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93-052 ORD REGULATING RATES CHARGED BY CABLE TELEVISION OPERATORS WITHIN COP FOR THE BASIC SERVICE TIER AND RELATED EQUIMENT AND INSTALLATION CHARGES ORDINANCE NU. 93-052 AN ORDINANCE REGULATING THE RATES CHARGED BY CABLE TELEVISION OPERATORS WITHIN THE CITY OF PARIS, TEXAS, FOR THE BASIC SERVICE TIER AND RELATED EQUIPMENT AND INSTALLATION CHARGES, IN ACCORDANCE WITH THE CABLE TELEVISION CONSUMER PROTECTION AND COMPETITION ACT OF 1992, PUSLIC LAW N0. 102-385; PROVID- ING DEFINITIUNS; REQUIRING NUTICE OF BASIC CABLE TIER AVAIL- ABILITY; REQUIRING CERTAIN INFORMATION OT3 CABLE MONTHLY BILLS; PROHIBITING NEGATIVE UPTION B,ILLING; PROVIDING FOR ITEMIZED SUBSCRIBER BILLS; PROVIDING FORMULA FOR CALCULATION OF BASIC SERVICE TIER RATES AND EQUIPMENT AND INSTALLATION CHARGES; PROVIDING FOR COST ACCOUNTING AND COST ALLOCATION REQUIREMENTS; PROVIDING FOR PASS-THROUGEi OF COSTS OF SATISFY- ING FRANCHISE REQUIREMENTS; PROVIDING GUIDELINES FOR CERTAIN CUSTOMER CHARGES; REQUIRING NOTICE OF PROPOSE:D RATE IN- CREASES; PROVIDING FOR REVIELd OF BASIC CABLE SERVICE AND EQUIPMENT RATES; PROVIDING PROTECTIONS FOR PROPRIETARY INF'ORr1ATI0N; PLACING BURDEN OF PROOF ON THE CABLE OPERATOR; PROVIDING FOR WRITTEN DECISIONS BY THE CITY; PROVIDING FOR POSSIBLE RATE REDUCTIONS AND REFUNDS; PROVIDING FOR SEVER- ABILITY; ORDAINING OTHER PROVISIONS RELATED TO THE SUBJECT NrATTER HEREOF; AND YROVIDING FOR AN EFFECTIVE DATE OF NOVEMBER 15, 1993. WHEKEAS, the Cable Television Consumer Protection and Competition Act of 1992, Public Law No. 102-385 ("Cable Act of 1992") became law on October 5, 1992; and, WHEREAS, the Cable Act of 1992 provides that municipal- ities may regulate the rates charged by cable operators for the cable service tier and related equipment charges to subscribers within the corporate iimits of the municipality if the operator is not subject to effective competition; and, WHEREAS, the City of Paris, hereinafter called CITY, in acco dance with the Cable Act of 1992 ar,d regulations adopted thereunder by the Federal Communications Commission, herein- after called the FCC, filed the appropriate documents with the FCC to obtain certification to regulate the basic service tier rates and related equipment and installation charges of all cable operators within CITY; and, WHEREAS, in order to be able to regulate the basic service tier rates and related equipment and installation charges, it is necessary for CITY to adopt the following regulatioris in conformance with the regulations of the FCC; and, WHEREAS, it is the intent of CITY to regulate cable TV operators within CITY to the full extent authorized by the Cable Act of 1992; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS: GENERAL PROVISIONS Section 1. The followin re ulations are hereb a o te an shall e known as the Cable TV Regulations for the City of Paris, Paris, Texas. Page 1 Section 2. Definitions. Unless otherwise apparent, the following definitions shall apply in this ordinance: (a) Affiliated programmer. An affiliated programmer is a programmer with an ownership interest of 5 percent or more including general partnership interests, direct ownership interests, and stock interests in a corporation where such stockholders are officers or directors or who directly or indirectly own 5 percent or more of the outstanding stock, whether voting or nonvoting. Such interests include limited partnership interests of 5 percent or greater. (b) Basic service tier. The basic service tier shall, at a minimum, include all signals of domestic television broadcast stations provided to any subscriber (except a signal secondarily transmitted by satellite carrier beyond the local service area of such station, regardless of how such signal is ultimately received by the cable system), and public, educational, and governmental programming required by the tranchise to be carried on the basic tier, and any additional video programming signals or service added to the basic tier by the cable operator. (c) Cable operator. Cable operator means any person or group of persons (1) who provides cable service over a cable system within CITY under a franchise issued by CITY, and who directly or through one or more affiliates owns a significant interest in such cable system, or (2) who otherwise controls or is resporrsible for, through any arrangement, the manage- ment and operation of such a cable system. (d) Cable programming service. Cable programming service includes any video programming provided over a cable system, regardless of service tier, including installation or rental of equipment used for the receipt of such video programming, other than: (1) Video programming carried on the basic service tier as defined in this section; (2) Video programming affered on a pay-per-channel or pay-per-program basis; or (3) A combination of multiple channels of pay-per- channel or pay-per-program video programming offered on a multiplexed or time-shifted basis so long as the combined service: (A) Consists of commonly-identified video programming; and (B) is not bundled with any regulated tier of service. (e) CITY. The City of Paris, Paris, Texas. (f) FCC. The Federal Communications Commission. (g) Small system. A small system is a cable television system that serves fewer than 1,000 subscribers. The service area of a small system is determined by the number of sub- scribers that are served by a system's