablevision ("Gold Coast") including (1) approving maximum basic cable
television rates for programming services and equipment for rates in effect through April 5, 1996 and
(2) ordering a subscriber credit for past rates charged.
BACKGROUND
The Cable Act of 1992 provided duly certified local franchising authorities such as the City
of Miami Beach with the power to regulate rates charged for the basic tier of cable television services
and equipment. The City, certified by the Federal Communications Commission ("FCC") to regulate
DATE
R- 3- \1-
~ -5- 95
AGENDA
ITEM
cable rates for basic tier services, adopted Ordinance No. 93-2876, and on March 31, 1994 gave
local notice to Gold Coast initiating the rate regulation process,
The regulatory process requires two phases. First, the cable operator was required to submit
an FCC 393 or Cost of Service showing rate request justifying rates in effect as of September 1,
1993. The goal of this first phase of rate regulation was to effect a reduction in cable rates nationally
of an average often percent (toolo) in those areas where effective competition did not exist. To the
extent rates ex:ceed the benchmark formula on the FCC 393, the franchising authority has the power
to order distribution of refunds for overcharges to subscribers for a period of twelve months back
from the date the cable operator implemented the rate change or back to September 1, 1993,
whichever period is shorter.
Recognizing that the City of Miami Beach would not issue a rate order by September 1, 1994,
Leibowitz & Associates, PA negotiated an agreement with Gold Coast, whereby the cable operator
agreed to pay to subscribers applicable refunds back to September 1, 1993, notwithstanding that such
period sha11 ex:ceed twelve months. A joint letter requesting approval of this agreement was filed by
Leibowitz & Associates with the FCC.
The second phase of the process required that regulated cable operators submit FCC 1200
series forms to justify rates in effect as of May 15, 1994. These rate justifications were submitted by
Gold Coast on August 15, 1994. It was ex:pected by the FCC that as a result of this second phase
of regulation, cable operators not subject to effective competition will be forced to roll back rates an
additional seven percent (7%) on a national average basis. Gold Coast has submitted a Form 1220
Cost of Service showing in this regard.
2
It is important to understand that the cumulative expectation of rate regulation by the FCC
of 17 percent bas been exceeded by Gold Coast in the rates to be approved in this Rate Order which
approves a 23.5 percent reduction over rates that were in place prior to September 1,1993. Gold
Coast has agreed to hold these rates until AprilS, 1996.
The Commission should be aware that Metropolitan Dade County has also undertaken
regulation of Gold Coast's rates for basic service and equipment in the cities of Bay Harbor, Bal
Harbour, Surfside, Golden Beach, North Bay Village, and unincorporated Dade County. As of this
date, the County has not issued a rate order.
DISCUSSION
Subscribers to Gold Coast in the City of Miami Beach have benefitted significantly from the
City's implementation of cable television rate regulation. In response to regulation by both the FCC
and the City of Miami Beach, Gold Coast vohmtarily lowered all monthly rates and charges for basic
programming and equipment. As a resuh of this restructuring, subscnbers have fP.'lli7ed a significant
reduction in their monthly cable bill as compared to rates in effect September 1, 1993 (See Exhibit
A attached hereto), The aforestated reduction represents an annual savings to subscribers of over
51,000,000 annually as compared to rates in effect prior to September 1, 1993. Moreover, the cable
operator has agreed to freeze their basic programming charges and the new equipment/service
charges adopted herein through April 5, 1996, In addition, subscribers in the City of Miami Beach
will receive a credit in the amount of 535,000 net of franchise fees, on a City wide basis as
compensation for past payments of equipment charges in excess ofthe maximum permitted rates as
contained in the rate order. Finally, the prospective reduced equipment and service charges represent
approximately a 535,000 annual savings.
3
BASIC PROGRAMMING SERVICE
Prior to September 1, 1993, Gold Coast charged $11.00 per month for basic service.
Effective September 1, 1993 this charge was reduced by $2.59 to $8.41, representing a savings of
$31.08 per year to each subscriber. Gold Coast has agreed to maintain this rate through April 5,
1996.
EOUIPMENT
LEASED REMOTES
Prior to September 1,1993, Gold Coast charged $4.00 per month for leased remotes. This
rate has been reduced to $0.14 thus providing subscribers with a savings of $3.86 per month
representing a savings of $46.32 per year.
'.EASED CONVERTER BOXES
Prior to September 1,1993, Gold Coast charged $4.00 and $2.00 per month for addressable
and standard converters, respectively. These rates have been reduced to $2.12 and $.99. Thus,
subscribers with addressable converters realized a savings of $1.88 per month or $22.56 per year,
Those with standard converters reoJl1i7e(l a savings of$1.01 per month or $12.12 per year. Charges
for new1y introduced converter boxes will be frozen for one year at the current maximum permitted
rate.
