May 2005

May 16th, 2005

MEMBERS PRESENT

Peter Blum, Chairman
Robin Winston, Member
Daniel Lynch, Member

OTHERS PRESENT

Peter Blum calls the May 16, 2005 meeting of the Marion County Cable Franchise Board to Order.

The first item on the agenda was the approval of the minutes for April 18th, 2005. Motion was made by Mr. Winston to approve the minutes and was seconded by Mr. Lynch. The motion carried unanimously.

The next item on the agenda to be discussed was the Cable Agency report. Mr. Maultra, Director of the Cable Communications Agency, thanks the Board for this opportunity to highlight some of the things that the Cable Communications Agency has been involved with during the past month.

Mr. Maultra stated the auditor is in the process of finalizing the franchise fee audit report on Bright House for years 2002-2003 and will be sending that on to Bright House shortly for them to review and respond.

With respect to First Mile, the Cable Agency must file its recommendation to the clerk of the Council. The Agency is awaiting instruction from the Council on the form in which that recommendation should be filed.

Cable Agency staff met with the Controller’s Office to discuss budget prep for 2006 and outlined cuts that may need to be made in the event that Indianapolis Works did not pass. Mr. Maultra stated it was the first round of discussions.

The City’s Information Services Agency has created a new web site format for the City and consequently it involves the transference of considerable data. Training is on going for Agency staff in being acclimated to the new format.

The Cable Communications Agency has been serving as a consumer advocate to Indianapolis and Marion County cable subscribers in assisting them in mediating cable complaints on their behalf. For the month of April, the Agency received nine complaints for Bright House. He stated that he believes that most set some kind of record stating they’re doing something very well over there and the Cable Agency is very pleased with that. Comcast for the month had 55 complaints. The areas of high complaints for Comcast were in billing and service interruptions.

Mr. Blum asked Mr. Jon Bryant, Corporation Counsel, what it is the Board could do to move First Mile off the ball.

Mr. Bryant stated he has spoken with Aaron Haith, who is Counsel for the Council, inquiring the status of this issue he stated he would follow up with Mr. Haith again.

Mr. Maultra stated staff is targeting the budget cuts given to its department by the Controllers office of 10%. Stating that the Controllers has stated knowing that the Cable Agency is a smaller department it may be not as obtainable to reach a 10% target as it may be for a larger department where there are more cuts to look at. He stated the Cable Agency is doing its best to try to obtain the goal of reaching a 10% budget cut.

The next item to discuss is Government Access TV program report with Mr. Montgomery.

Mr. Montgomery, Manager of Channel 16, highlighted some of the activities of Channel 16 for the month of April. Channel 16 had 57 hours and 34 minutes of live & tape delayed meeting coverage. There were 39 events for live & tape delayed meeting coverage. Special event productions were 18 hours and 40 minutes. In-Kind productions for City County/Government agencies were 3 hours and 47 minutes and 30 seconds. Series production totaled 3 hours and 30 minutes

Total of new production for April (all categories) was 83 hours, 31minutes, and 30 seconds.

Mr. Montgomery stated Channel 16 had In-Kind services of $9,275 for the month of April for charges that was external to Channel 16.

The next item on the agenda was the Bright House monthly report. Mr. Aldridge, Director of Public Affairs and Buz Nesbit, Division President, reported for Bright House Networks.

As represented by Bright House, the company started the month with 62,169 customers and ended with 61,862, which is a loss of 307 customers.

For incoming calls, Bright House represented receiving 45,551 calls. 45,409 of those calls were handled, and 43,315 were answered in 30 seconds or less. Bright House had 95% of calls answered in 30 seconds or less.

The complaint summary showed Bright House had 9 complaints for the month.

Mr. Aldridge represented that 100% of service interruptions calls were addressed within 24 hours. There were no planned service interruptions with 18 unplanned service interruptions with an estimated 3,728 subscribers with interrupted service. The service-interrupted hours were 27.53. System reliability was 99.9905%

100% of total service calls were addressed with the next business day, unless otherwise directed by customer. There were no appointments kept outside of the 4-hour service window during normal business hours, unless requested by customer.

100% of installations were completed within 7 days or by customer request. Mr. Aldridge reported there was 1 mile of construction for Bright House.

Under public affairs, the division ran in-kind promotional sports for Walker Theatre’s “Ain’t Misbehaving,” American Cabaret Theater’s “Rock Spell”, Indianapolis Charter Schools PSA with Councilman Ron Gibson, the Indy Book Fest at Glendale Mall, Hemophilia of Indiana and VHI Save the Music. The value of these gratis spots was $30,856.

For Community Affairs, the division sponsored two concerts with the Walker Theatre for the musical, “Ain’t Misbehaving,” Bright House Networks provided a $2,500 sponsorship.

The division sponsored the 2nd Annual Indy Book Fest during April. The Indy Book Fest is a weekend event at Glendale Mall, which brings several book authors in for writer symposiums and/or book singings. This is the first time that BHN has sponsored this community event.

The division was a sponsor of the SS Peter and Paul Annual Spring Fundraiser. The division sponsored a $500 gift certificate for the Silent Auction.

Several members of Bright House Networks attended the annual meeting of the Indy Partnership. The partnership helps in the growth of the Indianapolis Business community. The division has maintained a membership with this group for over five years.