principal headend, iricluding any other headend or microwave receive sites that are technically integrated ta the system's principal headend. Page 2 Section 3. Information to be rovided b cable operator on monthly su scri er ills. A cable operator must provide the following information to subscribers on monthly bills: (a) A statement substantially the same as the follow- ing: "The basic service tier rates and related equipment and installation charges are regulated by the City. If you have any questions or comments regarding these rates, you may call or write the City at (903) 785-7511, P. 0. Box 9037, Paris, Texas 75461"; and (b) The FCC community unit identifier for the basic cable system. Section 4. Negative option billing. A cable operator shall not charge a subscriber for any service or equipment that the subscriber has not affirma- tively requested by name. This provision, however, shall not preclude the addition or deletion of a specific program from a service offering, the addition or deletion of specific channels from an existing tier or service, or the restructur- ing or division of existing tiers of service that do not result in a fundamental change in the nature of an existing service or tier of service, provided that such change is otherwise consistent with applicable regulations. A sub- scriber's failure to refuse a cable operator's proposal to provide such service or equipment is not an affirmative request for service or equipment. A subscriber's affirmative request for service or equipment may be made orally or in writing. Section 5. Subscriber bill itemization. (a) Cable operators may identify as a separate line item of each regular subscriber bill the following: (1) The amount of the total bill assessed as a franchise fee. (2) The amount of the total bill assessed to satisfy any requirements imposed on the cable operator by the franchise agreement to support public, educational, or governmental channels or the use of such channels. (3) The amount of any other fee, tax, assessment, or charge of any kind imposed by any governmental authority on the transaction between the operator and the subscriber. In order for a governmental fee or assessment to be separately identified under this section, it must be directly imposed by a governmental body on a transaction between a subscriber and an operator. (b) The charge identified on the subscriber bill as the total charge for cable service should include all fees and costs itemized pursuant to this section. RATE PROVISIONS Section 6. Rates for the basic service tier. (a) Basic service tier rates. Basic service tier rates are subject to regulation by CITY in order to assure that Page 3 they are in compliance with the requirements of 47 U.S.C. § 543. Rates that are demonstrated, in accordance with this ordinance, not to exceed the "Initial Permitted Per Channel Charge" or the "Subsequent Permitted Per Channel Charge" as described below, or the equipment charges as specified in Section 7, will be accepted as in compliance. The maximum monthly charge per subscriber for the basic service tier offered by a cable operator shall consist of a permitted per channel charge multiplied by the number of channels on the tier, plus a charge for franchise fees. The maximum monthly charges for the basic service tier shall not include any charges for equipment and installations. Charges for equip- ment and installations are to be calculated separately pursuant to Section 7 of this ordinance. (b) Initial Permitted Yer Channel Charge. (1) For purposes of this section, the initial date of regulation for the basic service tier shall be the date on which CITY gives written notice to the cable operator that (1) CITY has been certified by the FCC to regulate rates for the basic service tier and (2) this ordinance has been adopted by CtTY. (2) For purposes of this section, rates "in effect on the initial date of regulation" or "in effect on September 30, 1992," shall be the rates charged to subscribers tor service received on that respective date. (3) The permitted per channel charge on the initial date of regulation shall be, at the election of the cable operator, either: (A) A charge determined pursuant to a cost- of-service proceeding; or (B) The charge specified in subparagraphs (i), (ii), or (iii) of this paragraph as applic- able; (i) If the operator's per channel charge for the basic service tier and equipment in effect on the date of initial regulation is equal to or below the benchmark per channel charge, as adjusted forward for inflation from September 30, 1992, to the date of initial regulation, then the permitted per channel charge shall be the per channel charge in effect on the date of initial regulation, adjusted for equipment. (ii) If (1) the operator's per channel charge for the basic service tier and equip- ment in effect on the date of initial regula- tion is above the benchmark per channel charge, as adjusted forward for inflation from September 30, 1992, until the initial date of regulation, and (2) the operator's per channel charge tor the basic service tier and equip- ment in effect on September 30, 1992, was above the benchmark per channel charge, then the permitted per channel charge is nine- tenths (9/10) of the per channel charge in effect on September 30, 1992, but no lower than the benchmark per channel charge, additionally adjusted for inflation from September 30, 1992, to the initial date of Page 