July 20, 1998

City County Building
Indianapolis IN 46254

MEMBERS PRESENT:

Carlton Curry, Chairman
Charlie Hiltunen, Member
David Leonard, Member
Steve Nelson, Member

MEMBERS ABSENT

Stuart Rhodes, Member

OTHER PRESENT: 

The first agenda item was the approval of minutes from the Cable Board’s June 15, 1998, meeting. Motion was made by Mr. Hiltunen, seconded by Mr. Rhodes, to approve the minutes of the Board’s June 15., 1998 Board meeting. Motion carried unanimously.

The next item on the agenda was the Comcast Audit Issues Settlement letter. Ms. Piety reviewed the terms of the proposed agreement. After meeting with the City and its Consultant, Comcast disputes that these amounts are due; however, in an effort to resolve this matter amicably, the City and Comcast desire to settle their dispute concerning the amounts due City under Comcast’s Contract for the years 1990 through and including 1994, on the following terms and conditions: 1) Comcast agrees to pay the city Fifty- Five Thousand Dollars ($55,000.00) in full and complete settlement of amounts alleged to be due under Comcast’s Contract for the years 1990 through and including 1994 (the "Settlement Amount"; 2) The Board agrees that Comcast may exclude advertising agency commissions from gross revenues for the purpose of calculating the franchise fee due the City under Comcast’s cable franchise so long as, and only so long as, Comcast does not receive such amounts and such amounts are not reflected in Comcast’s financial statements as revenues.; 3) Comcast agrees to exclude from its cable service rate calculations the Settlement Amount and not to pass-through to its subscribers in its cable service rates any amounts attributable to such settlement; and 4) Comcast’s payment of the Settlement Amount pursuant to this Agreement does not constitute an admission of liability or non-compliance.

Motion was made by Mr. Hiltunen, seconded by Mr. Leonard, to accept the Settlement of Franchise Fee Audit Issues for the period 1990-1994 as written. Motion carried unanimously.

The next item on the agenda was the Time Warner BST rate order. Ms. Piety stated this is a proposed final rate order for the City’s review of Time Warner’s Form 1240 for the period January 1^st 1998 through December 31^st 1998. Ms. Piety stated the Board has employed Lou Karrison of Crowe Chizek to review the rate forms and to provide a report to the Board concerning the proposed rate order. Ms. Piety stated that Crowe Chizek findings show there are no apparent errors in Time Warner’s filing, except for adjustments required by the City’s July 1997 Order, which requires Time Warner to take into account the adjustments in the FCC May 1997 Order, and the FCC June 1998 Order. These adjustments include; 1) Changing the true-up period from a calendar year to a fiscal year beginning October 1, 1996, and ending September 30, 1997; 2) Changing the actual rates charged and reported to reflect the correct true-up period and; 3) Changing lines 801 and 804 on Form 1240 to reflect the actual rates charged by Time Warner in 1997 and 1998. The proposed order accepts Time Warner’s recalculated 1998 Form 1240 to the extent it recalculates the basic service tier rate taking into account the adjustments set forth in the City’s July 1997 Order pursuant to the FCC May 1997 order, and the FCC’s June 1998 Order so that the maximum permitted rate is reduced to $10.01 from $10.32. Time Warner’s actual basic service tier rate in its franchise territory in Indianapolis-Marion County, Indiana, exclusive of franchise fees, exceeds the maximum permitted rate by $.31.

The proposed order requires Time Warner to immediately reduce its current rate to the maximum permitted rate and to provide to subscribers refunds for overcharges from January 1, 1998, to the date Time Warner implements the rate reduction. The period subject to the rate reduction and refunds runs from January 1, 1998, forward to the date Time Warner implements the rate reduction. Time Warner will implement the rate reduction and refunds ordered herein by means of its normal monthly billing cycle, and must do so no later than October 1, 1998. Ms. Piety stated she has provided a copy of the proposed order to Jay Satterfield of Time Warner. Mr. Satterfield asked to implement this refund during Time Warner October billing cycle.

