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HomeMy WebLinkAboutR-98-0913J-98-1036 09/24/98 RESOLUTION NO. 9 8 913 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF MIAMI, FLORIDA, ADOPTING A PRELIMINARY ASSESSMENT DETERMINING NOT TO RENEW THE MIAMI TELECOMMUNICATIONS, INC. CABLE TELEVISION LICENSE, ORDINANCE NO. 9332, AS AMENDED. WHEREAS, MIAMI TELECOMMUNICATIONS, INC. ("MTCIII) operates a cable television system pursuant to the City of Miami Cable Television Ord. No. 9223 and amendments thereto and the City of Miami Cable Television License Ordinance No. 9332 and amendments thereto; and WHEREAS, MTCI's cable television license expired on November 18, 1996; and WHEREAS, pursuant to Ordinance No. 11410, adopted October 30, 1996, said License was extended to February 18, 1997; and WHEREAS, pursuant to Ordinance No. 11443, adopted February 20, 1997, said License was further extended to May 18, 1997; and WHEREAS, pursuant to Ordinance No. 11504, adopted May 22, 1997, said License is extended on a month -to -month basis; and WHEREAS, the City initiated the formal cable television renewal process on April 17, 1997 in accordance with federal law (§47 U.S.C. 546a) due to lack of significant progress in informal negotiations between the City and MTCI; and My COMMISSIOM SLEETING OF SEP 2 8 IM a..*aft. I" 98- 913 WHEREAS, MTCI submitted on July 1, 1997 an updated response to a renewal questionnaire submitted by the City; and WHEREAS, the City issued the findings of its ascertainment proceeding in a report to MTCI on August 18, 1997; and WHEREAS, the City, in good faith, extended the deadline for receipt of MTCI's formal proposal to the City several times with a final deadline of no later than April 24, 1998; and WHEREAS, MTCI submitted its formal proposal for renewal on July 10, 1998; and WHEREAS, the City provided public notice of such proposal on September 5, 1998; and WHEREAS, the City and MTCI have been unable to agree on the terms and conditions of a cable television franchise renewal pursuant to the informal cable television franchise renewal process set forth in 47 U.S.C. § 546(h); NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA; Section 1. The recitals and findings contained in the Preamble to this Resolution are hereby adopted by reference thereto and incorporated herein as if fully set forth in this Section. Section 2. The City Commission hereby makes the following findings: The City Commission has reviewed the July 10, 1998 formal MTCI proposal received pursuant to 47 U.S.C. § 546(b)(1) and pursuant to § 546(c)(1), and has determined that: (a) MTCI has not substantially complied with the E 98- 90 material terms of the existing franchise; (b) The quality of MTCI 's service, including signal quality, response to consumer complaints, and billing practices, has not been reasonable in light of community needs; (c) MTCI does not have the financial, legal and technical ability to provide the services, facilities and equipment as set forth in the operator's proposal; and (d) MTCI's proposal is not reasonable to meet the future cable -related community needs and interests, taking into account the costs of meeting such needs and interests. Section 3. In light of the findings set forth above in Section 2 hereof, the City Commission of the City of Miami hereby adopts a preliminary assessment that MTCI's cable television license franchise with the City shall not be renewed on the terms and conditions set forth in the cable operator's formal proposal dated July 10, 1998. Section 4. The City shall commence an administrative proceeding pursuant to 47 U.S.C. § 546(c)(1), and shall hold a public hearing pursuant to Florida Statute 166.046(2), as applicable, after providing prompt public notice of such proceedings. MTCI and the City shall be afforded fair opportunity for full participation, including the right to introduce evidence, to require the production of evidence, and to question witnesses. A transcript shall be made of such proceeding. At the completion of the proceeding, the City shall issue a written decision granting or denying the proposal for renewal based upon the record of such proceeding. The City shall transmit a copy of such decision to MTCI. Such decision will state the reasons therefor. Any denial of the proposal for renewal that has been 3 98- 9113 submitted shall be based on one or more adverse findings made with respect to the factors described in 47 U.S.C. § 546(c)(1)(a) through (d). Section 5. Notwithstanding the above, the City Manager continues to have the authority to pursue informal negotiations with MTCI pursuant to 47 U.S.C. § 546(h). Section 6. This Resolution shall become effective immediately upon its adoption and signature of the Mayor". PASSED AND ADOPTED this 28th day of September 1998 JOE CAROLLO, MAYOR b aDc0ldance with Miami Code Sec. 2-36, since the Mayor did not indicate approve. i of Ilft it gWation by signing it in the designated place provided, said leg;sf ;t m i rto,'PI becomes effective with the elapse often (10) da from the date of Cornmissicr, action mpr ft same, without the Mayor exercis' eto. ' ATTEST: Wa r an, City Clerk WALTER J. FOEMAN CITY CLERK SS v W2974:YMI':csk 1/ If the Mayor does not sign this Resolution, it shall become effective at the end of ten calendar days from the date it was passed and adopted. If the Mayor vetoes this Resolution, it shall become effective immediately upon override of the veto by the City Commission. 4 98- 913 CITY OF MIAMI, FLORIDA 6 INTER -OFFICE MEMORANDUM TO: The Honorable Mayor and Members DATE: SER 2 1 1998 FILE: of the City Commission SUBJECT: Franchise Renewal - Miami Tele- _ Communications Inc. FROM: /OnaidMH. Warshaw REFERENCES: City Manager ENCLOSURES: RECOMMENDATION: It is respectfully recommended that the City Commission consider whether to grant a cable television franchise renewal to Miami Tele-Communications, Inc. (MTCI) or to issue a preliminary assessment that the franchise should not be renewed and to commence an Administrative Proceeding. BACKGROUND: On November 19, 1981 Miami Cablevision (a joint venture with TCI and Americable) was awarded a fifteen year franchise for the construction and operation of a Cable TV System to serve the residents of the City of Miami. On January 14, 1987, ownership of the cable system was transferred to Telecommunications, Inc. (TCI) under the official name Miami -Telecommunications, Inc. This franchise expired on November 18, 1996. After approving several 3-month extensions, the City Commission passed ordinance 11504 on May 22, 1997, setting the franchise extension period as month to month. The City initiated the formal cable television renewal process on April 17, 1997, in accordance with Federal law (47 USC § 546a), due to lack of significant progress in informal negotiations between the City and MTCI. In accordance with the formal renewal process, on July 1, 1997, MTCI submitted an updated response to a renewal questionnaire submitted by the City. The City continued to follow the formal renewal process by issuing the findings of its ascertainment proceeding in a report to MTCI on August 18, 1997. This report evaluated the performance of MTCI in relation to the needs of the City and the community. Finally, after requesting several extensions to the original deadline, MTCI submitted a formal proposal to the City on July 10, 1998. This formal proposal represents MTCI's response to the needs and concerns identified in the ascertainment report. The determination of whether to grant a cable television franchise renewal to Miami Tele-Communications, Inc. (MTCI) or to issue a preliminary assessment that the franchise should not be renewed should be based on whether the formal proposal responds to the needs and concerns identified in the City Ascertainment report as well as whether MTCI has satisfied the following criteria established by Federal Law (47 USC § 546c): 98- 912 1. The cable operator has substantially complied with the material terms of the existing franchise and with applicable law; 2. The quality of the operator's service, including signal quality, response to consumer complaints, and billing practices, but without regard to the mix or quality of cable services or other services provided over the system, has been reasonable in light of community needs; 3. The operator has the financial, legal, and technical ability to provide the services, facilities, and equipment as set forth in the operator's proposal; and 4. The operator's proposal is reasonable to meet the future cable -related community needs and interests, taking into account the cost of meeting such needs and interests. r� DHW/AdS/ecb 98 — 913 RECEIPT DATE SUBJECT I slw - 1 0 -.A_ !I VICE CHAIRMAN PLUMNMR COMMISSIONER GORT COMMISSIONER SANCHEZ COMMISSIONER REGALADO COMMISSIONER TEELE a!l�4�iA6iit'S OFFICE Received By: • j! 98 - 913 TO Honorable Mayor and Members of the City Commission FR Walter City Clerk CITY OF MIAMI. FLORIDA INTER -OFFICE MEMORANDUM September 28, 1998 DATE FiL_ SUBJECT Letter from TCI re Cable Franchise REFERENCES ENCLOSURES. Item # 6 Attached hereto, please find copy of letter from