4 regulation, for equipment, and for any changes in the number of channels offered on the basic service tiers. (iii) If (1) the operator's per channel charge for the basic service tier and equip- ment in effect on the date of initial regula- tion is above the benchmark per channel charge, as adjusted forward for inflation from September 30, 1992, until the initial date of regulation, and (2) the operator's per channel charge for the basic service tier and equip- ment in effect on September 30, 1992, was below the benchmark per channel charge, then the permitted per channel charge is the benchmark rate per channel adjusted for inflation from September 30, 1992, to the initial date of regulation, for equipment, and for any changes in the number of channels offered on the basic service tier. (c) Subsequent Permitted Per Channel Charge. After the initial date of regulation, the permitted per channel charge for the basic service tier shall be, at the election of the cable operator, either: (1) A per channel rate determined pursuant to a cost-ot-service showing, or (2) The prior permitted per channel charge pre- viously approved by CITY, adjusted for inflation and external costs in accordance with the price cap require- ments set forth in paragraph (d) of the section. (d) Price cap requirements. (1) Inflation adjustments. Permitted per channel charges for the basic service tier may be adjusted periodically on account of inflation. Adjustments to permitted per channel charges on account of inflation shall be based on changes in the Grass National Product Price Index ("GNP-PI") published by the Bureau of Economic Analysis of the United States Department of Commerce. (2) External costs. Permitted per channel charges tor the basic service tier may also be adjusted for changes in external costs measured on a per channel per subscriber basis. To the extent external cost increases are greater or less than the GNP-PI for the relevant period, the per channel charge will be adjusted accord- ingly. Per channel charges may not be increased if external costs other than franchise fees increase at a rate less than inflation. Permitted per channel charges also shall be decreased on account of external costs to the extent such costs decrease from previous levels. (A) Categories. External costs shall consist of costs in the following categories: (i) State and local taxes applicable to provision of cable television service; (ii) Franchise fees; (iii) Costs of complying with franchise requirements, including costs of providing public, educational, and governmental access channels as required by CITY; Page 5 (iv) Retransmission consent fees; and (v) Programming costs. (B) The permitted per channel charge for the basic service tier shall be adjusted on account of programming costs and retransmission consent fees only for programming or broadcast signals offered on that tier. (C) The permitted per channel charge shall not be adjusted for costs of retransmission consent fees or changes in those fees incurred prior to October 6, 1994. (D) The starting date for adjustments on account of external costs for the basic service tier shall be the initial date of regulation or 180 days from September 1, 1993, if the initial date of regulation occurs on or after 180 days from Septem- ber 1, 1993. (E) Changes in franchise fees shall not result in an adjustment to permitted per channel charges, but rather shall be calculated separately as part of the maximum monthly charge per sub- scriber for the basic service tier. (F) Adjustments to permitted per channel charges on account of increases in costs of pro- gramming obtained from affiliated programmers shall be the lesser of actual increases or the previous permitted rate level increased by the amount of inflation. (G) Adjustments to permitted per channel charges on account of increases in costs of pro- gramming shall be further adjusted to reflect any revenues received by the operator from the program- mer. Section 7. Rates for e ui ment and installation used to receive t e asic service tier. (a) Scope. The equipment regulated under this section consists of all equipment in a subscriber's location that is used to receive the basic service tier, regardless of whether such equipment is additionally used to receive other tiers of regulated programming service and/or unregulated service. Such equipment shall include, but is not limited to: (1) Converter boxes; (2) Remote control units; (3) Connections for additional television receivers; and (4) Other cable home wiring. Subscriber charges for such equipment shall not exceed charges based on actual costs in accordance with the require- ments set forth below. (b) Unbundling. A cable operator shall establish rates for remote control units, converter boxes, other customer equipment, installation, and additional connections separate Page 6 from rates for basic service tier. In addition, the rates for such equipment and installations shall be unbundled one from the other. (c) Equipment basket. A cable operator shall establish an Equipment Basket, which will include all costs associated with providing customer equipment and installation under this section. Equipment Basket costs shall be limited to the direct and indirect material and labor costs of providing, leasing, installing, repairing, and servicing customer equipment, as determiried in accordance with the cost account- ing and cost allocation requirements