ADDmONAL OUTLETS
Prior to September 1, 1993 Gold Coast charged subscribers $4.25 per month or $51.00 per
year for each additional outlet. On September 1, 1993 Gold Coast reduced this rate to $,30.
Effective with adoption of this rate order, Gold Coast shall not charge customers for additional
outlets as a separate item.
4
SERVICEllNSTAT LATION CHARGES
The rate order approves a maximum permitted rate of 528,36 for an hourly service charge,
This represents a reasonable rate based on Gold Coast's rate filings. This rate is reasonable as
compared to rates charged by other cable operators in the County. Exhibit B attached hereto
provides the maximum permitted rates for all service and installation charges based on the aforestated
hourly service charge.
COMMERCIAL RATES
Gold Coast has not provided any information with respect to commercial rates, Leibowitz
& Associates has filed a pleading with the FCC petitioning the FCC for an order that would prohibit
cable operators from charging a higher rate to commercial subscn'bers than that charged to residential
subscn"bers. The petition is currently pending and the City should reserve the right to regulate such
rates pending release of an FCC order,
PUBLIC EDUCATION GRANT
On December 20, 1994, the City of Miami Beach advised Gold Coast of the proposed rate
order with respect to their FCC 393 rate submission, As a result, Gold Coast resubmitted revised
data to the City that resulted in a substantial amount of additional analytical and research expense
to be incurred by the City. During rate negotiations with Gold Coast, the City requested
reimbursement for the additional expenses incurred in analyzing the revised data. Gold Coast
declined the City's request for reimbursement of those additional expenses.
During the final negotiations, the City proposed that Gold Coast consider a Public Education
Grant in the amount often Thousand Dollars (510,000) for the purpose of upgrading the City's cable
broadcasting activities. Gold Coast agreed to the grant providing that the recommended rate order
.'
5
..J
,
is approved by the City Commission,
CONCLUSION
The City of Miami Beach's decision to implement cable television rate regulation in
conjunction with the FCC's regulations has effectively protected the citizens of Miami Beach from
potentially unjustified rates for basic tier service and equipment, and has resulted in credits to
subscribers for unreasonably high charges. Prospectively, subscribers will realize significant savings
and the cable operator must obtain approval from the City before increasing basic rates and service
charges.
6
EXHIBIT A
CITY OF MIAMI BEACH, FLORIDA
GOLD COAST CABLEVISION
MONTHLY CHARGES
Type of Service Rate Prior to Maximum Permitted Difference
September 1,1993 Rate
Basic Service SI1.00 S8.41 (2.59)
Additional Outlet $4.25 S.OO (4,25)
Leased Remotes $4.00 SO,14 (3.86)
Standard Converter S2.OO SO.99 (1.01)
Addressable $4,00 S2.12 (1.88)
Converter (no
volume control)
N/A S3.05 --
Addressable
Converters (without
impulse capability)
Addressable N/A S3,50 --
Converters (with
impulse capability)
7
EXHIBIT B
CITY OF MIAMI BEACH, FLORIDA
GOLD COAST CABLEVISION
INSTAl.T ATION/SERVICE CHARGES
Maximum Permitted Rate
Hourly Service Charge $28.36
Instal1 Outlet $14.18
Add Outlet $21.27
..
Prewired Apartment $21.27
Reconnect $14,18
Prewired Home Aerial $28,36
Prewired Home UG $63.81
Relocate Outlet $21.27
Service Charge (upgrade/downgrade) $14.18
Unwired Apartment $28,36
Unwired Home Aerial $42,54
Unwired Home UG $77.99
Courtesy Call $0.00
Installation $28.36
NB switch, parental control installation $14.18
8
IN THE MATTER OF RATE REGULATION )
ESTABLISlllNG INITIAL RATES TO BE )
SET ON BASIC SERVICE TIER AND )
ACCOMPANYING EQUIPMENT BY )
RIFKIN NARRANGANSETT SOUTH FLORIDA )
CATV D/B/A GOLD COAST IN THE CITY OF )
MIAMI BEACH, FLORIDA )
ORDER SETTING RATES
The City of Miami Beach, Florida hereby makes the following findings offact and conclusions of
>
law:
JURISDICTION AND PROCEDURAL BACKGROUND
1. The City of Miami Beach (the "City") has authorized Ritkin Narrangansett South Florida
CATV d/b/a Gold Coast Cablevision ("Gold Coast") to operate a cable television system in the City
pursuant to a franchise granted under Ordinance No. 86-2500 and amendments thereto. On
September 2, 1993, the City applied for Federal Communications Commission ("FCC") certification
to regulate rates in FCC Community Unit FL 0860, which includes Miami Beach. The FCC granted
this certification automatically on October 2, 1993.