Edward Garcia, TCI, Director of Government Affairs & Communication, in connection with cable franchise, which is item 6 in today's agenda.. This is being submitted to your offices for your information and files. WJF:sl 9 8 -- 91,E KA TO Florida Region Edward Garcia Director, Government Affairs & Communication 600 N. Pine Island Road, Ste. 100 Plantation, Florida 33324 (954) 723-7138 September 28, 1998 Dear Commissioner, One of the strongest commitments our company has is to provide the best customer service possible as well as to listen to our customer's concerns. That is why we welcome the opportunity to hear from our customers at this forum --- as we also welcome their comments via telephone calls and letters. Not only do we welcome this opportunity to hear from our customers, I am also here today to discuss the renewal of our cable television franchise. First, allow me the opportunity to talk about our employees and some recent improvements we have made in our cable operations. Among the many people here today, there are more than 40 TCI employees who also happen to be residents of this great City. Each day, they come to work with pride and the desire to assist customers and to provide a quality cable products and service. Due to the high value and demand of cable television today, some of our customers may have experienced delays when calling the office or delays when obtaining repair service or installations. In an effort to provide better service, just in the past month, we have hired more than 45 new team members who are in the final stages of an extensive training program to better serve our customers. Furthermore, for those employees who have demonstrated a thorough knowledge of our product and adhere to our high standards of customer service, we have promoted them to positions with greater responsibilities. Now, I would like to address the renewal of our franchise. We have on several occasions offered the City a reasonable and fair resolution of this matter — either by requesting a short term extension of two to three years or by offering terms and conditions of a renewal agreement. It is unfortunate that unrelated challenges have hindered an amicable solution to our renewal. 98- 913 Letter for Miami Commission Meeting Page Two Nevertheless, just recently, your consultant, Mr. Leibowitz, and our corporate director of franchising met, again, in an effort to discuss a solution that both parties could accept. Unfortunately, due to Hurricane Georges and the City's immediate and obvious priority to its citizens, our proposal did not make it out of the city attomey's office as expeditiously as we would have liked. However, last week or earlier today, I was able to meet with you or your staff to provide you with a copy of the proposal. The proposal outlines two separate offers to resolve our renewal enabling both the City and the Company to move forward and address other business issues. Please realize that we feel that the offer made in this proposal clearly provides the City with both financial incentives to resolve this issue as well as a generous plan to meet the City's future cable -related needs and interests. During past meetings, negotiation sessions, and in written correspondence, we made it very clear that we did not wish to enter into the adversarial and costly formal process. Despite this fact - as you are aware - we are currently following the formal renewal procedures as outlined in federal law. Due to the fact that we are cognizant of the City's financial state, we are willing to once again offer to continue negotiations in an "informal" manner, if the City does not find one of the two offers in our most recent proposal acceptable. In that light, we would respectively request that the City refrain from considering our formal proposal - which was submitted July 10, 1998 - and table this matter for further consideration until each of you have had an opportunity to fully consider our offer as outlined in the letter dated September 23, 1998 to Mr. Leibowitz. We feel confident that once you have had that opportunity you will see how reasonable and fair our offer is ... ! Finally, as you know, TCI has entered into an agreement to merge with AT&T. This merger is a change of control of the ultimate parent of the franchise holder - Miami Tele- Communications, Inc. - and not a transfer of the franchise. In connection with this transaction, we have delivered to the City a FCC Form 394, which provides a description of the transaction and satisfies our requirement to seek your consent of this merger. We are hoping you will find this information satisfactory and that you will ultimately grant your consent to the change of control. If you should have any questions regarding any of these matters, please do not hesitate to contact me. I thank you for your time and this opportunity. Sincerely, r r.. `�.. _. . d Garcia Attachment(s) J O— 912 SEP-23-90 14:55 Froe:TC1 MOUNT T-033 P.02/2) Job-525 \ T 'El TCI September 23, 1999 Mr. Matt Leibowitz, Esquire Leibowitz & Associates Suite 1450 SunTrust International Center One Southeast Third Avenue Miami, Florlda 33 t 31-17 t S VIA FACSIMILE (305) $30-9417 & U.S. MAIL RE: Informal Proposal For a Cable Television Renewal For The City of Miami Dear Matt: Pursuant to our meeting(s) of last week and an ongoing effort to resolve the cable television franchise renewal with the City of Miami (the City), please be advised that Miami Tele-Communications, Inc. (MTCI) is willing to agree to the following provisions of its cable television franchise renewal agreement: MTCI and the City will agree to hire an independent, outside technical consultant to examine the existing cable plant in order to develop a plan designed to enhance the maintenance of the cable system (the "EMP"). The inspection of the. cable system and the development of the EMP shall be agreed to by technical representatives from the City, MTCI and the consultant prior to its implementation. Upon completion of the plant inspection and the development of the EMP. MTCI shall adhere to the plan from its effective date through the completion of the cable system upgrade. The costs of the consultant will be borne by MTCI not to exceed fifteen thousand dollars ($15,000). In addition to the EMP, MTCI will agree to meet wilt: city technical staff on a monthly basis to address any outstanding issues or concerns regarding the cable plant and will provide the quarterly reports as outlined in my August 11. 1998 letter. As previously discussed, MTCI agrees to upgrade the cable system to bandwidth of 750 MHz and be fully operational with a minimum activated channel capacity of seventy-eight (78) video channels available to subscribers; with two-way capability, capable of delivering advance services such ac cable service internet access. MTCI agrees that the obligations of the upgrade are applicable to the entire service area within the City as it now exists, excluding only those areas of the City expressly agreed to between the parties. Terrace Tower 11 POSI Office eox 5530 5615 DTC Parkway OenY6r. CO 80217.500 Englawood. CO 60111.3000 (303) 267-5500 An Evuar OpporAmny FmWwa 9 8 - 91,E Sc�-'13-98 '4:55 from:M 3034863201 7-033 P.03/2Q Job-52! In the event that MTCI faits to complete said upgrade and activate the cable system in the City by the date specified, then MTCI agrees that the City may impose fines in the amount of Two Thousand Dollars ($2,000.00) par day for failure to meet the completion date; provided, however, that the City shall not impose a fine if the delay is a result of force majeure; or failure of the City to promptly issue permits; or due to utility mane -ready delays; or, other circumstances beyond the control of MTCI. Prior to assessing any fines against MTCI, the City must follow the notice and cure procedures set forth in the Franchise Agreement. I realize that in our meeting of Septeml er 17, we discussed a construction schedule of twenty-seven (27) months, but, after further discussion with company officials, a construction schedule of thirty (30) months is more realistic. However, as an incentive for MTCI to complete the upgrade in a more expeditious manner, I would propose that for every month prior to the thirty (30) month deadline that MTCI completes the upgrade, the term of the franchise will extended by one year, respectively. MTCI is willing to agree to a state-of-the-art provision under the foilowing terms and conditions. - In order to invoke the state-of-the-art clause, the City must within sixty (60) days after the fifth anniversary of the effective date of the Franchise Agreement request in writing that MTCI submit a report to the City, in a form reasonably satisfactory to the City Manager, discussing technological advances and the availability of new and enhanced services for the cable system. in the City. MTCI shall have ninety (90) days from the date of the written request to produce its report. The report shall state what plans, if any, MTCI has for the upgrade or rebuilding of its cable system and the costs associated therewith; contain an analysis of the impact of updating the cable