of Section 8. The Equipment Basket shall not include general administrative overhead including general marketing expenses. The Equipment Basket may include a reasonable profit. (d) Hourly service charge. A cable operator sha11 establish charges for equipment and installation using the Hourly Service Charge ("HSC") methodology. The HSC shall equal the operator's antiual Equipment Basket costs, excluding the purchase costs of customer equipment, divided by the total person hours involved in installing, repairing, and servicing customer equipment during the same period. The purchase cost of custouier equipment shall include the cable operator's invoice price plus all other costs incurred with respect to the equipment until the time it is provided ta the customer. The HSC is calculated according to the following formula: HSC = (EB - CE) = H Where, EB = annual Equipment Basket cost; CE = annual purchase cost of all customer equipment; and H= person hours irivolved in installing and repairing equipment per year. (e) Installation charges. Installation charges shall be either: (1) The HSC multiplied by the actual time spent on each individual installation; or (2) The HSC multiplied by the average time spent on a specific type of installation. (f) Remote charges. Nionthly charges for rental of a remote control unit shall consist ot average annual unit purchase cost of the type of remote leased, including acqui- sition price and incidental cost such as sales tax, financing and storage up to the time it is provided to the customer, added to the product of the HSC times the average number of hours annually repairing or servicing a remote, divided by 12 to determine the monthly lease rate for a remote according to the following formula: Monthly Charge =[UCE -(HSC x HR)] = 12 Where, HR = average hours repair per year; and UCE = average annual unit cost of remote. Separate charges shall be established for each signifi- cantly different type of remote control unit. (g) Other equipment charges. The monthly charges for rental of converter boxes and other customer equipment shall be calculated in the same manner as for remote control units. Separate charges shall be established for each significantly different type af converter box and each significantly different type of other customer equipment. Page 7 (h) Additional connection charges. The costs of iristallation and monthly use of additional connections shall be recovered as charges associated with the installation and equipment cost categories, and at rate levels determined by the actual cost methodology presented in the foregoing paragraphs (e), (f), and (g) of this section. An operator may recover additional programming costs and the costs of signal boosters on the customer's premises, if any, associated with the additional connection as a separate monthly unbundled charge for additional connections. (i) Charges for equipment sold. A cable operator may sell customer premises equipment to a subscriber. The equipment price shall recaver the operator's cost of the equipment, including costs associated with storing and preparing the equipment for sale up to the time it is sold to the customer, plus a reasonable profit. An operator may sell service contract for the maintenance and repair of equipment sold to subscribers. The charge for a service contract shall be the HSC times the estimated average number ot hours for maintenance and repair over the life of the equipment. (j) Promotions. A cable operator may offer equipment or installation at charges below those determined under paragraphs (e) through (g) of this section, so long as those offerings are reasonable in scope in relation to the opera- tor's overall offerings in the Equipment Basket and not unreasonably discriminatory. Operators may not recover the cost of a promotional offering by increasing charges for other Equipment Basket elements, or by increasing programming service rates above the maximum monthly charge per subscriber prescribed by this ordinance. As part of a general cost-of- service showing, an operator may include the cost ot promo- tions in its general system overhead costs. (k) F'ranchise fees. Equipment charges may include a properly allocated portion of franchise fees paid to CITY. Section 8. Cost accounting and cost allocation requirements. (a) Applicability. The requirements of this section are applicable for purposes of rate adjustments on account of external costs and for cost-cf-service showings. (b) Generally accepted accounting principals. Cable operators shall maintain their accounts in accordance with generally accepted accounting principles, except as otherwise directed by CITY. (c) Accounts required. Cable operators shall maintain accounts in a manner that will enable identification of appropriate costs and application of the City's cost assign- ment and allocation procedures, to cost categories necessary for rate adjustments due to changes in external costs and for cost-of-service showings. Such categories shall be suffi- ciently detailed and supported to permit verification and audit against the company's accounting records. (d) Accounting level. Except to the extent indicated below, cable operators shall aggregate expenses and revenues at either the franchise, system, regional, or company level in a manner consistent with practices of the operator as of April 3, 1992. However, in all events, cable operators shall identify at the