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HomeMy WebLinkAboutR-1990-D5668 Cable Communications Policy Act• • RESOLUTION NO. D 5668 A RESOLUTION urging the Congress of the United States to revise the Cable Communications Policy Act of 1984, and expressing general concern about the need for greater local government regulatory authority WHEREAS, the Cable Communications Act of 1984 restricted states' and local governments' regulatory power over the cable television industry, most notably denying rate regulation, and WHEREAS, since the passage of the Cable Communications Act of 1984, concentrations of ownership, amounting to monopolies, have increased among cable operators, even though the Act was intended to "promote competition in cable communications;" and WHEREAS, more than half of the nation's households, and more than 52%© of the residents of the City of Yakima subscribe to cable, and cable television is increasingly becoming the main means of access to information and entertainment, and WHEREAS, cable subscribers in the City of Yakima have been subject to rate increases in excess of 194% in less than a decade and of 55% since the Cable Act was signed into law in December of 1984, and WHEREAS, cable television is rapidly being priced beyond the reach of lower-income people, including families with children and the elderly who are particularly in need of information and other services that are available solely through television, and WHEREAS, existing law does not provide the City of Yakima and other franchising authorities adequate control over cable television operators, especially over rates, even though cites place the public rights of way at the disposal of the franchises, and WHEREAS, the National League of Cities has adopted policies in favor of increasing local governments' cable regulatory authority and in favor of more competition in the provision of cable television service to consumers, and TLEGALFE 1 1/5/90 WHEREAS, legislation that is now pending in the Congress of the United States seeks comprehensive changes in the Cable Communications Policy Act of 1984, THEREFORE, BE IT RESOLVED THAT 1 The City of Yakima declares its support for the restoration of rate regulation and expansion of other regulatory powers over cable television systems 2 The Congress of the United States should rewrite the Cable Communications Policy Act of 1984, with particular focus on re -regulation of subscriber rates, allowance of telephone company provision of cable service under circumstances that respect local government authority, system ownership transfers, the impact of vertical integration in the cable industry, and other aspects of the Act that directly impact local regulation and consumers 3 The City of Yakima urges Congressional action for appropriate federal legislation to restore local authority over cable systems, to eliminate the barriers to competition, and to rectify other aspects of the 1984 Act that work to disfavor cable consumers ADOPTED BY THE CITY COUNCIL this 1990 A 1`L EST CITY C TLEGALFE 2 t i5i90 ERK day of January, MAYOR • MEMORANDUM T0. Richard Zais, City Manager and the Honorable Members of the City Council FROM Wendy Warren, Cable Communications Manager DATE. January 5, 1989 RE. Resolution Regarding Congressional Action on Cable Re -regulation Background The intent of the Cable Communications Policy Act of 1984 was to balance the needs of the cable industry with the needs of the public, providing an open market for cable operators and at the same time providing a broad range of tele -communications services for consumers. The Act promised competition in place of regulation. Unfortunately, since the Act went into effect more than four years ago, the balance has swung heavily in favor of the cable industry and at high cost to the consumer Many changes in that brief five year span -- ranging from lack of local control over rates to cable operator ownership of cable programming sources -- have produced what amounts to a deregulated, de facto monopoly in virtually every U.S city1, including Yakima. While some promises of our original franchise negotiations and provisions of the actual franchise have never been fulfilled,2 in general, local cable service has been reasonably responsive to the needs of our citizens Cable complaints to this Division have been minimal, averaging less than ten per month in 1989 Local cable managers in the last five years have worked in a spirit of cooperation with City staff to resolve several issues of franchise compliance in a way that meets the needs of both entities We believe this cooperation will continue for the foreseeable future Tucson Mayor Thomas Volgy speaking to the Senate Subcommittee on Anti-trust Monopolies and Business Rights April 12 1989 Volgy is chairman of the Conference of Mayors Task Force on Telecommunications and Telephone Companies It is inter- esting to note that Tucson has been through the same set of transfers cable ownership as Yakima, Cox McCaw, Cooke and now TCI, with the three transfers occurring in less than a decade 2 The two most notable examples are franchise -mandated provision of two-way capable cable connection to every school, government and public building in Yakima and provision of studios and production equipment for public/educational/governmen- tal access television However, a major focus of local concern is rate increases. The 1984 Cable Act removed rate regulaton from local jurisdictional powers The consumer has, consequently, seen a remarkable change in his monthly cable bill. In 1978 when cable television was first available in Yakima, basic sub- scriber service provided 12 channels at $7 00 per month. In 1990, basic subcribers receive 30 channels at 818 45 per month. While the per channel basic price has increased a modest 6% in those 12 years (from 58( to 61 54 per basic cable channel), overall basic rates have increased 263% in that same time span. Since the advent of the Cable Act, those increases have totalled 55%, from 811 90 to 18 45 The attached chart shows the progress of rate increases. (See Exhibit A The Cable Act was to have engendered competition. But even though our cable franchise is non-exclusive, meaning other companies may also be franchised to offer cable services within the City, in practical terms it has not been feasible for multiple companies to exist here In fact, there are few major municipalities which have more than one cable operator The only way for a consumer to take advantage of cable competition is to move to a community where another company operates. In addition to this de