system to include new advances upon the technical plant, customer service, and subscri5er rates; and also provide the City wit.Z a comparison of the services, facilities and technologies utilized by yiTC? or any of its affiliates operating a cable system in franchise areas of the same size. After receipt of the report, the City may order MTCI to upgrade or rebuild the facilities of its cable system, if after holding at least two (2) public hearings to enable MTCI and the public to comment on the upgrade or rebuild, the City finds on the basis of the report submitted and the public hearings held that- (i) The upgrade or rebuild will serve the community needs and interacts of subscribers, local institutions, local programmers, and other customers interested in cable services in the City; SEa-23-98 ;4:56 From:TC1 3034863207 '-033 P 04/20 Job-525 (ii) The upgrade or rebuild is economically and technically feasible and viable; and (iii) The upgrade or rebuild is needed to meet future cable related community needs and interest, taking into account the costs associated with those needs and interests. The City must notify MTCI in writing of its request for an upgrade or rebuild of the cable system. Should the City order an upgrade or rebuild of the cable system and such is completed and activated by MTCI prior to the eighth anniversary of the effective date of the Franchise Agreement, the term of the Franchise shall automatically be extended for a period of time to allow MTCI to fully recover its actual and direct costs of the upgrade or rebuild, but in no event shall such extension exceed a period of fifteen (15) years from the effective date of the Franchise Agreement. In the event the report submitted to the City demonstrates a need for an extension of the term of the Franchise which exceeds fifteen (15) years from the effective date, then MTCI shall be relieved of its obligations to upgrade or rebuild the cable system. Alternatively, should the City order an upgrade or rebuild of the cable system and MTCI decides that it is not willing to rebuild or upgrade the system, then MTCI must notify the City in writing within sixty (60) days of the City's request of its intention not to do so. The notice by MTCI to the City of its failure to upgrade or rebuild the cable system shall be deemed, by mutual agreement, to reduce the term of the Franchise so that the term of the Franchise Agreement terminates thirty six (36) months from the date of such notice. Furthermorc, the notice shall also be deemed to provide notice to the City, pursuant to Section 626 of the Cable Act (47 U.S.C. 1546), that MTCI wishes to commence proceedings to renew its Franchise. The City may not request an upgrade or rebuild of MTCI's cable system, if MTCI is subject to effective competition as defined in 47 U.S.C. §543. 4 MTCI agrees to pay to the City franchise fees in the amount permitted in accordance with local, applicable law. The franchise fee will be paid on a quarterly basis within sixty (60) days after the end of the preceding quarter. For definition purposes, "Gross Revenues" shall mean ail revenues received by MTCI from any source whatsoever to the extent that such revenues are derived from the operation of the cable system to provide cable services in the City. Gross Revenues shall include the following. revenues received from subscribers for basic service: revenues received from subscribers for any optional, premium, per - channel or per -program services; revenues received from subscribers for any tier of service other than basic service; revenues received from installation, disconnection, reconnection and change -in-service fees; revenues received from 98- 913 SEP-23-90 '14:57 Fron:TC! 3034863207 7-033 P 05/20 Job-52`. wiring fees, revenues received from leased access fees; revenues received from payments from programmers for the carriage of programming on the cable system (exclusive of marketing and promotion support); revenues received from remote, converter, modem or other equipment rentals; revenues from transmission of data to the extent that the data services are considered cable services under applicable law; advertising revenues allocable to the City based on a percentage of the subscriber base in the City divided by the subscriber base of the headend providing cable services to the City. Such percentage will then be multiplied by the cabie systems' total advertising revenue to determine the allocable gross revenue stemming from advertising revenues; revenues received from home shopping channels, and provided that where certain home shopping channel revenue is allocable to more than one franchise area due to common zip codes, MTCI will allocate the percentage of revenue to the City which is equivalent to the percentage of the City's population divided by the total population for the allocable franchise areas in question. Gross revenues shall not include any revenue paid by the subscribers in connection with PEG access support, nor shall it include any taxes on services furnished by MTCI which are imposed upon any subscriber or user by the state or City or other governmental snit and collected by MTCI on behalf of said governmental unit and which MTCI passes on in full to the applicable tax authority or authorities, nor shall it include the FCC user fee. MTCI shall continue to provide to the City one (1) activated channel on the cable system which the City may elect to use, in whole or in part, for the video and audio services for public, educational and/or government (PEG) access use. Upon completion of the upgrade, MTCI agrees to provide to the City two (2) additional PEG access channels so as to provide the City with a total of three (3) PEG access channels exclusive of any channels utilized my Miami -Dade County. The City may request up to an additional two (2) channels for use for PEG access programming for a total not to exceed five (5) PEG access channels (exclusive of any channels utilized my Miami -Dade County). in order to request one of the two additional PEG access channels, the three (3) existing PEG access channels must be programmed at least fourteen (14) hours a day with non - repetitive, locally produced programming, Monday through Friday. for a minimum of twelve (12) consecutive weeks. For purposes of calculating the fourteen. (14) hour programming requirement. non -repetitive character -generated programming shall be permitted up to a total of four (4) hours. 9 8 - 91,E SE?-2MS 14:57 Fran:TC1 303466320T 7-033 P.06M Job-525 MTCI hereby agrees to provide to the City a grant in an amount not to exceed fifty cents ($.50) per subscriber per month for PEG capital support. The actual amount of the per subscriber per month charge shall be determined based upon the City's needs as identified in a projected budget to be prepared by the City Manager and submitted to MTCI not later than September 30 of each year during the term of the franchise Agreement. The City shall agree that all amounts paid by MTCI on a per subscriber per month basis may be added to the price of cable services and collected from MTCI's subscribers as "external costs," as such term is used in 47 C.F.R. V6.922. Additionally, all amounts paid on a per subscriber per month basis may be separately stated on the subscriber's bills as permitted pursuant to 47 C.F.R. §76.985. In addition to the per subscriber per month fee, MTCI agrees to provide the City with a one time capital payment of two hundred fifty thousand dollars ($25'J,000) for its use in establishing its PEG access channels and facilities. In addition to the payment of the capital grant, MTCI will cooperate with the City in order to eablecast live all City Council meetings. MTC[ hereby agrees that the facilities, equipment and monetary grant to be provided by MTCI constitute capital costs which are required by the Franchise Agreement and will not be offset from the payment of franchise fees. Upon completion of the upgrade of its cable system, MTCI hereby agrees to install, operate and maintain an institutional network (I -NET) for the City. h1TCi shall be responsible for interconnecting all government buildings and schools as agreed to by the City and MTCI. The costs for the interconnection of these designated sites shall be paid for by the City at MTCI's incremental costs of construction. The City may request interconnection of additional sites (for example, sites which are designated after the effective date of the Franchise Agreement) for which MTCI shall charge no more than its actual and direct costs of interconnection. It is hereby agreed that MTCI shall not be responsible for the following: (i) the distribution of 1-NET wiring within the buildings identified for interconnection; (ii) the provision to the City of any peripheral or end user equipment required to be connected to the I -NET; or (iii) the management of the use of the I -NET. However, MTCI will provide to the City, upon the City's request, a proposal for the provision of an I -NET management agreement. 