Mr. Curry asked Ms. Hoffman-Meadows if the October billing cycle date starts in September or October.

Ms. Hoffman-Meadows stated that it starts October 1^st.

Mr. Curry asked if the billing cycle would be in three segments all in the month of October.

Ms. Hoffman-Meadows responded that it would.

Mr. Leonard asked Ms. Hoffman-Meadows as an executive at a cable company how she feels about the government’s ability to order Time Warner to reduce its rates.

Ms. Hoffman-Meadows stated she understands this is the or law and it works and is accepted. Ms. Hoffman-Meadows stated the process works, because even if the reduction did not take place in October only .09 cents would be corrected in January when prices are recalculated. Ms. Hoffman-Meadows stated .09 cents of the 0.57 cents of the reduction is not inflation related.

Mr. Leonard asked whether Time Warner preferred the government or the customers to set the rates.

Ms. Hoffman- Meadows stated that Time Warner would like the market to drive the prices.

Motion was made by Mr. Hiltunen, seconded by Mr. Curry, to approve the Time Warner BST rate order. The vote on the motion was 2-2, with Mr. Leonard and Mr. Nelson voting against. The motion failed.

Ms. Piety asked for direction from the Board as to what she should do. Ms. Piety stated the Board should consider whether or not rate regulation should be continued. It is a waste of money and time to continue this review if this is not what the Board wants to do.

Mr. Curry stated that the vote was 2 to 2 without a full quorum. Mr. Curry changed his vote to a "no" in order to be on the prevailing sides and suggested at the next meeting this item be discussed again.

Mr. Hiltunen stated he does share the "nay" votes concerns, stating the Board does not want to be in the business of regulating rates and that the market should be setting prices. He stated the Board should be concerned with how to get other entities in the market so the subscribers have a choice.

Mr. Leonard stated it’s his understanding law that the Board has discretion to regulate rates. Mr. Leonard stated that it is his view that if a subscriber is not satisfied with the rates that there are other choices such as the satellite dish. Mr. Leonard also stated he felt that it was the Board’s obligation to support local privately owned businesses to let them employ many people in our community, and not to tell them how to run their businesses. He completely supports bringing in other providers of cable service to provide choices.

Mr. Nelson stated that he concurs with Mr. Leonard, that the Board should not be in position of regulating the cable operators’ rates.

The next agenda item on the agenda was the Cable Agency Report. Mr. Maultra presented the Cable Agency report which highlighted the events that have taken place at the Cable Agency in the last month. The Cable Agency has been active with the National Association of Telecommunications Officers & Advisors as the Agency now chairs the Committee on the FCC & Legislative Issues. The Agency worked with the Committee in constructing a filing on behalf of NATOA that spoke to the streamlining of some of the processes at the FCC’s Cable Services Bureau. The Agency also served on NATOA’S Advocacy Committee where they are in the process of compiling a database of entities that share common interests of NATOA. The database will be utilized for strategic purposes by NATOA as circumstances dictate, such as joint filings with FCC. The Agency has had discussions with the Indianapolis Library Foundation to pave the way for producing a philanthropic video for them in the same way that Channel 16 worked with the Children’s Guardian Home Foundation. The Cable Agency has assisted Columbus, Indiana, in reviewing their business plan for implementing a government access television station and facilitating a review of their facilities as well as answering their questions. The Agency met with Cathy Cregor Blitzer of the International Center of Indianapolis and with Shary Hoffman-Meadows to discuss Channel 16’s participation in producing a video to commemorate the 25^th Anniversary of the Center. The Agency attended a meeting sponsored by the Mayor’s Office on competitive bidding and outsourcing in the work place. Finally, the Cable Agency has worked with both cable operators in mediating a number of customer cable problems with a summary and breakdown of the problems included with the Agency’s report. Mr. Maultra also stated that Time Warner had a total of 44 complaints for the month, and Comcast had a total of 132 complaints for the month with 78 of those complaints as rate complaints due to Comcast’s rate increase.