franchise level their cost of franchise requirements, tranchise fees, local taxes, and local program- ming. (e) Cost allocation requirements. Page 8 (1) For purposes of establishing expenses at the franchise level, cable operators shall allocate expenses and revenues aggregated at higher levels to the fran- chise level based on the ratio ot the total number of subscribers served at the franchise level to the total number of subscribers served at the higher level. (2) Except to the extent indicated below, all categories af costs allocated to, or identified at, the franchise level shall be allocated ta the basic service tier based on the ratio of channels in the basic tier to the total number of channels offered in the franchise area, including nonregulated and leased commercial access channels. These costs shall be allocated to each tier of cable programming services based on the ratio of channels in that tier to the total number of channels offered in the franchise area. (3) Ccsts of programming and retransmission consent fees, however, shall be allocated only to the tier on which the programming or broadcast signal at issue is offered. (4) Costs of franchise fees shall be allocated among equipment and installations, program service tiers and subscribers in a manner that is most consistent with the methodology of assessment of franchise fees by CITY. (5) Costs of public, educational, and governmental access channels carried on the basic tier shall be directly assigned to the basic tier where possible. (f) Common costs. Expenses which cannot be assigned to ariy single expense or service category shall be described as common costs. Common costs will be allocated to expense categories as follows: (1) Wherever possible, common costs are to be allocated to service cost categories based on direct analysis of the origin of the costs themselves. (2) When direct analysis is not possible, common costs shall, if possib]_e, be allocated to service cost categories based on indirect, cost-causative linkage to other costs directly assigned or allocated to the service cost category. (3) When neither direct nor indirect measures of cost allocation can be found, common costs shall be allocated to each service cost category based on the ratio of all costs directly assigned and attributed to a service cost category over total costs directly assign- able and attributable. (g) Unrelated expenses and revenues. Cable operators shall exclude from cost categories used to develop rates for the provision of basic service tier and equipment, any direct or indirect expenses and revenues not related to the provi- sion of such services. Common costs of providing basic service tier and equipment, and unrelated activities shall be allocated between them in accordance with paragraph (f) of this section. (h) Part-time channels, In situations where a single channel is divided ori a part-time basis and is used to deliver service associated with different tiers or with pay per channel or pay per view service, a reasonable and docu- mented allocation of that channel between services shall be required along with the associated revenues and costs. Page 9 Section 9. Costs of franchise requirements. (a) The costs of satisfying franchise requirements to support public, educational, and governmental channels shall consist of the sum of: (1) All per channel costs for the number of channels used to meet franchise requirements for public, educational, and governmental channels; (2) Any direct costs of ineeting such franchise requirements; and (3) A reasonable allocation of general and admin- istrative overhead. (b) The costs of satisfying any other requirement under the rranchise shall consist of the direct and indirect costs, including a reasonable allocation of general and administra- tive overhead. Section 10. Charges for customer changes. (a) This section shall govern charges tor any changes in service tiers or equipment provided to the subscriber that are initiated at the request of a subscriber after initial service installation. (b) The charge for cUStomer changes in service tiers effected solely by coded entry on a computer terminal or by other similarly simple methods shall be a nominal amount, not exceeding actual costs, as defined in paragraph (c) of this section. (c) The charge for customer changes in service tiers or equipment that involve more than coded entry on a computer or other similarly simple method shall be based on actual cost. The actual cost charge shall be either the HSC, as defined in Section 6 of this ordinance, multiplied by the number of person hours needed to implement the change, or the HSC multiplied by the average number of person hours involved in implementing customer changes. (d) A cable operator may establish a higher charge for changes effected solely by coded entry on a computer terminal or by other similarly simple methods, subject to approval by CITY, for a subscriber changing service tiers more than two times in a twelve month period, except for such changes ardered in response to a change in price or channel line-up. If a cable system adopts such an increased charge, the cable system must notify all subscribers in writing that they may be subject to such a charge tor changing service tiers more than the specified number of times in any twelve month period. (e) Downgrade charges that are the same as, or lower than, upgrade charges are evidence of the reasonableness of