Member of the continues to volunteer with the Indianapolis Public Schools Education Foundation (IPSEF), the Walker Theatre Center, the 100 Black Men Indianapolis chapter, and the Indiana Hemophilia Chapter Foundation and the Edna Martin Christian Center.

Bright House continued partnership with WDNI provided the required hours of local programming as mandated by the City franchise agreement.

Mr. Aldridge wraps up his report and opens for he Board’s questions.

The next item on the agenda was the Comcast’s operator’s monthly report. Mike Delph presented on behalf of Comcast. Mr. Delph reported last month he and Doug Ward, call center manager, for Comcast laid out a specific action plan to bring Comcast service level back into compliance. Mr. Delph stated he is happy to report that Comcast met the standards for the month of April at 91.68%. Mr. Delph stated he would like to thank the members of Comcast customer service team for making this possible.

Mr. Delph reported the number of customers requesting total basic service decreased by 468.

For the month of April, Comcast was at a 91.68% of calls answered in 30 seconds or less. System reliability for the month was 99.99%. Comcast had five planned service interruptions for system improvements.

Comcast reported 98.02% of total service calls were addressed within next business day, unless as otherwise directed by customer. 99.79% of appointments were kept within four-hour service window during normal business hours, unless otherwise directed by a customer, as represented by Comcast.

Comcast reported 100% of installations were done within 7 days or by customer request.

There were 55 complaints sent to the Cable Agency. Comcast completed construction in five new subdivisions.

Comcast aired Public Service Announcements for Susan G. Komen Foundation “Race for the Cure”, Purdue University “Symphony of the Circle”, Rupert’s Kids “Renovate My House” and National Day of Prayer “Indy Event.”

Appearing on Indiana Newsmakers for the month of April were Michelle Wood, Race for the Cue, Jennifer Mahoney, Rebuilding Together, Steve Campbell, Deputy Mayor, Gina Ferrar, Boy Scouts, and Brian Bosma, Speaker of the House.

For events and sponsorships, Mr. Delph noted that Comcast helped sponsor the Ambassadors for Children Dinner & Silent Auction, April 15. One hundred percent (100%) of the proceeds raised by the silent auction will go directly to the Ambassadors for Children group, which is a non-profit organization that offers travel opportunities to volunteers who make a meaningful difference in the lives of children.

For the 11th consecutive year, Comcast was a Platinum Sponsor of the Race for the Cure. The annual event, held this year on April 16 at the IUPUI campus, is the state’s largest fundraiser in terms of participants and dollars raised. This year, more than 38,000 walkers and runners raised an estimated $1.5 million for breast cancer research and treatment.

Comcast was a sponsor of the United Way Annual Meeting, April 21. At the luncheon, United Way of Central Indiana recognized companies that participated in the 2004 annual campaign. Governor Mitchell Daniels, Jr. was the keynote speaker.

Comcast also helped sponsor the Annual St. Mary’s Child Center Auction, April 29. St. Mary’s Child Center provides services to children who have or are “at risk” for developmental, learning or behavioral problems and services 320 children each year from Marion County.

Mr. Delph stated in conclusion, Chairman Peter Blum notified Comcast that the Board is considering a compliance letter regarding the issues of launch fees. Mr. Delph stated he asked Mr. Blum if the City or Agency would be responding to Comcast documentation, that Comcast supplied including the financial statement indicating the contra expense nature of launch fees. He said that to his disappointment the Cable Agency and the Chairman are taking an unprecedented and aggressive approach in trying to coerce additional monies out of the company for general revenue purposes. He stated the Cable Agency, in Comcast’s view, should not serve as a tax collector.

Mr. Delph stated, moreover, when he asked for information that was presented to the Board and the Cable Agency that allegedly supports Mr. Maultra’s position, he was told that legal Counsel information was “privileged”. He stated he has been appearing in front of the Cable Franchise Board since January trying to seek a resolution to this matter. He said he is trying to provide each and every information request to the Board and the Cable Agency. He stated the Board asked for accounting and specific responses to Scott Lewis’s audits and Comcast did those things. He stated Comcast has been forthright and candid, stating Comcast has asked the City to work in partnership and the City chooses to treat Comcast as an adversary. He said that is both disheartening and unfortunate. Mr. Delph stated the Cable Agency is mired in a paradigm that is based on the 20th Century market place and is completely lacking of 21st Century competitive realities.

Mr. Lynch commented, personally, on good customer service at Comcast.

Under new business, Richard Miles and Don Newman presented the CIRRI annual report and request for funding. Mr. Miles stated in 1982, Hasbrook approached friends, colleagues and supporters, and made the case for a radio-reading program to serve the Indianapolis area. With crucial input from Joe Money of the National Federation for the Blind, Central Indiana Radio Reading Incorporated (C.I.R.R.I) was formed to meet the need for access to written materials for those who would not otherwise be able to use normal sized print. Special radio receivers were provided free of charge to print-impaired individuals within 45 mile of Indianapolis.

Later renamed Indiana Reading and Information Services (IRIS), the mission continues to be serving people who cannot use normal sized print due to vision impairment, physical limitations or illiteracy. The service allows print-impaired Hoosiers to hear the contents or newspapers, magazines and books, facilitating independent living through access to the written word.