9 8 - 91,9 SE�-23-06 4:56 From:TC1 3034863207 T-033 P.OT/20 JOb-52E MTCI agrees that the PEG access capital support provided for under the terms of the Franchise Agreement can be used by the City for the purchase of equipment necessary for the locations identified to be interconnected to the 1-NET. The ownership of the I -NET distribution system, i.e. the fiber optical strands and associated distribution equipment and facilities, will remain with MTCI. Except for trouble calls and malfunctions determined to have been caused by the City or the I -NET users, including but not limited to trouble calls related to equipment incompatibility, MTCI will be responsible for maintenance and repair of the I -NET. The I -NET shall be considered a private communications network which will be governed by the Franchise Agreement and applicable law, including the Cable Act. The I -NET shall be used by the City solely for non-commercial applications. Users of the I -NET, including the City, shall not attach any equipment or otherwise use the I -NET in any way that will imerfcm with the signal quality and regulations of the cable system, including but not limited to regulations pertaining to signal leakage. The City and users of the I -NET will not resell access to the I -NET. In the event that the construction, maintenance and operation of the [-NET results in MTCI being considered a common carrier, then MTCI shall be relieved of its obligations of providing the I -NET. For definition purposes, "Institutional Network (I -NET)" means a voice, data and/or video communications system constructed, operated and/or maintained by MTCI for the use of the City, the transmissions of which are generally available only to, and intended to be sent and received by, persons designated by the City and not to cable subscribers generally. For the purpose of the Franchise Agreement, an Institutional Network shall consist of not more than two (2) strands of fiber connected with MTCI's haadend and various nodes located throughout the City including the fiber distribution from the nodes to the various site locations. This is meant to define the distribution network itself and not any peripheral equipment or end user equipment such as computers and modems that may be contacted to the I -NET or otherwise required to access the network. 1: , MTCI currently provides cable service, without charge, to each and every floor of the City government buildings and public libraries as agreed to between the parties, MTCI further agrees to provide one outlet of cable service to all buildings of the City that may be constructed , opened or annexed within the City after the effective date of the Franchise Agreement which are within one hundred twenty-five (125) feet of its cable distribution plant. Such service shall at a minimum include the basic cable service tier, and all programming offered on the cable programming service tier offered by MTCI over the cable system. 98- 919 CITY OF MIAMI ANALYSIS OF MIAMI - TELECOMMUNICATIONS, INC CABLE TELEVISION SYSTEM Prepared by Dept. of Information Tech. Telecommunications Office August 15, 1997 Exhibit D Customer Service Analysis 98- 912 -6i -61 -/ - I I c4TTEN 20 D8 DB/DIU 10 •41 60 TO SWEEP I CALAN I ATTEN 26 DE =-+ DBIDIU 16 60 TO S14EEP I CALAN ep ...... . .... ... .. ..... ..... 4 r_� RGr GV.O✓o"'v SPECTRUM ANALYZER. r rt�r cv� v✓�•nv 5P CTRUM RNALYZER ------ c7 rr 1 LEVEL H O i � H FpEo C 1MARKER rt m L------ O �. CF a 1250 66 �p MHZ �p L =____ SPAN 'a26_ee MHz i LEVEL (MARKER L------ CF �256.66 MHz L SPAN 4S6.fl0 MHZ L------ 98- 9A CATV CHANNEL ALLOCATIONS Freq. Callen In MHz Channel Range In MHz Video Color Audio 2 54-60 55.25 68.83 59.75 3 60-66 6125 64.83 65.75 4 66-72 6725 70.83 71.76 5 76-82 77.25 80.83 81.75 6 82-88 $3.25 86.83 87.75 FM 88-108 A 2 (00) 108-114 109.25 112.83 113.75 A-1 (01) 114-1°20 115.25 118.83 119.75 A (14) 120-126 12125 124.83 125.75 8 (15) 126-132 127.25 130.83 131.75 C (16) 132-138 133.25 136.83 137.75 D (17) 138-144 139.25 142.83 143.75 E (18) 144-150 145.25 148.83 149.76 F (19) 150-156 161.25 154.83 156.75 G (20) 156-162 157.25 160.83 161.75 H (21) 162-168 163.25 166.83 167.75 1 (22) 168-174 169.25 172.83 173.75 7 174-180 175.25 178.83 179.75 '8 180-186 181.25 184.63 185.75 9 186-192 187.25 190.83 191.75 10 192-'198 193.25 196.83 197.75 11 198-204 199.25 202.83 203.75 12 204-210 ;. 205.25 208.83 209.75 13 210-216 211.25 214.83 215.75 J (23) 216-222 .`; 217.25 220.83 221.75 K (24) 222-228 223.25 226.83 227.75 L (25) 228-234 • 229.25 232.83 233.75 M (26) 234-240. 235.W 238.83 239.75 N (27) 240-246 241.25 244.83 245.75 O (28) 246-252 247.25 250.83 251.75 P (29) 252-258 253.25 256.83 257.75 0 (30) 258-264 259.25 26283 263.75 122 CATV CHANNEL ALLOCATIONS Freq. Carriers In MHz Channel Range In MHz Video Color Audio R (31) 264-270 265.25 268.83 269.75 S (32) 270.276 271.25 274.83 275.75 T (33) 276-282 27725 280.83 281.75 U (34) 282 288 283.25 286.83 287.75 V (35) 288-294 289.25 292-83 293.75 W (36) 294300 29525 298.83 299.75 AA (37) 300306 301.25 304.83 305.75 88 (38) 306312 30725 310.83 311.75 CC (39) 312-318 313.25 316.83 317.75 DD (40) 318324 319.25 322.83 323.75 EE (41) 324-M 325.25 328.83 329.75 FF (42) 330-M 331.25 334.83 335.75 GG (43) 336342 337.25 340.83 341.75 HH (44) 342-M 343.25 346.83 347.75 (1(45) 348-W 34925 352.83 353.75 JJ (46) 354-360 355.25 358.83 359.75 KK (47) 360-M 361.25 364.83 365.75 LL (48) 366 372 367.25 370.83 371.75 MM (49) 372-378 373.25 376.83 377.75 NN (50) 378-M 379.25 382.83 383.75 00 (51) 384.390 385.25 288.83 389.75 PP (52) 390396 391.25 394.83 395.75 00 (53l 396-402 397.25 400.83 401.75 RR (54) 402-408 403.25 406.83 407.75 SS (55) 408-414 409.25 412.83 413.75 TT (56) 414-420 415.25 418.83 419.75 UU (57) 420-426 421.25 424.83 425.75 w (58) 426-432 427.25 430.83 431.75 WW (59) 432-438 433.25 436.83 437.75 XX (60) 438-444 439.25 442.83 443.75 YY (61) 444-450 445.25 448.83 449.75 123 gg- 913 MTCI's subscribers are likewise very satisfied with the_ current level of customer service. As noted below, the City's Report concludes that there are "sufficient concerns" with MTCI's customer service performance. But MTCI's survey shows an excellent and improving level of customer service. Over 60% of customers responded that they were very satisfied or somewhat satisfied with the way MTCI handles complaints and requests. And over 50% said that the way MTCI handles requests and complaints has improved over the past 12 months. 2. Thep Is Very Little Interest In Public, Educational, And Governmental Access Programming Or Facilities Results of MTCI's surveys show that very little interest exists in public, educational, and governmental ("PEG") access programming or facilities, particularly when the cost is considered. Approximately 40% of respondents said that the one current City access channel is sufficient. Other survey findings demonstrate that providing the City with money to fund access facilities, equipment and operations is not important at all in relation to concern for greater programming choices and holding down rates (see Section V.A.3, below). When the cost of providing such PEG access channels and equipment was included in the consideration, the overwhelming majority of respondents were opposed to requiring PEG access. For example, over 25% of the respondents said that MTCI should not be required to pay the City PEG equipment and facilities grants, even if cable rates would not be affected. If the provision of such facilities and services by MTCI would raise rates $1.30 per month, approximately 50% of respondents said they would "definitely switch" or "probably switch" to another service that provided similar programming but, because it had no 78194.1 - 25 - 98- 912 PEG costs, was able to charge $1.30 less than MTCI.3 In this era of growing DBS competition, MTCI must weigh such customer opinion heavily. 3. Customers' Main Interests Are Additional Programming And Controlling Costs MTCI's studies, as well as the responses of individuals at City Council meetings, indicate that the main cable -related community needs and interests are additional programming and controlling costs. Customers were asked which of six needs and interests implicated by the Report was the most important. They responded as follows: • holding down future rate increases (nearly 40%); • providing more channels of programming (over 20%); • providing the Miami city government with money to fund access facilities, equipment and operations (approximatley 6%); • providing the Miami city government with money to fund a two-way internal communications network (less than 5%); • improving customer service (less than 5%); • improving the reliability and quality of your TV picture (approximately 12%). Out of these choices, nearly 40% of customers responded that "holding down future rate increases" was most important, wile over 20% responded "providing more channels of programming." Each of these two interests alone outweighed the total of all other interests combined. 3 The $1.30 amount is the cost to customers per month if MTCI provided the same per - customer PEG support as is provided under the recently renewed Coral Gables franchise. The City and its consultant suggested in negotiations that MTCI should treat the Coral Gables franchise as a model for Miami. Given the City's failure to identify any specific PEG requirements in its Report, MTCI surveyed community interest and willingness to fund the Coral Gables PEG requirements. 