such downgrade charges. (f) For 30 days after notice of retiering or rate increases, a customer may obtain changes in service tiers at no additional charge. Page 10 REGULATORY PROVISIONS Section 11. Notification of proposed rate increase. (a) A cable operator shall provide written notice ta a subscriber of any increase in the price to be charged for the basic service tier or associated equipment at least 30 days befare any proposed increase is effective. The notice shall include a provision stating that protests to such process may be filed with CITY at P. 0. Box 9037, Paris, Texas. The notice shall also include a statement that such protests must be filed with CITY no later than 30 days after the notice is received by the subscriber. (b) In additiori to the notice required in paragraph (a), the cable operator shall give CITY a minimum of 30 days advance written notification of any changes in rates for cable programming service or associated equipment. Section 12. Initiation of review of basic cable service and equipment rates. A cable operator shall file its schedule of rates for the basic service tier and associated equipment with CITY within 30 days of receiving written notification from CITY that CITY has been certified by the FCC to regulate rates for the basic service tier, or by November 15, 1993, whichever is later. Section 13. City review of basic cable rates and equipment costs. (a) After a cable operator has submitted to CITY for review its existing rates for the basic service tier and associated equipment costs, or a proposed increase in these rates (including increases in the baseline channel charge that results from reductions in the number of channels in a tier) the existing rates will remain iri effect or the pro- posed rates will become effective after 30 days from the date of submission to CITY. Provided, however, that CITY may toll this 30-day deadline for an additional time by issuing a brief written order as descr.ibed in paragraph (d) within 30 days of the rate submission explaining that it needs addi- tional time to review the rates. CITY may, at any time, require the cable operator to produce additional information, including proprietary information, that CITY deems necessary in order to make a rate determination. If proprietary informatian is provided, the provisions of Section 14 hereof will apply to such information. (b) Upon receipt by CITY, the cable operator's submit- tal sha11 be available for public inspection and copying. Comments on the submittal by interested persons may be submitted in writing or orally at a City Council meeting held at any time during the initial 30-day review period. Written comments shall be addressed to the City Manager or the City Clerk, and must by received prior to the end of the 30-day review period. (c) If a cable operator submits a proposed rate in- crease for review that appears to exceed the presumptively reasonable level and does not include a cost-of-service showing to justify the rate, CITY wi11 permit the cable operator to cure this deficiency and submit a cost-of-service showing. Page 11 (d) If CITY is unable to determine, based upon the material submitted by the cable operator, that the existing or proposed rates are within the permitted basic service tier change or actual cost of equipment as defined in Sections 6 and 7 hereof, or if a cable operator has submitted a cost-of- service showing pursuant to Sections 8 and 15 hereof, seeking to justify a rate above the basic service tier charge as defined in Sections 6 and 7 hereof, CITY may toll the 30-day deadline in paragraph (a) of this section to request and/or consider additional information or to consider the comments from interested parties as follows: (1) For an additional 90 days in cases not in- volving cost-of-service showings; or (2) For an additional 150 days in cases involving cost-of-service showings. The order tolling the effective date of the proposed rate shall explain why CITY could not make the necessary determination, and it shall also provide the cable operator an opportunity to cure any deficiencies in its original filing. During the additional time periods provided in this paragraph, comments from interested persons may be submitted in writing, as provided in paragraph (b) of this sectiori, or orally during at least one City Council meeting duririg the period of abatement. (e) If CITY has availed itself of the additional 90 or 150 days permitted in paragraph (c) of this section, and has taken no action within these additional time periods, then the proposed rates will go into effect at the end of the 90- or 150-day period, or existing rates will remain in effect at such times, subject to refunds if CITY subsequently issues a written decision disapproving any portion of such rates. Provided, however, that in order to order refunds, CITY must have issued a briet written order to the cable operator by the end of the 90- or 150-day period permitted in paragraph (c) of this section directing the operator to keep an accu- rate account of all amounts received by reason of the rate in issue and on whose behalf such amounts were paid. Section 14. Proprietary information. (a) If CITY has required the cable operator to produce proprietary information under the provisions of this ordinance, the cable operator may submit therewith a request that such information not be made routinely available for public inspection. A copy of the