2, On September 22, 1993, the City adopted Ordinance No. 93-2876 adopting cable television
rate regulation standards and criteria as promulgated by the FCC.
3. The City gave notice to Gold Coast on March 31, 1994, of its intent to regulate rates for basic
cable service and equipment, Gold Coast filed with the City on April 26, 1994 FCC Form 393 for
rates in effect as of September 1, 1993. On May 17, 1994, the City exercised its right to order a 90
day extension to August 23, 1994 to issue its rate order.
4. On August 11,1994 Gold Coast filed FCC Forms 1200, 1205 and a Cost of Service showing
for rates in effect as of May 15, 1994 with the City,
5. Prior to August 23, 1994, pursuant to 47 C.F.R. 76.933(c), the City issued an Accounting
Order ordering Gold Coast to keep an accurate account of all amounts received by reason of the rates
at issue and on whose behalf such amounts were paid,
6. Based on analysis of the revised data, the City and Gold Coast entered into discussions to
determine reasonable rates for the basic tier of cable service and associated equipment consistent with
the rules, regulations and rate orders of the FCC.
7. On December 20, 1994 the City released to Gold Coast a proposed rate order. In response,
Gold Coast provided significant new data thereby requiring recalculation of the proposed rates,
8. On September 13, 1994, the City and Gold Coast filed a joint letter with the FCC wherein
it was agreed that the City may issue and Gold Coast would comply with a rate order directing that
subscriber refunds be retroactive to September 1, 1993, notwithstanding that such period would
exceed twelve (12) months,
2
FINDINGS OF FACT
9. Gold Coast has submitted FCC Form 393, 1200, 1205 and a Cost of Service showing to
justify its rates for its basic service and equipment and installation charges to customers. Under
federal law, Gold Coast has the burden of proving that its existing rates for basic service and
associated equipment are reasonable and comply with 47 U.S.C. 543, and 47 C.F. R. Sections 76.922
and 76.923.
10. Having reviewed the cable operator's filings, the City and Gold Coast have reached an
agreement with respect to the maximum permitted rates for basic service and equipment as listed
below:
3
A) Monthly Charges Maximum Permitted Approved Rate
Basic Service $8.41
Additional Outlet $0,00
Leased Remotes $0.14
Standard Converters $0.99
Addressable Converters (no volume control) $2.12
Addressable Converters (without impulse $3.05
capability)
Addressable Converters (with impulse $3.50
capability)
B) Installation/Service Charges
Hourly Service Charge $28.36
Install Outlet $14.18
Add Outlet $21.27
Prewired Apartment $21.27
Reconnect $14.18
Prewired Home Aerial $28.36
Prewired Home Ug $63.81
Relocate Outlet $21.27
Service Charge (upgrade/downgrade) $14.18
Unwired Apartment $28.36
Unwired Home Aerial $42,54
Unwired Home Ug $77.99
Courtesy Call $0.00
Installation $28.36
AfB Switch, Parental Control, Installation $14.18
The above rates will be in effect until at least April 5, 1996, without adjustments or increases.
4
11. Notwithstanding anything contained herein, this Order is not to be construed as a finding that
the City has accepted as correct any specific entry, explanation or argument provided by Gold Coast
within any of its rate filings or proceedings not specifically addressed herein.
CONCLUSION
12, Accordingly, the City hereby orders Gold Coast to implement the rates indicated above.
Moreover, Gold Coast is prohibited from increasing any such rates prior to April 5, 1996. In
addition, in order to compensate subscribers for rates previously charged in excess of the maximum
permitted rates, Gold Coast is hereby ordered to issue credits in the amount of $35,000 net of
franchise fees, and credits shall be issued to all subscribers within ninety (90) days of the date of this
Order. In addition, Gold Coast is ordered to charge bulk rates to customers only so long as such
charges are cost justified and uniformly offered to all customers within reasonable classifications of
similarly situated subscribers and to submit the definitions and applicable rates for all such
classifications to the City. Such bulk rates may not exceed the maximum initial permitted rates listed
above,
13. If any section, sentence, clause, phrase or portion of this Order Setting Rates is for any reason
held invalid or unconstitutional by any court of competent jurisdiction, such portion shall be deemed
a separate, distinct and independent provision and such holding shall not affect the validity of the
remaining portions hereto, The City reserves its rights to regulate commercial subscriber rates,
subject to FCC rules.
5
. 14, This Order Setting Rates is effective as of April 5, 1995.
DONE and ORDERED this 5th day of April, 1995 at the City of Miami Beach, Florida,
ATTEST:
1G~J-[. ~
City Clerk
Mayor
Ll'.';',~ ^r",:,('",c-l
r ,., _ I. . .
pi r ~
~I!:I..~
-
f"t/~~~C"
. By
Date
6