78194.1 -26- B. The City's Ascertainment Materials __ MTCI has reviewed the City of Miami's "MTCI Ascertainment Report" (the "Report"), dated August 19, 1997, and materials obtained from the City responsive to MTCI's June 22, 1998 Freedom of Information Act request ("FOIA materials").' These records do not contradict MTCI's findings, discussed above, with respect to the future cable related needs and interests of the community. In fact, these materials demonstrate that the community needs and interests are more accurately reflected by the results of MTCI's ascertainment data. The City appears to have based its ascertainment on the following sources: a two-day inspection and technical test of the cable system (performed by the City on January 25, 1996); a review of subscriber complaints forwarded to the City (1996 through July 1997); an analysis of MTCI records and performance reports; public inquiry results (consisting of responses to (i) a broadcast of public notice of franchise renewal on NET9 in October 1995, and (ii) a cable billing insert in February 1996). Generally, MTCI notes several problems with the City's protocols used in collecting and assessing subscriber data and community needs and interests. First, the City fails to consistently identify the number and sources of complaints and comments, making it impossible for MTCI to assess the validity and seriousness of such comments. Second, beyond the conclusory remarks made in the Report, the City fails to offer any documentation justifying its claimed needs and interests; for example, there are no letters or complaint logs substantiating the claims made in the Report (nor were such materials provided in response to MTCI's FOIA request). Turd, thk method used by the City in its solicitation of public comment in the ascertainment process unfairly biases the results contained in the Report because the responses are not taken from a representative sample of MTCI subscribers. In its Report, the City identifies several future needs and interests of the community: improved customer service; increased programming or data services; digital 4 Although the City identified the Report as a "final and a clear representation of the needs and concerns of the City based on internal and external analysis," (Letter, Edward Marquez, City Manager, to Maureen O`Neill, Miami Tele-Communications, Inc. (October 10, 1997)), MTCI also conducted a comprehensive investigation of City records relating to the cable franchise in order to fully review the City's claimed needs and interests. 78194.1 - 27 - 98- 9$ �j channels; PEG access channels and PEG access support from MTCI; _free subscriber network service to -public buildings; commitment to the City's institutional network. The City has failed to demonstrate any support for these claims, however, and MTCI's review of materials supplied by the City did not uncover any materials substantiating the City's demands. 1. Customer Service The Report fails to accurately characterize the comments and complaints received by the City of Miami. Based on MTCI's review of the City's records, there is no evidence supporting the City's claim that there are "sufficient concerns" with MTCI's customer service performance. First, the Report only identifies 13 general subscriber comments regarding customer service and billing issues. Second, the City is unable to substantiate the data contained in the chart in Exhibit D to the Report categorizing public complaints about MTCI. With respect to the chart, the City also fails to explain the nature of complaints received that are categorized as "Dissatisfaction" or "Billing Dispute." MTCI has no way to verify if the claimed "dissatisfaction" or "billing dispute" is a result of a problem created by MTCI, or if the City simply has lumped all complaints regarding general dissatisfaction with cable television or cable television rates into these categories, thereby unfairly skewing the City's ascertainment data. - Notwithstanding the City's failure to accurately identify and attribute the customer service comments logged by the City, MTCI notes that the volume of complaints received evidences general overall satisfaction with the system and MTCI's customer service practices (this finding is consisteSt with the results of MTCI's own survey, which demonstrated that the majority of MTCI customers are satisfied with MTCI's service. See Section V.A.1, above). For example, based on the City's data, 96.4% of MTCI subscribers did not have any complaints with MTCI's service in 1996.5 The percentage of satisfied subscribers climbed to 99.3% in 1997 (for the only period referenced by the City, of January through July). Not only does the City fail to reconcile the high satisfaction rates with its 5 Notably, this figure could be greater if MTCI were able to exclude those general "dissatisfaction" and "billing dispute" complaints received by the City incorrectly attributed to MTCI's practices. But even including these generic "complaints," MTCI subscribers appear satisfied with MTCI customer service performance. 78194.1 - 28 - 98- 912 -`� claims of poor MTCI customer service, the City fails to note the sharp decline in complaints in the first-half of 1997. 2. Increased Programming or Data Services The Report states that "calls and complaints received from City subscribers indicate that there is a demand for additional services such as increased programming or data services." Report at 19. A review of the City's ascertainment data revealed only 4 specific comments relating to programming or data services (Report, Exhibit D). MTCI's survey, on the other hand, revealed that customers generally are satisfied with the programming they receive on cable (nearly 65%). 3. Rates The City claims that "public inquiries indicate that City subscribers generally perceive that for the rates being charged they are not receiving the same level of programming services as other local communities." Report at 32. The City's own data, however, refutes this statement. "Rate Comparison: Dade County" (Report, Exhibit D) clearly illustrates that MTCI's rates for basic and expanded basic are among the lowest of the five - - communities reviewed.' Furthermore, MTCI's review of the materials supplied by the City failed to uncover any letters, complaints or statements made to the City specifically complaining about MTCI's rates and services offered. On the other hand, MTCI recognizes that its customers are highly sr ensitive to any rate increases. 4. PEG Access The City states that it is "presently experiencing ever increasing demands both internally from City departments as well as by the community at large for additional air time and opportunities on the City's access channel(s)." Report at 29. The City also states that it "has a corollary need to develop the capability for remote location programming." Report at ' Although not included in the City's analysis, MTCI believes that its rates similarly are lower then the other systems when viewed on a per -channel cost basis. 78194.1 -29- 98- 9i$ i 29. Based on its review of the City's ascertainment data, MTCI has_ found no community nor government department support for these claims. Generally, there is no evidence supporting the City's claim that "PEG programming currently [is] in demand by civic groups and local citizenry." Report at 31. For example, there are no letters to the Telecommunications Administrator or City Manager from community groups or private citizens seeking increased access to the system's PEG channels. There are no statements from City Council meeting minutes reflecting an "increased programming demand." Finally, there are no proposals or general outlines of possible programming opportunities supplied by municipal agencies that the City claims are calling for increased PEG access commitments from MTCI. The Report's broad conclusory statements regarding PEG access do not demonstrate a need or interest of the community. In contrast, MTCI's Survey demonstrates extremely limited interest in PEG access, with over 25% of customers believing that MTCI should not be required to pay the City PEG grants even if rates did not change, and 40% saying that one access channel (Net9) is adequate. 