request shall be attached to and shall cover all af the materials to which it applies and all copies of those materials. If feasible, the mater- ials to which the request applies shall be physically sepa- rated from any materials to which the request does not apply. If this is not feasible, the portion of the materials to which the request applies shall be identitied. (b) Each such request shall contain a statement of the reasons for withholding the materials from inspection and of the facts upon which those reasons are based. If the request is that the materials be withheld from inspection for a limited period of time, that period shall be specified. (c) Casual requests which da not comply with the requirements of paragraphs (a) and (b) of this section will not be considered. Page 12 (d) Upon receipt of a request in compliance with paragraphs (a) and (b), CITY will not grant routine public access to the materials. A letter to that effect will be placed in a public file in lieu of the materials withheld from public inspection. (e) Provided, however, if a written request for the materials is received by CITY pursuant to the Open Records Act, Chapter 552, Texas Government Code, CITY will notify the person providing the materials of the request for the mater- ials. If the person providing the materials requests CITY to do so, C1TY will request an opinion from the Attorney General, pursuant to the Open Records Act, regarding the public availability of the materials. If the person provid- ing the materials does not request CITY to request an opinion from the Attorney General, CITY may, at its option, either request such an opinion or provide the materials to the public. (f) If the Attorney General issues an opinion or letter ruling requiring CITY to make the materials available to the public, the materials will be made available for public inspection. (g) If no request for confidentially is submitted, CITY assumes no obligation to consider the need for nondisclosure. Section 15. Burden of proof. (a) A cable operator has the burden of proving that its existing or proposed rates for basic service and associated equipment comply with 47 U.S.C. § 543, and Sections 6 and 7 hereof. (b) For an existing or a proposed rate for basic service tier or associated equipment that is within the permitted tier charge and actual cost of equipment as set forth in Sections 6 and 7, the cable operator must submit the appropriate FCC form to CITY. (c) For an existing or a proposed rate for basic service tier that exceeds the permitted tier charge as set forth in Section 6 and 7 hereof, the cable operator must submit to CITY a cost-of-service showing to justify the proposeci rates. The cost-of-service showing must be in conformance with Accounting and Cost Allocation Requirements as adopted and amended by the FCC for cable system operators. Section 16. Small systems. Option l. (a) A small system, as defined in Section 2, may certify that the small system's initial rates for basic service and associated equipment comply with Section 6 hereof. A certification by a small system under this Section shall be filed with CITY within 30 days of receiving written notification from CITY that CITY has been certified hy the FCC to regulate rates for the basic service tier. The certification shall be in writing, shall be signed by the General Manager of the system, and shall be verified. (b) Such certification shall be subject to verification by CITY on its own motion or upon complaint by a subscriber. CITY may request additional information from the operator in order to verify the certification. In the event proprietary Page 13 information is requested by CITY, the provisions of Section 14 hereof shall control the availability of such information to the public. (c) As used in this Section, "initial rates" shall mean those rates charged by the small system operator on the date on which CITY gives written notice to the cable operator that (1) CITY has been certified by the FCC to regulate rates for the basic service tier and (2) this ordinance has been adopted by CITY. (d) If CITY determines that the small system's certifi- cation is in error, it shall so notify the small system operator and shall require the small system to comply with all filing requirements for non-small systems in this ordi- nance. (e) Subsequent rate filings by a small system operator shall comply in all respects with the provisions of this ordinance. Option 2. (a) A small system, as defined in Section 2, may certify that the small system's rates for basic service and associated equipment, and subsequent rate increases, comply with Section 6 hereof. A certification by a small system under this Section tor its initial rates shall be filed with CITY within 30 days of receiving written notification from CITY that CITY has been certified by the FCC to regulate rates for the basic service tier. Certifications for subse- quent rate increases shall be filed with CITY at the same time that notice is given to the small system's subscribers of the proposed rate increasz, in conformance with Section 11 hereof. Al1 certifications shall be in writing, shall be signed by the General Manager of the system, and shall be verified. (b) Such certification shall be subject to verification by CITY on its own motion or upon complaint by a subscriber. CITY may request additional information from the operator in order to verify the certification. In the