The next item on the agenda was the Channel 16 Programming Report presented by Mr. Montgomery. Mr. Montgomery highlighted some of the activities of Channel 16 for the month of June. In June there were 43 hours and 15 minutes of live meeting coverage. Tape Delay meetings totaled 4 hours and 39 minutes. Special Events Production totaled 12 hours and 44 minutes.

In the area of In-Kind Production, Channel 16 had 6 hours and 40 minutes of production. Series Programs totaled 4 hours and 30 minutes. The total for the month of June for all productions was 71 hours and 49 minutes. Interactive Information Service Usage totaled 892 calls for the month.

Mr. Leonard asked Mr. Montgomery to explain Rites of Passage Conference Part 1 and 2 programming.

Mr. Montgomery stated the Rites of Passage Conference, held in conjunction with the Indiana Black Expo, was a two day seminar to provide young people with positive role models. Channel 16 is producing "Crackback": One Neighborhood at a Time" and "Everything You Ever Wanted to Know About Parking Meters, but did not Know Who to Ask" and "Project #180 Update II, Creating Backyard Sanctuaries and Million Dollar Tee off "PSA for Keep Indianapolis Beautiful and "Library Foundation Program" and "Children’s Guardian Home Anniversary Program" and "City Market Program", for promotional usage. Finally, Mr. Montgomery stated that Channel 16 served as a judging site for the NATOA awards.

The next agenda item was the Cable Operator’s Reports. Ms. Shary Hoffman-Meadows presented the Time Warner Report. Ms. Hoffman-Meadow stated that the Full Cable Service includes the limited service. Time Warner completed 3,268 installs for the month of June with 3,820 scheduled. Incoming calls total for the month was 60,501;answering 90.0% within 30 seconds or less. Service calls received for the month were 5,751; 2,814 calls scheduled and 2,737 service calls completed. Time Warner had 47 outages for the month; which were all planned outages. Time Warner is on track with its upgrade and plans to have the upgrade completed even earlier than anticipated.

In its Community Involvement report, Time Warmer produced and aired commercial spot promoting its Sunday afternoon Jazz Event at the Arts Garden featuring Cynthia Layne. Time Warner also produced and aired three commercials for the Indianapolis Public Schools Foundation’s "Reading On Grade by the Third Grade" program. Al Aldridge and Shary Hoffman-Meadows served as Masters of Ceremonies for the Urban League’s Ebony and Ivory Dinner honoring Indianapolis families and students. Time Warner sponsored the American Cancer Society’s Relay for Life at Fort Harrison.

Mr. Nelson stated that he applauded Time Warner’s efforts towards the Black Expo. Also, Mr. Nelson asked Ms. Hoffman-Meadows what happens when Time Warner loses any of its full basic customers and is the loss of customers because of rates or other reasons.

Ms. Hoffman-Meadows stated there’s a combination of reasons: people moving out of Time Warner service area; people selecting to purchase a satellite dish: or people feeling cable is not a necessity. Ms. Hoffman-Meadows stated Time Warner has an outreach to those subscribers who do disconnect from service and Time Warner tries to find out the reason for disconnect.

Mr. Hiltunen asked Ms. Hoffman-Meadows if Time Warner tracks the loss of subscribers due to rate increases.

Ms. Hoffman-Meadows stated ,yes, lost subscriber numbers are tracked.

Mr. David Wilson presented the Cable Operator’s Management Report for Comcast. Mr. Wilson thanked the Board for approving the settlement of the franchise fee issue. Mr. Wilson stated Comcast has announced a $2.95 rate increase in the ValuePak tier of the full basic package in the August 1^st billing cycle. Mr. Wilson stated with the increase the full basic service increased from $30.74 to $33.69. The increase applies to the re-build area only. In rebuild Comcast completed 158 miles in the month of June, completing the southeast section of Marion County. Comcast expects to complete the upgrade by the end of the year. Mr. Wilson stated Comcast is launching a new service called "Digital Cable by Comcast" which is available for all Comcast customers in the rebuild areas. The price is $9.95 for the digital converter and includes: interactive program guide, 40 channels of commercial free music and subscribers have HBO get 9 additional channels of HBO, subscribers that have Cinemax receive 7 additional channels of Cinemax and if the subscriber have Showtime receive 6 additional channels of Showtime, and also 2 movie channels.