facto monopoly, there is the "merger -mania" which has overtaken the cable industry and is concentrating cable ownership in a few hands Since de -regulation, the overwhelming majority of U.S cable subscribers are serviced by only four or five companies, the biggest being TCI (our in -coming cable operator) which serves approximately 23% of the nation s cable customers Another area which has both national and local implications is vertical integration, a situation in which the cable system operator owns part or all of a company which provides cable programming. In other words, not only does one company deliver the programming but it controls the content of the programming. Because cities and consumers across the nation have raised concerns over these developments and the far-reaching issues they imply, Congress has begun work to modify the Cable Act of 1984 Summaries of Bills to Re -regulate the Cable Television Industry Congress is approaching cable re -regulation through two major focal points increasing effective competition and promoting consumer protection through local regulatory powers. The major bills are very similar in their proposals 2 • and have multiple sponsors, indicating that Congress intends to enact this session legislation with teeth to significantly modify the Cable Act of 1984 Senator Albert Gore (D -Tenn ) says, "1 believe we have now reached a critical mass of support for enacting meaningful cable legislation in this Congress "3 The major bills are The Cable Competition Act S 1068 (Gore) and HR 2437 (Boucher) This is a comprehensive bill. The key elements: - - Restoration of rate regulation to local jurisdictions -- Provision of lifeline services defined as a service tier including local network affiliates, the local public television station, and any local independent stations. -- Allow telephone companies to provide video service; FCC to adopt rules against cross -subsidy -- All program services must be given nondiscriminatory access to the local cable system unless precluded from doing so by channel capacity or the nature of program content. - - Program services owned by or affiliated with cable operators must be available to all other program distributors on a non- discriminatory basis -- Federal Trade Commission will study and report to Congress on vertical integration of operators and programmers and its consumer and competitive impacts, trafficking and speculation in cable sys- tems and its consumer effects; and the the availability of program- ming by cable or other means in rural areas - - All ownership transfers are subject to review of the franchising authority and may not be approved unless cable subscribers shall benefit, channels are increased, signal quality improved, and more services offered through "modern technology" (e.g. fiber optics); and the new owner agrees to modify franchise to accept those obligations. - - Concentration of ownership or cross -ownership may be grounds for denial of renewal or transfer 3 "Senators Tell Cable Bigs to Expect Re -Regulation," Multi-ChannelNews, November 20, 1989; pp 1, 38 The Cable Te evision Subscriber Protection Act S 833 (Metzenbaum and Lieberman) Redefines "effective competition" to allow greater rate regulation. Effective competition is defined as occurring in a community with more than one multi -channel video programming distributor (including alternate technologies such as "wireless cable") Exempts systems with less than 30% penetration. [Yakima has 52% penetration.] The Competition in Cable Television Act S 834 (Metzenbaum, Lieberman, Pressler) Limits the percentage of subscribers which can be served by a single entity and related to entities to 25% of the nation's cable subscribers; and requires programming owned by vertically integrated companies be made available to alternate technologies The Cable Consumer Protection Act S 905(Lieberman and Dodd); H.R. 2222 (Shays, Downey, and five other co-sponsors) Repeals rate deregulation, allows denial of transfer or renewal because of concentration of media ownership, establishes modified must -carry and channel -placement rules for local broadcast stations. Cable Television Conn) mer Protection Act of 1989 S 1880 (Danforth, Lieberman, Metzenbaum and 11 other co-sponsors) Limits the size of multiple system operators to 15% of the nation s cable subscribers; local rate regulation in communities with at least 30% cable penetration, requires cable programmers affiliated with the cable operator to provide programs to other systems on a non-discriminatory basis; establishes the number of broadcast signals a cable system must carry according to channel capacity The Draft Resolution Regarding Congressional Action The National League of Cities and its affiliate the National Association of 4 • • Telecommunications Officers and Administrators has submitted a draft resolution which calls upon Congress to re-examine the Cable Act of 1984's effects on the cable television industry and the consumer This Division has modified the resolution to reflect the the particular circumstances of the City of Yakima. (See Exhibit B) The resolution declares support for restoration of local regulatory powers over cable operators as well as promotion of effective competition within the cable industry The resolution does not bind the City to a particular legislation, but encourages thoughtful Congressional examination and decisive legislation. In light of the fact that each municipality must deal individually with mas- sive cable television corporations which have vast resources available to them, local regulatory powers become the frontline defense of the cable and tele -communications consumer Therefore, the staff recommends adoption of this resolution, joining with hundreds of other municipalities seeking clout to protect the interests of our citizens Exhibit A Cable Rates In the City of Yakima • • $ • 110. .11 Basic Subcriber Rates Rates in City of Yakima 1978 1982 ___19113 1984 1906 1987 1980 1909 Price $7.00 *9.50 $10.50 $11 90 $13 95 $16.32 *1695$1845 Channel capacity 35 35 35 35 35 35 35 35 Channels operational 15 24 26 34 34 34 34 35 3 Inc over last rate 35 00% 10.50% 13 00% 17 00% 17 00% 4.00% 9.00% % Inc over 1978 35 003 50 00% 70 00% 99 00% 233 00% 242.003 263 00% Other Services Rates 1970 1982 1903 1984 1986 1987 1908 1909 HBO 3745 $8.50 $11 95 *1195 31095 *1095 *1095 *1095 Cinemax $7.50 $7.50 $9.50 *1195 $10 95 *1095 $10 95 $10 95 Disney N/A N/A N/A N/A $ I 0 95 $ 10 95 $8 95 $8 95 Galavision N/A N/A N/A N/A $9 95 $9 95 N/A N/A Additional Outlets $3 00 $5.00 $5 00 $5 00 $5 00 $5 00 $2.50 $2 95