5. I -Net Other than the City's conclusory remarks in the Report regarding its "ongoing concerns" about the City's I -Net, the Report and the FOIA materials are silent as to the specifics of any such concerns, or the desire for a new I -Net. MTCI was unable to find any letters, memoranda, meetings, hearings or reports documenting an interest in a different or more sophisticated municipal institutional network, nor did the City attempt to demonstrate how its existing I -Net has been used or would continue to be used to better serve the community's needs. The City's unsubstantiated claim for a new or upgraded I -Net, together with the public's resistance to upward pressure on rates (see MTCI ascertainment, above), has led MTCI to conclude that any additional investment by MTCI in a municipal I -Net is not consistent with the reasonably ascertainable needs and interests of the community. Indeed, MTCI's own survey results show that 50% of customers do not think that a network should be built at all. 78194.1 - 30 - C. Summary of Ascertainment Overall, the ascertainment materials present a picture markedly distinct from that painted by the City of Miami in its August 1997 Report. The materials show that the majority of MTCI customers are satisfied with MTCI's service and with the way MTCI handles complaints and requests. Contrary to the City's statements, the ascertainment demonstrates that very little interest exists in public, educational, and governmental ("PEG") access programming or facilities, particularly when the cost is considered. The one consistent finding in the ascertainment data is that customers are most concerned with holding down future rate increases, which, as the City's own Report indicates, MTCI has done successfully relative to other similarly situated cable operators in the Dade County market. VL PROPOSAL TO MEET FUTURE CABLE -RELATED COMMUNITY NEEDS The final factor to be considered by the City under Section 626 of the Federal Cable Act is whether or not MTCI's proposal reasonably meets "the future cable -related community needs and interests, taking into account the cost of meeting such needs and interests." Although, as explained above, there appears to be no reliable data to support the assessment of future cable -related needs and interests contained in the City's Ascertainment, MTCI is prepared to go forward with a sound business plan that meets or exceeds the requirements of the Ascertainment Report. A. Summary of Prvpo*al .a� Y . Outlined below is MTCI's proposal for a ten year renewal franchise that would include the following highlights: 78194.1 • A major market upgrade of the cable television system serving the City within thirty six months of the effective date of any renewal. • Upgrade to a minimum of 750 MHz bandwidth. • Two-way capable plant. • Fiber -to -the -node architecture, serving nodes of 1200 homes on average, readily scalable to 600 homes or less per node to deliver advanced services. -31 - 98- 91�? • Backup power to assure reliability. • One free outlet of cable service, and one free cable modem hookup, plus service to all schools in MTCI's service areas. • Up to five channels for public, educational and governmental (PEG) programming. • A capital commitment of up to $250,000 per year to support PEG programming. • Continuation of the current institutional network (I -Net) owned by the City, with a commitment to work with the City to meet any I -Net needs that may arise in the future that cannot be met using' the existing network, so long as the cost is reasonable for customers or is paid by the City. The details of each element of this proposal follow. B. System Description This section describes the upgraded cable system that MTCI is prepared to provide under a franchise renewal agreement. Due to technology changing at an unprecedented rate, Congress has legislated that no municipality may condition, prohibit, or restrict a cable operator's use of any cable system transmission technology, and may not regulate customer premises equipment. MTCI therefore reserves the right to alter this plan at any time so long as the modified system provides at least the equivalent functionality and quality that would be pro*W®d-under the system outlined below. 1. Major Market Upgrade MTCI proposes an upgrade of its system capacity to 750 MHz capacity within 36 months of the effective date of the renewal franchise. The upgrade will advance our cable system using fiber optic technology, taking fiber to the neighborhoods. The design of the fiber system will allow discrete programming to be transmitted to individual neighborhoods (or "nodes") of approximately 1200 homes, scalable to nodes serving 600 or even 300 homes, if necessary to deliver advanced services. 78194.1 -32- 98- 912 —� As planned, MTCI will invest an estimated $18 million_ dollars in the upgrade of the Miami system. The upgraded system will have the capability for at least 78 video channels, using current NTSC standards. With digital technology, already proven in this system, the system will have the capability to deliver substantially more channels of programming. Once the upgrade of our system is completed, our programming offering will be greatly enhanced for the citizens of Miami. The system upgrade will commence with a physical "walk out" of this entire plant, allowing all plant attributes to be recorded. Actual system design and specifications are then completed. Materials are ordered and contractors are hired to handle some portions of the actual construction. The project is supervised and audited by MTCI management and technical personnel devoted specifically to the effort. As part of the upgrade, MTCI will replace old cable, strand, and amplifiers. Subscriber taps will receive new RFI shielded fittings and new groundings will be installed. The line amplification equipment that will be used to upgrade the City of Miami system is capable of both upstream and downstream transmission of RF signal (video and audio programming) without further construction -related modifications to the system.. The system will have the built-in flexibility to offer customers in the City of Miami interactive services as they develop. Although fiber optics will be used for the backbone of the cable system, any trunk cable deployed throhout the system will have copper -clad aluminum center conductor surrounded by a low attenuation dielectric and aluminum outer conductor, which greatly reduces signal leakage, while remaining flexible for improved handling. 500. The sub -trunk and distribution cable will be coaxial type ranging from .750 to The passive devices will be Regal, Scientific Atlanta, or other compatible taps, splitters, and directional couplers. Integral sleeve connectors will be used throughout to prevent signal leakage. 78194.1 -33- 9 8 - 91,E 2. Technical Capabilities - a. High Definition Television/Advanced Television Enhancing the picture quality for our customers is an on -going objective of MTCI and Tele-Communications, Inc. High Definition Television (HDTV) is one technology that potentially offers viewers a more "life -like" picture by providing sharper colors and contrasts, and an enhanced perspective of real depth. The Company has invested a significant amount of money and energy in researching and developing HDTV so that it is prepared for the advent of this exciting advance in picture quality. MTCI is already offering residents of the City service via digital technology. In addition, MTCI will meet all federal HDTV standards as they are finalized in the near future. b. Pay -Per -View The proposed cable system will be capable of offering additional pay -per -view services. The City of Miami system already has 10 analog and digital pay -per -view channels. This ability will increase dramatically with the additional capacity provided by the upgrade. C. Two -Way Capability The upgraded cable system serving the City will be two-way capable. MTCI is proud to have two-way ca�ability,,available within the community as it can represent a tremendous asset to our customers. Over the years, however, there has been no demand for two-way services. Should conditions change in a way that allow for two-way services, such as cable modem service, to become an economically viable business, MTCI will activate this service.' ' We note that the City, in Ordinance 9831, May 1984, provided that the cable system could only introduce two-way interactive services with the City's consent. That provision, however, could not be enforced in any renewal franchise, particularly in light of federal law. 47 U.S.C. ¶ 544(e). 