Mr. Wilson stated that Comcast ending total subscribers are 1,089. For incoming calls, Comcast had 87,704 calls; 78.43% of those calls were answered in 30 seconds or less. Comcast had 228 outages for the month, 3 of them were planned. Comcast received and scheduled 3,313 calls and completed 3,304; 61.7% were completed within 24 hours; 99.0% were completed in 36 hours or by customer request. Comcast scheduled 3,963 installations and completed 3,679 of those scheduled.

Mr. Wilson also stated that during the month of June, Comcast had 71.5 hours of community interest programming aired on Channel 50. WAV-53 had 143 hour of locally produced programming. In June 1998, Comcast aired and produced 9 public service announcements and Newsmakers featuring 6 local organizations in June. Finally, on June 4, Comcast sponsored a foursome in a golf outing at Prairie View Golf Club. Comast continued its support for the Indianapolis Urban League by attending the organization’s Ebony and Ivory Gala, June 12 at Indiana Roof Ballroom. For the second consecutive year, Comcast sponsored the Indianapolis Chamber of Commerce’s Local Government Reception, held June 18 at the IMAX Theater. Comcast was a media sponsor of the 1998 Junior Goodwill Games, held June 20 at various locations around the city.

The next item on the agenda was the ETC Report. Mr. Donaldson presented the ETC report. Mr. Donaldson stated ETC July Monthly meeting was cancelled. Also IPS has confirmed Tuesday PM time slot for potential Board Meeting broadcast. August Schedule will be updated on the ETC website to reflect new school year programming. Fall schedule in progress. Mr. Donaldson thanked Time Warner, which has agreed to underwrite "Education Showcase" which was formerly funded by Comcast. Time Warner offered "Colonial Williamsburg: Electronic Field Trips" for ETC’s consideration. The Colonial Williamsburg Foundation has been contacted regarding licensing arrangements: awaiting reply. For July 1998, ETC provided 0 hours of purchased programming, 432 hours of free or donated programming; 156 hours of PBS programming; 267 hours of locally produced programming and 321 hours of SCOLA/Deutsche Welle.

Mr. Hiltunen asked whether the preliminary time slot of 7 and 9 for IPS Board meetings was "gavel to gavel" coverage.

Mr. Donaldson stated that there was flexibility in the schedule to provide complete IPS Board meeting coverage.

Under Old Business, Mr. Donaldson stated that ETC is not covering IPS board meetings. ETC is providing only the time slot, and production support for that programming would be coming from IPS .

Mr. Curry stated that IPS would be using its own assets. Mr. Curry asked Mr. Donaldson when he thought that the Board would decide on its meeting coverage.

Mr. Donaldson stated he would expect that a decision would be made at the start of the school year in August.

Mr. Curry stated that it would probably be a better use of assets if IPS was able to do it and ETC was able to televise the meetings through the educational channel. Mr. Curry stated this item should be deferred until the August meeting to give IPS the opportunity to act.

Under New Business, Mr. Curry presented the cable agency and Channel 16 budget for the year of 1999. Mr. Curry explained the different characters within the budget and their objects. Mr. Curry stated the total budget is down from the 1998 actual budget and the department is asking for monies within the City guidelines.

Mr. Leonard suggested that the budget item be put on August Board agenda for further discussion after he has had time to review it.

Mr. Curry stated that this will be a Board agenda item for August Board meeting.

Under Public Comment, Mr. Ray Kocher stated he feels that subscribers have what appears to be an uncontrolled and run-away monopoly in the cable television industry. Also he stated that he was under the opinion that this Board was to look after the interest of cable television customers, stating after all he is being taxed by this Board by six percent of his gross cablevision bill, which includes a tax on a tax. Mr. Kocher stated he has been a Comcast customer since cable service became available to his area for a rate which started out to be a reasonable profit by the cable companies. He asks what is the margin of profit for Comcast? Mr. Kocher feels until there is a consideration for reasonable profit, totally supported by Comcast, the Board should review having cable customers pay tax on state and federal tax through the cable billings.