Because IRIS is accessible to anyone with a radio receiver (for broadcast) or telephone (using the dial-up), existing service agencies are urged to recommend the service to those already enrolled in other programs. Information about IRIS is distributed to agencies serving the blind and print-impaired, doctors’ office and government agencies. Individuals learning personal skills through an agency service such as Bosma Rehabilitation Center can augment their money management skills by listening to grocery, pharmacy or discount stores ads on IRIS. In addition, service receivers are currently located in facilities such as the Central Healthcare Center, Extended Care in Greenfield and the Indianapolis Senior Citizen’s Center and other facilities where groups of individuals can gather to listen to IRIS programs.

U.S. Census data (1990) reports that 215,769 Hoosiers are either unable or have difficulty seeing words and letters in newspaper print, with over 30,000 of those residing in Marion County. IRIS is designed to make the same information available to print-impaired individuals that the majority of Indiana’s population enjoys everyday.

A five-minute VHS was presented to the Cable Board viewing regarding IRIS.

Don Newman stated IRIS is a free service for the print-impaired. To become a qualified user-client of the radio broadcast or telephone dial-up services, an individual need only submit a simple form signed by a physician, social worker, minister, community center director or other qualified advisor. Once IRIS receives the signed form, a radio receiver is delivered to the listener’s home, or a dial-up access code is used. Qualified applicants are never denied access to IRIS, regardless of background or lifestyle. The only qualification necessary is the inability or difficulty to read printed material.

Additionally, individuals across the state may use the Nina Mason Pulliam Statewide Dial-up Service to hear local news and information with the push of their touch-tone phone. Volunteer readers may record their readings from their local newspapers from virtually any touch-tone phone and listeners may “dial-up” sections of the paper on demand. Both the broadcast and dial up services are available 24 hours per day, seven days a week.

Approximately 200 volunteers contribute nearly 9,000 hours of reading each year—with some 900 live broadcasts of The Indianapolis Star and over 450 programs of other local newspapers and magazines. Content selection varies depending on the program, but volunteers often select their own readings within the topic of the program. Some programs are broadcast via satellite (typically during the overnight hours) through a nationally syndicated program called In-Touch.

Over the past 20 years, IRIS has grown from a three-hour per day service to a 24-hour, seven day per week resource. Started by a handful of volunteers, IRIS now uses the resources of nearly 200 volunteers in addition to two full-time and four part-time staffers. The initial 300 radio receivers distributed in 1982 have multiplied to nearly 1,000. The addition of the Nina Mason Pulliam Statewide Dial-up service has extended the reach of this service to thousands more Hoosiers. IRIS will continue to grow as it seeks to serve a larger percentage of print-impaired individuals living in our state, reaching out into new counties and increasing saturation of the communities currently served.

IRIS is fortunate to have a representative of the Indianapolis Public Library’s Talking Books program as an active member of the Advisory Board. Since both programs provide reading services to print-impaired individuals, IRIS and Talking Books are able to use this relationship to create best practice models between the two programs.


Mr. Newman stated annual support from the Cable Franchise Board continues to be critical to WFYI’s ability to continue the IRIS service, and the organization respectfully requests a continuance of that funding in the amount of $35,000 for the current fiscal year.

Mr. Newman wraps up his report and opens for the Board’s questions.

Mr. Winston asked if the other Counties provide any monies.

Mr. Miles stated no.

Mr. Winston stated so Marion County is the only Municipal Government that gives grant monies to IRIS.

Mr. Newman stated yes.

Mr. Winston asked if the publications donated or is there is a subscription fee that IRIS must pay.

Mr. Newman stated there are a small percentage of publications that IRIS subscribes to however the majority of publications are donated.

Mr. Winston asked if he is a Hamilton County residence does Hamilton County government provide any funds at all.

Mr. Newman stated no.

Mr. Blum asked has IRIS asked them.

Mr. Miles said he is not sure if Hamilton County been approached or not.

Mr. Winston asked how many subscribers or listeners live in Marion County.

Mr. Newman stated locally there are about 1200 subscribers that listen to the radio and about 900 statewide that are dial up only.

Mr. Winston stated he feels that the other counties should be sharing the cost of the service as well.

Mr. Blum asked to table IRIS request at the time. He stated he supports what IRIS is doing however the city is working out the details of the budget.

Under Old Business, Mr. Maultra addressed the Bright House and Comcast audits. Mr. Maultra stated there are two pending franchise fee audits that reveal that Comcast and Bright House owe monies to the City on revenue they have received. Corporation Counsel has outlined for the Board’s review, that collecting on these fees is consistent with the language in the franchise agreements with both operators. Furthermore, where Comcast is concerned, the Cable Agency has proof and precedence that Comcast paid on launch fee revenues and did so without a pass thru.

Collecting a 5% franchise fee on the cable operator’s gross revenues is based upon the FCC’s premise that it is a payment of rent by the private vendor in utilizing the public right of way. The fact that the cable operators may be attempting to hide these revenues or excuse them as contra expenses does not take away from the fact that the monies are owed to the City. The cable operators, the City-County Council, the Mayor and the Cable Board, at that time, all approved the all-encompassing language of gross revenues in the present franchise agreements the City has with the operators.