78194.1 -34- 98- 9!2 When a cable system is capable of providing the community it serves with two-way transmitting capabilities, it is possible to transmit live programming from a remote location. The advantages to having such programming capabilities within the community are tremendous. Because of this, the Company plans to activate the upstream capability of two- way transmission technology, using return lines. MTCI agrees to discuss with the City some of these locations prior to the upgrade of the two-way cable system. d. Fiber Q12tic Transmission The system, when rebuilt, will bring fiber -to -the -neighborhood, efficiently substituting fiber for coaxial in the trunk and feeder lines. Fiber is extended from the headend to nodes located in the neighborhoods, where the light signals are turned back into radio -frequency signals which are transmitted along coaxial cables to the neighborhoods. This higher "broadband" capacity over long distances will open up tremendous opportunities for the cable systems to provide customers with new program options, the means to capitalize on technological breakthroughs in teleconferencing, interactive programming, high definition television (HDTV) and many other services. Fiber is expected to make up a growing portion of the U.S. cable infrastructure over the next decade. The construction of these and even newer fiber optic transmission lines represents an important commitment on the part of the Company in continually offering its customers the best service at the most reasonable cost. In the Miami j5ea YTCI plans to deploy 200 miles of fiber optic trunk/feeder line. With this in place, our customers in Miami will enjoy service on an improved cable system. Additionally, the fiber optic cable upgrade, along with the digital compression technology already being utilized by MTCI, will allow our customers to receive a large number of additional services to better meet their preferences. e. Research and Development The Company believes that it has a fundamental responsibility to its customers in providing them with the best possible technology available, today and in the future, at the 78194.1 - 35 - 9 8 - 91,E most reasonable price. In support of this commitment, Tele-Communications, Inc. has played a major role in the formation of CableLabs. Located in Boulder, Colorado, CableLabs has been founded to coordinate and oversee research and development activity for standardization within the cable television industry. Among other things, it is currently providing the. industry with key research on issues like improved signal quality, fiber optic transmission and high definition television. In demonstrating its support of this endeavor, Tele- Communications, Inc. has provided CableLabs with significant financial and personnel resources. 3. Technical Specifications and Standards MTCI is working to maintain excellence and improve customer service. This section outlines the technical specifications and construction procedures which the Company will strive to maintain throughout Miami. These standards and procedures exceed the technical guidelines in the FCC's Rules and Regulations, Part 76. a. Construction Standards Materials and components used will be of the highest quality and of conservative design. For example, trunk and distribution or feeder lines shall be constructed using low -loss aluminum coaxial cable or newer fiber optic technology. To ensure reliability and continuing good service, system components will be carefully selected to maintain system RF shielding integrity. All coaxial splices and connectors will be of the integral sleeve type. House -drop cable will be double -shielded, with a layer of foil and 67 percent braid coverage. All matching connectors will be of the "long shank" type with an integrated crimp, or one of equal or better quality. To minimize the occurrence of major system outages and other problems, MTCI will take the following precautions: • All indoor headend components will be in an air-conditioned environment to insure optimum functioning. • The system will be bonded and grounded. 78194.1 - 36 - 98 -- 913 • All towers, antennas, satellite receive stations and other_exposed equipment will — exceed normal requirements. Standard construction practices to be followed by MTCI dictate that coaxial cable splices shall be held to a minimum, be properly waterproofed, and contain adequate thermal expansion loops to absorb the expansion and contraction of the cable due to temperature variation. Installation of -equipment, cable placement, and similar practices will be in conformance with the drawings and procedures contained in the TCI Construction Practices Handbook (available upon request). All active equipment will be checked for operational parameters, such as frequency response, flatness, and gain, etc. b. Safety Standards The Company considers reliability of service second only to safety in the design and construction of a cable system. With respect to the latter, construction practices shall be in accordance with standard utility pole regulations and those statutes and regulations currently in effect, listed below: • Rules and Regulations of the Federal Communications Commission, Parts. 76, and 78, , • Obstruction Marking and Lighting, AC 70/7460-IE, Federal Aviation Administration, • Federal Communications Commission Rules, Part 17, Construction. Marking and Lighting of Antenna Structure, • National Electrical Safety Code, • OSHA Safety and Health Standards, • NCTA Standards of Good Engineering Practices, NCTA 008-0477 ELA Standard RS-222C, "Structural Standards for Steel Towers and Antenna Supporting Structures." 78194.1 -37- 9 8 - 912 C. System Maintenance And Performance Tests The system performance tests that are performed on a monthly basis include Frequency Response, Signal -to -Noise, Signal -to -Hum, Headend Operations and Satellite Station Inspection. The entire plant will be inspected for egress on a quarterly basis. Yearly system performance tests will be performed in compliance with guidelines set forth by the FCC. Preventive maintenance will consist of a monthly routine evaluation of all system operating parameters at the extremities of each distribution network. It will also include routine physical inspections of each active device in the distribution system. This will document the mechanical integrity of all housings, the security of all coaxial connectors, and the placement of all radiation and moisture shielding. All power connections, ground devices, pole mounts, external power supplies, surge protectors, and other associated equipment will be inspected for proper operation, installation, and placement. This inspection shall include the verification of operating parameters. A complete record of such data will be maintained for each active device, and will also include components such as equalizing devices, pads, splitters and modules. Any changes, modifications, or substitutions shall include verification of RF levels and AC and DC voltage levels at each site. 4. Service Area MTCI proposes to continue serving all areas of Miami that are currently passed -ter, r _ 4 by the cable plant. Areas within the current franchise boundaries of MTCI in Miami that are not currently served will be constructed under the following circumstances: (a) The distance the distribution line would be extended to provide service divided by the number of people requesting service is not more than three hundred (300) feet from the cable system, and the drop distance is not more than one hundred twenty five (125) feet from the cable system. 78194.1 - 38 - 98- 912 (b) Cable service shall be provided to all persons who are not within these distances if the person agrees to pay the full cost to provide cable service beyond these distances. MTCI will build new areas which are not within these parameters on a cost -sharing basis. 5. Stand -By Power An emergency power system protects the cable system against power line disturbance and loss of utility power. MTCI's system is already equipped with a stand-by generator at the headend which provides for 24 hours of power in the event of an emergency. In addition, MTCI has recently upgraded all of the power supplies in the distribution portions of its system. With the stand-by power system, continuity and quality of power are maintained independently of the commercial power service. The emergency power system is designed to operate in harsh outdoor environments with wide temperature fluctuations, thus insuring system reliability. The emergency power system provides at a minimum two hours of capability to insure the integrity of the new fiber network. 6. Emergency Alert Capability MTCI's system already provides for emergency alert capability. As part of its upgrade, MTCI will continue this capability. With this system in place, fire, flood, severe weather warnings, and civil defense alert's can be cablecast over the system to the entire unincorporated Miami area cable community by authorized community officials. -4 MTCI will work with the City to incorporate the emergency alert notification into the Community's disaster plan. MTCI requests that Miami hold its agents, employees, officers, and assigns harmless from any claims arising out of the City's emergency use of its facilities. C. Franchise Term and Fee MTCI proposes a ten-year franchise term to justify the substantial investment that we propose in the system and in other benefits, such as public, educational and governmental access. Throughout the term of the franchise, MTCI will pay Miami a 78194.1 - 39 - 98- 919 franchise fee equal to five (5) percent of its annual gross revenues received, which currently amounts to over $1. million per year. D. Initial Programming MTCI is committed to providing our customers with a comprehensive and well-balanced mix of programming. This mix will be reliable and proven, both in terms of subscriber popularity and long-term success. Following franchise renewal, a wide variety of services will continue to be carried on the system. We reasonably anticipate service will include, at a minimum, television broadcast signals and an array of satellite -delivered cable programming. MTCI recognizes that its programming fare should be in harmony with the needs and interests of the community, ensuring customer satisfaction and commercial viability. With the