event proprietary information is requested by CITY, the provisions of Section 14 hereof shall control the availability of such information to the public. (c) If CITY determines that the small system's certifi- cation is in error, it shall so notify the small system operator and shall require the small system to comply with a11 filing requirements for non-small systems in this ordi- nance. Section 17. Written decision. (a) CITY shall issue a written decision in a ratemaking proceeding whenever it disapproves an initial rate for the basic service tier or associated equipment in whole or lIl part, disapproves a request for a rate increase in whole or in part, or approves a request for an increase in whole or in part over the objections of interested parties. CITY is not required to issue a written decision that approves an un- opposed existing or progosed rate for the basic service tier or associated equipment. (b) Public notice shall be given of any written deci- sion required in paragraph (a) of this section, by making the text of any written decision available to the public, and by publication of the decision one time in the official news- paper of CITY. Page 14 Section 18. Reduction of Rates; Prescription of Rates. (a) CITY may order a cable operator to implement a prospective reduction in basic service tier or associated equipment rate where necessary to bring rates into compliance with the standards set forth in Sections 6 and 7 hereof. (b) CITY may prescribe a reasonable rate for the basic service tier or associated equipment after it determines that a proposed rate is unreasonable. Section 19. Refunds. (a) CITY may order a cable operator to refund to subscribers that portion of previously paid rates determined by CITY to be in excess of the permitted tier charge or above the actual cost of equipment, unless the operator has submit- ted a cost-of-service showing which justifies the rate charged as reasonable. Before ordering a cable operator to refund previously paid rates to subscribers, CITY shall give the operator notice and opportunity to comment. The opera- tor's opportunity to comment upon the proposed refunds may be at any meeting of the City Council during the City's period of review of the operator's rates. If CITY has extended its review period under Section 13, and has issued an accounting order under Section 13(e), then the operator, prior to refunds being ordered, may request an opportunity to appear before the City Council to camment upon the proposed retunds. (b) An operator's liability for retunds is limited to a one-year period, except that an operator that fails to comply with a valid order issued by CITY shall be liable for refunds commencing from the effective date of such order until such time as it complies with such order. (c) The refund period shall run as follows: (1) From the date the operator implements a prospective rate reduction back in time to September 1, 1993, or one year, whichever is shorter. (2) From the date CITY issues an accounting order pursuant to Section 13(d) hereof, and ending on the date the operator implements a prospective rate reduction ordered by CITY or one year, whichever is shorter. (d) The cable operator, in its discretion, may imple- ment a refund in the following manner: (1) By returning overcharges to those subscribers who actually paid the overcharges, either through direct payment or as a specifically identified credit to those subscribers' bills; or (2) By means of a prospective percentage reduction in the rates for the basic service tier or associated equipment to cover the cumulative overcharge. This shall be reflected as a specifically identified, onetime credit on prospective bills to the class of subscribers that currently subscribe to the cable system. (e) Refunds shall include interest computed at applic- able rates published by the Internal Revenue Service for tax refunds and additional tax payments. Page 15 Section 20. Severability. If any section, sentence, or clause of this ordinance is for any reason held to be illegal, ultra vires, or unconsti- tutional, such validity sha11 not affect the validity of the remaining portions of this ordinance. Section 21. Governing Law; Venue. This ordinance shall be construed under and in accord- ance with the laws ot the State of Texas, the City Charter, and City Codes to the extent that such Charter and Codes are not in conflict with or in violation of the Constitution and laws of the United States or the State of Texas. Al1 obliga- tions of the parties hereunder are performable in Lamar County, Texas. In the event that any proceeding is brought to enforce the terms of this ordinance, the same shall be brought in Lamar County, Texas. Section 22. Compliance with Open Meetings Act. It is hereby officially found and determined that the meeting at which this ordinance is passed is open to the public as required by law and that public notice of the time, place, and purpuse of said meeting was given as required, in accordance with Chapter 551, Texas Government Code. SECtion 23. Repeal of Conflicting Ordinances. Al1 ordinances or parts of ordinances in conflict here- with are hereby expressly repealed. Section 24. Effective Date. This ordinance shall become effective on November 15, 1993. PASSED AND aDOPTED this 15th day of November, A.D., 1993. G rge Fis er, Mayor ATTEST: ~ Mattie Cunningham, Cit C er APPROVED ~ 0 FORM: T. K. Haynes, City Attorney Page 16