To ignore the fact that the operators have been identified in the audits as being less than forthcoming with their reporting and subsequent payment of fees to gross revenues and should the City not aggressively pursue said amounts owed would offer nothing but incentive for the practices to continue.

Therefore, the Cable Agency would encourage the board to authorize corporation counsel to pursue the launch fees as has been outlined to the Board previously by counsel.

Mr. Lynch stated that from his standpoint he is very sympathetic to Mr. Delph’s requests and statements. Stating he does believe that Lewis Audits are audits that encompasses more than just audits against standards and includes policy interpretations that were not necessarily due to the auditor. He stated historically, the City has not collected on these contra revenues. He said Lewis has recommended that the City actually change the standing policy on interpretation of gross revenues. He said the attorneys have done an excellent job on surveying precedence out in the other cities; however he is not sure that all those precedents can be translated. He said what the City needs to determine is what the franchise agreement says.

Mr. Lynch also stated his understanding is that the City has not collected these fees and this would be a change in policy to collect on a new revenue stream based on a new definition of gross revenues. He stated he is not convinced that would be the right thing to do. He stated what would be appropriate would be to have good faith negotiations of a new franchise fee, which would clarify these terms of gross revenues. He stated if the City chooses to interpret those launch fees as part of gross revenues that it be included in next franchise agreement.

Mr. Winston stated his concern has been consistent. He stated the City is in business of providing service to the people in the community. He said his concern is whether these fees would be passed on to the consumer and if they were, he would not be in favor of that. He said he does not know how this can be prevented without a possible court challenge, which can end up either way. He said if it ended up with a negative impact that would mean customers would be charged more money to have cable. He also asked if there was a way to prevent having those fees passed to consumers.

Mr. Blum stated the historic non-collection is what bothers him the most. He stated the reason these fees were not collected in the past was because there was a conflict and the City and cable operators agreed to disagree. He said he tends to take the view, that gross revenues mean gross revenue and the franchise agreement does not mention any other inclusions or exclusions. He stated it’s up to the Board to enforce the franchise agreement; stating the pass thru concerns him the most of all. He said if the Board proceeds, today, his hope is this will begin some negotiating process to avoid passing fees to consumers.

Mr. Maultra stated Corporation Counsel talked about this with Comcast. He said Comcast extended an offer to him to meet with them in March to try to settle this matter. He stated he followed up with Comcast and had not heard back from them with respect to their initial invitation. He said there has not been a change of definition in terms of the gross revenues stating that the franchise language defining that has always been there. He said it has not always been enforced; stating from the history of the Cable Franchise Board in ruling on this, after speaking to Charlie Hiltunen, was that back in the mid- 90’s the Cable Board, at that time, took the cable industry at their word that launch fees were a contra expense. The City took them at their word and consequently did not pursue the launch fees. Mr. Maultra stated that in the audit settlement of last year with Comcast, which is in writing, the City and Comcast agreed to keep the matter of the launch fees an open-ended matter. He said the Los Angeles arbitration and the matters to be resolved there were to act as a guidance going forward. He said Comcast settled with the City of Los Angeles, for the full amount of launch fees, and that the fees paid to L.A. as a result, were not passed on to their customers. He said he is at a loss why Indianapolis should be any different in terms of treatment on this subject. He stated that the franchise agreement language needs to be enforced and it’s not a change of policy. He also stated Counsel should be given the opportunity to sit down with Comcast and work out something similar to what had been negotiated and settled with Los Angeles. He said it is a win-win on both sides stating the City gets the monies that are owed to them and its done without a pass through. He stated Comcast is making a profit off their ability to use the public- rights-of-way.

Mr. Lynch stated he has read the Los Angeles interpretation, on several occasions, and he does not read it the way it is being described. He stated how he read it is as a settlement that encompasses many different negotiating points stating there were highly restricted payments not in the general fund into the City that was an investment into the cable T.V. business.

Mr. Lynch stated he would like to hear from Comcast on their interpretation of the Los Angeles settlement and on how these pass through will be handled. He stated there was a pass through on the last settlement and he does not want that to happen again.

Mr. Winston stated he is looking at a letter signed by Rusty Robertson sent to the City in March. Stating the letter mentions the amount that Comcast will pass thru to customers is $304,000 on another issue. Stating the consistence is that the fees would be passed thru to consumers. He asked what is the status of that issue; asking if that issue been resolved.

Mr. Blum stated that issue is resolved.

Mr. Maultra stated there was $700,000 in which Comcast ended up passing through $303,000. He stated that was their business decision stating Bright House does not pass through franchise fee audits. He asked Mr. Bryant, Corporation Counsel; to weigh out the legalities of the pass through of the franchise fee audits all together stating he feels the matter is not quite clarified.

Mr. Winston addressed Mr. Maultra by stating the Board serves as volunteers of this panel. Stating he takes his responsibility to be good stewards very seriously. He asked why the City did not put up a fight regarding pass thru for the last ruling, but is willing to put up a fight regarding this pass thru.

Mr. Maultra stated Comcast elected to do the pass thru. Stating Comcast set the precedent and history for doing so. Stating when they did so, the Cable Board and the Cable Agency made known their objections, stating they’re taking a difference stance to this one.