Mr. Leonard stated it’s his understanding that one time the cable companies did have exclusive territories in the City and it was against the law for one to provide service in another territory. Mr. Leonard also stated that it is his understanding that any cable company as long as franchised by the City can come and provide cable services to the area; therefore, there is no government created monopoly at this time. Mr. Leonard thinks the market is responding to rate increases and agrees that rates are too high. He decided to cancel his service 6 months ago. Mr. Leonard stated he would rather cancel his service than see the government regulate a private business that contributes to this community.

Mr. Hiltunen stated that he feels that the Board has a responsibility to its subscribers to regulate the cable companies to make sure the numbers are crunched properly.

Mr. Kocher asked if there is a public councillor who handles the public’s concerns.

Mr. Curry stated the Board and Cable Communications Agency has the opportunity to oversee certain rate structures. Mr. Curry also stated the Franchise contract controls the parties’ relationships as to how certain things are done and changes come up each time the contract is open and is subject to negotiation.

Mr. James Smashey voiced that his main concerns are the Time Warner rate order and not having competition in the City and the rates.

Mr. Leonard asked whether the federal law that grants the local franchise authority to regulate basic rates also gives the local Franchising Authority discretion to regulate rates if its chooses.

Ms. Piety stated local rate regulation was initiated in 1993 whether the FCC set up the regulations. Those communities or local franchising authorities that wished to regulate had to be certified to do so, which was accomplished by a filing with the FCC. The Board filed with the FCC to be certified to regulate rates. Ms. Piety stated that there is a procedure for decertification, and some jurisdiction have decertified. That would not affect the CPST tier rate regulation which is done by the FCC, but it would affect the ability to regulate basic tier rates. Ms. Piety stated the Local franchising authority could vote to decertify and no longer review the basic tier rate.

Under other New Business, Mr. Hiltunen stated that there was a study by the Hudson Institute focusing on the role of competition in the cable market place. Mr. Hiltunen stated this study basically focused on how the industry needs to look at how to bring competition in the market place and how competition is the best way to regulate rates. Shortly afterwards, there was a letter from the Cable Agency which criticized the Hudson Institute study. The letter was sent to the FCC which was also published in national publications. Mr. Hiltunen stated he was very concerned with the letter from the Agency because he supports the Hudson Institute findings and feels the Hudson Institute is a very valuable resource in the Indianapolis area.

Mr. Leonard stated he was also concerned when he saw the communication to the Chairman of the FCC as well as the editorial letter expressing the Cable Agency’s views. Mr. Leonard suggested that in the future correspondence should be more from the view of the Board versus the opinion of Agency staff members.

Mr. Leonard moved that any future communications of a similar nature that are promoted as communications of the Cable Agency be presented to the Board before being sent to the FCC or to public media outlets. Mr. Nelson seconded the motion.

Mr. Hiltunen asked if Mr. Leonard’s motion also included involvement in NATOA.

Mr. Leonard stated only if the NATOA involvement is represented to be the views of the City or the Cable Agency.

Mr. Curry suggested that Mr. Leonard should put something in writing before the motion is passed. Mr. Curry stated that he would be concerned with the Agency having to get Board approval before speaking to the press and that he is concerned with the possible global impact of the current motion.

Mr. Leonard withdrew his motion and Mr. Nelson withdrew his second in order to consider a more concise motion for the next Board meeting.

There being no other business to come before the Board, Mr. Curry adjourned the meeting at 4:15 P.M.

__________________________________ Mr. Carlton Curry, Chairman

__________________________________ Mr. Charlie Hiltunen, Member

__________________________________ Mr. David Leonard, Member

__________________________________ Mr. Steve Nelson, Member

___ABSENT________________________ Mr. Stuart Rhodes, Member

ATTEST:

___________________________________
Ms. Janise Winston, Recording Secretary