Mr. Winston asked how much money would be owed to the City if launch fees were collected.

Mr. Maultra stated with the outstanding audits there is about a half million dollars.

Mr. Winston stated we let $304,000 go through without making an effort of stopping the pass thru but we are willing to put up a fight for $500,000.

Mr. Blum stated the Board did not put up a right kind of fight with the last pass thru, also stating he doesn’t think anyone sitting on the Board was happy with that decision.

Mr. Lynch stated, his prospective is, the Board is clearly debating the fundamentals of the contract. Stating the Board is actively proposing to change the definition of the contract.

Mr. Winston asked would this be a continued fee, or is there more launch fees coming down the line. Asking are we using this as a snap shot.

Mr. Maultra stated that the Board is using this as a snap shot at this time. Stating preliminary results from another audit with Bright House would indicate that there was launch fees owed from that audit, as well.

Mr. Winston asked if there were more stations added would there be additional fees that Mr. Maultra would recommend be owed.

Mr. Maultra stated it’s possible, if the cable operators are not paying on those revenues that they receive for cash for carry. Mr. Maultra stated he has had a discussion with the FCC concerning this. He stated one of the things that the pass thru is being based on is a case called Pasadena. Stating the Pasadena case had to do with the cable operator’s ability to pass thru on to subscribers those fees that are not related to the bill. In the case of Pasadena it does not talk about the cable operators passing thru amounts owed by cable to the City because of the cable operator accounting errors that were made which resulted in the improper amount of franchise fees being remitted. Mr. Maultra stated unlike the launch fees, the $300,000+ owed by Comcast from the last time that Comcast did pass through, were a result of general revenue accounting errors that Comcast admitted to having made and Comcast chose to pass those accounting errors on to their subscriber base, those being monies owed to the City. He said the FCC has invited the City to submit to them a filing to determine whether Comcast can pass thru these amounts as a result of a franchise fee audit. He said if the Cable Board would like to get some clarity or further direction with respect to this from the FCC, the Cable Agency would be happy to submit a filing to the FCC.

Mr. Winston stated his concern, as a business man, would be if he is aware that a business is going to make him pay and absorb the cost to expand his business, but the expansion of the business is tan- amount on the ability to garner more subscribers; which in a long run gives more revenue as a City and community, what incentive would he have to expand and offer more channels if the operator knows that they would have to absorb the cost. He stated therefore, the company does not expand and maybe subscribers would not sign on if there are not new stations added.

Mr. Maultra stated the cable operators get cash for carriage and on top of that, when they launch channels, the FCC has a rule called the new product tier and when a cable operator adds new channels to the new product tier, they are able to raise the rates proportionately from their subscriber base. Stating cable operators are getting revenue two ways when they launch a new network or channel. Stating there is not a disincentive for the cable operators not to add channels.

Mr. Winston asked would the City then charge a launch fee to them for adding a channel.

Mr. Maultra stated the City is not charging them a launch fee, stating they are receiving cash for carriage as a result of putting the channel on the cable system and they are not accrediting the amount that is revenue.

Mr. Lynch stated the concerns that he shares with Mr. Winston is he does not want to see increased fees going to the subscribers.

Mr. Blum stated that is correct and he believes this can be concluded without a pass thru, stating he is willing to try.

Mr. Delph stated that Comcast has a franchise agreement with the City that is in effect with the City that allows Comcast the ability to pay 5% franchise fee, which is passed thru to the customer. He stated Comcast pay $1.2- $1.3 million dollars a quarter to the City. Mr. Delph stated that the argument that Comcast does not pay a fair rent to use the rights-away, in his opinion, is disingenuous.

Mr. Delph stated on August 28, 1998, Rick drafted an evasion complaint with the FCC alleging that Comcast evaded FCC regulations by not including launch fees on their 1240 filing. He stated Mr. Maultra wanted to ask the FCC to determine if launch fees are indeed required to be included in gross revenues. Mr. Delph stated although the letter was never sent to the FCC reports of the evasion complaint surfaced in trade reports.

On September 18, 1998, Comcast responded to the Cable Agency stating the proposed evasion complaint was without merit, because there had been no rate increase to trigger the complaint and the rates for the years in question had already been reviewed and approved by the City and the FCC.

On October 14, 1998, attorneys representing Comcast provided the information requested in the September 30, 1998 letter from, Corporation Counsel, Peggy Piety dealing with “assisting the Cable Board and evaluating whether to make any filings with the FCC”. Mr. Delph stated on November 23rd, 1998, apparently persuaded by Comcast arguments, Mr. Maultra stated in a letter to David Wilson, of Comcast, that the Cable Agency is no longer interested in filing the evasion complaint to claim refunds on behalf of Comcast customers. He stated instead the Agency believes it’s “more appropriate to seek franchise fee payments on launch fees paid to Comcast” because franchise fees are passed thru to customers the Agency begin taking the position that would result in Comcast customers paying more for their cable service.

On December 18, 1998, Comcast sent a letter from their attorneys stating launch fees are not subject to franchise fees because they do not fall under gross revenues that are defined in their franchise agreement. Stating launch fees are actually co-op marketing reimbursements to help Comcast acquire new customers, which results in increase franchise fee payments to the City.

Mr. Delph stated on January 19, 1999 the Cable Franchise Board voted, 3 to 2, against an amendment to include launch fees as part of the 1995-1996 audits. On June 21st, 1999 the Cable Franchise board voted, 2 to 1, in favor of excluding franchise fees from the definition of gross revenues. He said board member Leonard stated “launch fees should not be part of franchise fees because it would result to an increase of cost to cable subscribers”.

Mr. Delph stated as he has stated each month since January, Comcast has responded to Scott Lewis and his position regarding the franchise fee audit. Mr. Delph stated Comcast continues to retain their position regarding launch fees. He stated Peter Feinburg, Comcast Corporation Counsel, had given the Board two in-depth explanations of Comcast’s position. Mr. Delph stated in February, Comcast provided the Board with further dialogue and discussion on the matter with Pete Kieltyka, Comcast’s Regional Vice President of Finance. Mr. Delph stated per the request of the Board, he has provided the board with a financial report which shows where the launch fees are recorded. He said furthermore, Comcast maintains, per their correspondence dated December 16th, 2005 to the Cable Communications Agency, that as of the result of Scott Lewis audit, the City owes Comcast $78,128.00.

Mr. Delph stated Comcast has over 4500 franchise agreements in place. He stated the City of Los Angeles agreement, that Rick cites, is a former AT&T legacy community. He stated he has read the settlement agreement, which Rick has provided a copy of, stating there is a disagreement in the interpretation of the settlement. Stating Comcast does not believe they settled specifically in launch fees stating this matter has been reviewed by corporate accounts and no one believes that agreement settles specifically on launch fees.

Mr. Lynch asked if the Board pursues these launch fees and comes after Comcast to pay launch fees of 5% what would be Comcast actions.

Mr. Delph stated he would hope the Board would not take that action. Stating if the Board chose to do that Comcast would avail themselves of every right under the law and the FCC regulations and if they are allowed to pass the fees on to their customers, they will do so.

Mr. Delph stated Comcast does not want to be in that position stating its not good for Comcast or the City of Indianapolis. He stated Comcast wants to be in partnership with City wanting to work with the City. He stated Comcast provides $1.2- $1.3 million in franchise fees. He stated Comcast wants to grow the customer base stating he would like to get the relationship back on the road of a partnership as oppose to the adversary relationship.

Mr. Winston asked, Mr. Maultra, if the launch fees were passed through what would be the impact to each customer.

Mr. Maultra stated that Mr. Winston is assuming a pass thru stating that this is what the City wants to avoid. He stated by his calculations if the fee was to be pass thru to the customers it will be a .25 pass thru to each customer per month, for a year, to recover $400,000. He stated Mike Delph extended an invitation to meet with him in February or March to try to reach a settlement in regards to this because it was a “process” stating he was amendable to that and was happy to meet with him; however this discussion never happened.

Mr. Delph stated Rick is accurate. Stating he did give Rick a call after the February board meeting because it got kind of heated, between he and Rick, stating he and Rick have a good relationship and was wanting to make sure everything was ok with their relationship. He said at the time he did extend an offer to sit down and talk. He stated the idea of a settlement was not specifically advanced. He stated since that phone conversation several things have happened that took that off the table at the time.

Mr. Winston asked, Mr. Maultra why only one place out of 4,500 franchise agreements has this occurred. He stated he knows Indianapolis is on a cutting edge, asking why we are ahead of 4,499 communities.

Mr. Maultra stated some of those communities in the specific Northwest have been getting launch fees e.g. Seattle, Portland, and he said Los Angeles is settled. He stated a lot of this is networking and knowing. He said many rural communities might have a fire chief or somebody who is a council clerk and that person is the cable administrator. He stated usually these individuals might have franchise agreements put in front of them and they sign off on them but they do not have a lot of details. He said where this particular matter is concerned; there is a lot of evidence to go by. Stating there is an auditors’ report, there is counsel recommendations and the Agency recommendations; stating there is precedent setting settlements done in other communities without a pass thru. He said the Agency brings that forward, with its best recommendations, and then the Board makes a decision to what direction they want to go with this.

Mr. Winston asked if there have been challenges on launch fees made that have been struck down by a court of law.

Mr. Maultra stated Comcast is giving the Board an extremely formal and aggressive posturing today. He said the last thing Comcast wants to do is have any kind of a legal decision that would come down. Stating whether it would be formal arbitration or court case or FCC decision that would say Comcast is to pay launch fees and it is not to pass thru to subscribers. Stating Comcast, at that point, knows that other cities will go ahead and pursue the same. He said Comcast is going to bring out the big guns and make their best pitch to try to persuade the Board from doing this.

Mr. Winston asked are there any other communities who have tried to do this and were defeated in a court case.

Mr. Maultra stated no, stating it never gets to that point. Stating Comcast’s history is to settle outside of it going to a formal decision that can be printed and distributed.

Mr. Winston stated 4,500 communities have cable and two communities where they are paying launch fees and not passing them thru asking if the other over 4,000 didn’t challenge the launch fees or what happened there.

Mr. Maultra stated or they did not know about them. He stated the communities that do the franchise fee audits are those local franchising authorities that are aware that these types of things exist and to the degree that they do they may try and get the launch fees and may get aggressively lobbied to not pursue it.

Mr. Robertson, Regional Senior Vice President of Comcast, stated Indianapolis may be on the cutting edge but Comcast holds franchise agreements in Chicago, Boston, Philadelphia, Detroit and Washington D.C. He stated what you have here is a couple of people that are trying to set a new precedent. He said he is getting disheartened by continuing to fight this issue. Stating the Board in Mike’s fax, presents that this issue has already been tackled in previous audits. He stated this is continually being called revenue; but that it is not revenue but an incentive to launch a product; stating it’s a discount for a wholesaler to sale to a distributor. Mr. Robertson stated that in the Charter Communications case, the Securities and Exchange Commission required Charter to take it out of their revenue line item and put it into expense. He stated he thinks the Board is seeing just a few pieces from the Director that makes this a mountain out of a mole hill.

Mr. Maultra stated when this issue went before the arbitrator in Chicago the arbitrator shot down the Comcast representation’s that launch fees do not fall under the premise of G.A.A.P. (general accepted accounting principals). Mr. Maultra said GAAP does not apply when you are looking at a franchise agreement that takes a look at all revenue (franchise fees based on gross) because the profitability of the cable system depends upon occupying the public rights of way. He stated the arbitrator shot Comcast down stating that does GAAP not apply. Stating that was the arbitration, Mr. Robertson referred to, in the letter to the Agency, when Comcast was seeking the guidance to keeping this matter open-ended when it stated as such in its letter to the City last year.

Mr. Robertson stated he maintains launch fees are not revenue and he believes the Board role is to be a consumer advocate.

Mr. Maultra said to Mr. Robertson, that is not what Mr. Robertson said in his March 1, 2004 letter to the City. Mr. Maultra stated that Mr. Roberston said in that letter that Comcast wanted to keep this matter of launch fees open and that Mr. Robertson was looking at the L.A. arbitration for direction in going forward on Indianapolis.

Mr. Robertson stated in Los Angeles. Stating he that was settled and not specifically in launch fees. Stating the Board is suppose to be a consumer advocate for the cable subscribers stating he would not be a responsible business man if he did not pass thru the cost. Stating Comcast would have to pass it thru to customers.

Mr. Blum stated the fact is that Comcast does not have to pass the fee thru, however Comcast chooses to do so.

Mr. Robertson stated the fact is the Board does not have to collect it but they choose to.

Mr. Lynch stated the problem is there is no defining adjudication that has ever been made. Stating no one got the trump card.

Mr. Delph stated he disagrees with that. He said the Cable Board has voted at least twice against the issue of launch fees as a component of gross revenues.

Mr. Maultra stated not this board.

Mr. Blum stated he was not aware of that.

Mr. Delph stated he would provide the minutes of the meeting.

Mr. Blum stated he is not clear if that vote pertained just to that audit or the broader question at hand.

Mr. Mark Apple stated the first vote in January of 1999, was to the specific audit stating the second vote, in June of 1999, was to the issue in general.

Mr. Maultra stated the Board also asked the auditor to look at launch fees too. Stating Charlie Hiltunen mentioned when the Board voted down launch fees previously, to that, the Board was doing it based on the representations by Comcast and Time Warner that launch fees were an offset or contra expense without detail to substantiate it.

Mr. Delph stated there was not a dispute of the financial statement Comcast provided several months ago.

Mr. Blum stated he disputed all the zeros.

Mr. Maultra asked why that was.

Mr. Blum stated he does not want to go down that road.

Mr. Delph stated it was a pro forma outline of how the accounting on how Comcast p&l had weighed out.

Mr. Lynch stated it does not appear that new information is coming forward. He stated the Board represents the customer, city and the business on the board and the Board needs to take an interest of all parties. He said this debate is not in the interest of the customer. He said whether it’s in interest of the other parties he does not know. He offered a motion to maintain the current interpretations of revenue as defined in the franchise and the Board accepts the definition of launch fees as contra expense and move on.

Mr. Blum asked for a second to the motion.

Mr. Winston asked if Mr. Lynch was willing to accept amendment to that.

Mr. Lynch stated yes.

Mr. Winston stated that he thinks the Board needs to empower Counsel to negotiate and report to the Board. Stating he has only been on the Board for three months and records go back for six years. Stating Comcast position is rigid, the board position is rigid, and he would like to see counsel to do some negotiations with a date to report to the board. Stating he is asking for the amendment, to Mr. Lynch’s motion, to allow legal counsel to get involved in the negotiations and report back to the Board by a certain date.

Mr. Lynch asked would there be specific guideline on how long.

Mr. Winston stated by the next meeting.

Mr. Delph asked at what point the Board wants Comcast to negotiate. Stating if it is the fundamental questions of whether or not launch fees is revenue; Comcast has no negotiation there. He said Comcast does not believe that it is revenue stating it is a contra expense. He said that seems to be what the issue this debate has been framed on. Stating there is nothing, more to discuss on launch fees.

Mr. Winston stated that Counsel and Comcast need to have a discussion.

Mr. Maultra asked if the Board would be supportive to looking to the FCC to get some clarification on this. Stating it certainly cannot hurt.

Mr. Winston asked how long it would take to get a response.

Mr. Maultra stated he does not know.

Mr. Lynch stated he is not interested in a long drawn out phase. Stating it is a very simple question.

Mr. Maultra stated with the kind of money that is involved he would think there would be some patience with working with the FCC.

Mr. Lynch stated it is the kind of money that would be passed on to the consumer.

Mr. Maultra stated what if the FCC says the money cannot be passed on.

Mr. Delph stated Comcast has been at the Board meeting every month since January prepared to deal with this issue. He stated he has literally cut and pasted his comments every month since January.

Mr. Blum stated he realizes that Mr. Delph is frustrated.

Mr. Delph stated he is very frustrated.

Mr. Blum stated he understands that, stating we all are frustrated. Stating time has been taken to educate all three parties on the issue. He stated Comcast is ahead of the curve of the issue. He stated he feels there should be one more time to try to resolve this. He also stated he do not think all parties, collectively, tried hard enough to resolve this.

Mr. Delph stated he would be more than happy to sit down with Rick and counsel. Stating Comcast is not negotiating on launch fees as a revenue stream.

Mr. Maultra stated Rusty mentioned that the Los Angeles settlement did not mention launch fees. He stated the settlement mentioned launch fees and the dollar amount it settled upon.

Mr. Blum stated his guess would be the figure and everything around it was arrived at after some face-to-face discussions between the two parties.

Mr. Delph stated Comcast has five-divisions. Stating in that case there was a set arbitration process set up. He said launch fees was a minor issue in the Los Angeles settlement.

Mr. Blum stated there is an amended motion on the table. He asked Mr. Lynch if he has to accept the amendment.

Mr. Lynch stated he wanted to be clear. He asked if the amended motion would bring this issue to closure by next meeting.

Mr. Winston asked if there is a meeting next month.

Mr. Blum stated yes.

Mr. Winston stated that would be about 30 days.

Mr. Blum asked Mr. Bryant if he felt that was adequate time.

Mr. Bryant asked what would be the Board intent at the June meeting. He asked would it be to receive a report on the progress of discussions or to take final action on the matter regardless of the progress made.

Mr. Blum stated he has a hard time believing this will be settled in a month.

Mr. Winston asked Mr. Bryant how much time he thinks he needs.

Mr. Bryant stated he will use the time the Board gives him.

Mr. Winston asked how much time it will take to get the FCC interpretation. Stating the dollar amount is accumulating and Comcast has.

Mr. Blum asked if it would be possible to conclude this audit by separating out the launch fee issue until the Board gets the FCC interpretation on launch fees.

Mr. Lynch stated there are two issues. Stating one is if the definition that Rick is advocating is correct or not. He also stated that what the Board needs to consider is if it is defined in a way that allows the City to collect revenue against those non-subscribers or will it be passed on to the subscribers. He stated the answer is yes, so either way, from his perspective, no matter what the outcome is the City does not want to do it. He stated regardless of the outcome of the FCC rule it is not in the interest of the consumer.

Mr. Blum stated part of the question that is asked, to the FCC, is whether it can be passed thru or not.

Mr. Maultra stated the question is; can franchise fee audits be recovered by the operators as a pass through to subscribers? He stated that Counsel has said the money is owed to the City.

Mr. Blum stated he understands that.

Mr. Delph stated because that is what Mr. Maultra told counsel to tell them.

Mr. Maultra stated he disagrees and that Counsel has a mind of his own. He stated Counsel independently came up with that legal opinion.

Mr. Blum stated that was not constructive (this conversation).

Mr. Delph stated he has tried to be constructive since January and he will continue to do so.

Mr. Winston stated his concerns are that Comcast’s Feinburg will make a lot of money because soon as the FCC rules Comcast will appeal it. He states his major concern is that if it rules the other way it will be more increase to the subscriber. He said he wants to allow the parties to talk and report to the Board.

Mr. Jim Smashey, representing himself as a resident, stated this would apply across the industry. He stated there needs to be a cooling off period. He also stated he does not think any issue will be resolved by going to the FCC. Mr. Smashey stated the procedure would be to go and get a court decision and then go to the FCC stating that is why there is a local authority. He asked Mr. Blum to vote on the amendment first.

Motion was made by Mr. Winston requesting Counsel to enter into negotiations with Comcast along with the Executive Director, and to report back to the Cable Board within 30 days on Monday June 20, 2005. Motion seconded by Mr. Lynch. Motion carried unanimously.

Mr. Winston asked that the parties genuinely and honestly have the meeting.

Mr. Delph stated he is more than happy to meet with Rick and Counsel. He stated he would encourage the Cable Board members to participate, as well, so they can get a first hand experience on what’s going on.

Mr. Blum stated unfortunately, Comcast could only get one Board member at a time, right now.

Mr. Delph stated they will have three meetings.

Mr. Nesbit stated he noticed the item on the agenda was the audit for Bright House and Comcast, stating Bright House have not seen the audit report.

Mr. Blum stated he believes that this matter and discussion would also pertain to the previous audit for Bright House. He stated whatever the Board does for one it would do for the other.

Mr. Nesbit stated he would say to Mike Delph “we too”.

Mr. Smashey complained of not having competition and not having a full Cable Board.

Mr. Blum encouraged Mr. Smashey to contact his City County Councilor in regards of not having a full board.

Mr. Blum adjourned the meeting.

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