added channels from an upgrade, MTCI will have greater opportunities to satisfy all feasible programming interests. MTCI feels it must have ultimate responsibility in its programming decisions in order to respond to market conditions and customer demand. MTCI reserves the right to make changes from time to time should, for instance, a service become unavailable, or should programming become available that better responds to the needs and interests of our customers. E. TRAINING Providing our employees with training about cable technology, programming, customer service and management techniques is key to the long-term success of our Company. The following training programs have been formulated to help our employees meet the needs of our customers: • Management training courses: Provides system and state -level management personnel with ongoing, three-day modules that focus on critical management issues. • "The CUSTOMER 1ST" training program: Provides all employees who have direct public contact, and their managers, with training that includes classroom J 78194.1 - 40 - �) work, videos and interactive technology that can be reviewed whenever needed or desired. • Management trainee program: Enables the company to train qualified people to fill management positions by enrolling them in this six-month course. • Technical training: Provides all technical personnel with National Cable Television Institute courses and supplemental seminars on technical developments and safety. • Society of Cable Television Engineers membership for engineers: Provides continuing technical training through monthly satellite programs and periodic seminar sessions held throughout the'year at various locations. • Advanced customer service training program: Provides all customer service representatives with training that is designed specifically for their job responsibilities. F. CUSTOMER SERVICE Customer service is the core of the cable business. MTCI must be able to provide a good product with good service in order to remain competitive and to allow the business to grow. Under its renewal franchise, MTCI will continue to provide the finest possible customer service. The primary objective of the complaint procedure is to correct problems with minimum delay. This means havjing enough well -trained staff on duty. It will be the responsibility of the office staff to receive complaints from customers relating to the reception of services offered, such as service interruptions, system difficulties, and weak pictures. The policies and practices discussed below are designed to facilitate the quality of service we deliver. They may be modified from time to time to accommodate the needs of the community or the business interests of the Company. 1. Requests for Service Office personnel will receive and satisfy complaints relating to billing, installations, and employee problems. This office will also receive and process requests from 78194.1 -41 - 9 8 - 91,E customers and potential customers for installation, disconnection and change in service. Inquiries relating to rates, payment methods and service offered will be handled by the staff. 2. Service Calls Service calls will be answered by a trained TCI employee on a 24-hour basis. Generally, response to service calls will be made within 24 hours of the customer call. After regular business hours, service calls will be answered by company trained personnel and forwarded to a "stand-by" technician. Experienced engineering staff will be available on -call to work with stand-by technicians who are fully trained to handle service calls, both from technical and customer relations perspectives. Should a system outage occur, customers will receive a pro rata rebate for loss of service of 24 hours or longer, upon request. 3. Office Hours The walk-in office hours for the system are as follows: 8:00 am - 6:00 pm Monday - Friday 8:30 am - 5:00 pm Saturday TCI customers are able to talk by telephone to a TCI customer service representative concerning their cable service 24 hours a day, 7 days a week. A service technician will be available to respond to service calls within 24 hours of customer notification of a problem other than a system outage. Any System Outage - ,, - _ 4 (major or minor) is responded to immediately, any hour. of night or day, 7 days per week. Scheduling of service calls will be handled on the following priority basis: • Major System Outage (disruption of service to a majority of subscribers). • Minor System Outage (disruption of service reasonably identifiable as unique to 6 - 10 subscriber or to a specific geographic area). • Impairments (when cable signal is delivered, but there is a deficiency in either the picture or sound). • Miscellaneous (disruption of service caused by another party). 78194.1 -42- 98- 913 Is Miami-TCI providing quality service to the citizens of the City of Miami? Can Miami-TCI meet the future needs of this community? PERFORMANCE ANALYSIS POINTS • Miami TCI System Profile • City Technical Review • Public Inquiry Results • Subscriber Complaint and Outage Profiles • Rate Comparisons, County and National • Customer Service Telephone R ' p Response Analysis • Equal Employment Opportunity An alysis MIAMI TCI SYSTEM PROFILE STATISTICS • 740 Cable Plant Miles • 175,000 Dwelling Units Passed • 60,000 Dwelling Units Served • 34% Market Penetration • 3,500 Installations Per Month • 3,000 Disconnects Per Month • 500 Subscriber Growth Per Month tD • 3% Annual Subscriber Growth Rate MIAMI TCI SYSTEM PROFILE PERFORMANCE • 57 Channel Capacity (400 MHz bandwidth) • 61 Channel Operation (426 MHz bandwidth) • 30 Service Outages Per Month • 1.5 Hours Avg. Duration Per Outage • 2,000 Service Calls Per Month • 3% of Subscribers TECHNICAL REVIEW ON JANUARY 25, 1996 CITY STAFF PERFORMED A BRIEF TWO DAY INSPECTION AND TEST OF THE CABLE SYSTEM TASKS PERFORMED • Reviewed subscriber complaints received by the City The major technical complaints were due to service outages • Analyzed the outage logs for 1996 The majority of causes is due to failure of active devices • Made a visual inspection of the cable plant Various problems were spotted throughout the system • Made some comparison tests at three points in the system One location failed to meet FCC standards Other problems found, further testing done by consultant PUBLIC INQUIRY .Zir`.Y'd5afi'6.9f3uE..✓.� sra« w, , _ s .. IS MIAMI TCI MEETING THE NEEDS OF SUBSCRIBERS IN THE CITY OF MIAMI ? THE CITY SOLICITED PUBLIC COMMENT - - - - • October, 1995 - NET9 broadcast Public Notice of Franchise Renewal to • February, 1996 - Notice published in Cable billing I statement rao PUBLIC INQUIRY SUBSCRIBER RESPONSE PROFILE Customer Service (telephone) Customer Service (site visit) Billing Dispute Outage Reception Programming Construction Dissatisfaction 0 5 10 15 20 25 30 35 40 45 Percent of Total May 1996 PUBLIC INQUIRY CUSTOMER SERVICE COMMENTS' • Excessive waiting times on telephones, particularly on weekends and evenings • Too much advertising while on hold; sometimes promoting programming that has already occurred • Lack of proper equipment or job knowledge exhibited by on site personnel cc °0 • Lack of customer service follow-up on reported problems PUBLIC INQUIRY BILLING COMMENTS • Customer is required to call and request credits for outages; TCI policy should be more proactive. • Unannounced, confusing changes in billing cycles • Too many billing increases with no increase in service • Late fee charged on late payments is excessive when compared to other area utilities V 00 • Longer period of time desired between mailing of bill toand due date PUBLIC INQUIRY RECEPTION, OUTAGE, CONSTRUCTION COMMENTS V • Frequent outabes in some areas com ou p nded by inability to reach customer service personnel and d failure of customer service to correct in a re asonable time frame • Consistent reception problems on some chan nels • Reception problems often not corrected in fir st site visit with on site personnel frequently'unsure of correct resolution � •More underground installations (rather than aerial) to enhance general appearance of residential areas PUBLIC INQUIRY PROGRAMMING COMMENTS • Fewer split channels (one channel for day viewing and another channel for evening viewing) J I • Frequent channel line-up changes or channel deletions with insufficient notice to customers • On screen channel guide requested • Increased channel selection, including: g CSPAN2, MSNBC, Cartoon, ESPN2, History, Sci Fi, WGN, Sundance, Court, Sports, EWTN, Ole TV SUBSCRIBER COMPLAINT PROFILE JANUARY- DECEMBER 1996 21) 24 TOTAL COMPLAINTS CABLE TV COMPLAINTS RECEIVED BY THE CITY OF MIAK41 BY MAJOR CATEGORY FOR JANUARY THROUGH DECEMBER 199 6 o Has COMPLAINT PROFILE January, 1996 235 total complaints Customer Service (telephone) Customer Service (site visit) Billing Dispute Outage Reception Programming. Construction Dissatisfaction v o 10 15 20 25 30 35 40 45 Percent of Total January, 1996 COMPLAINT PROFILE February, 1996 217 total complaints Customer Service (telephone) Customer Service (site visit) Billing Dispute Outage Reception Programming Construction Dissatisfaction Go 1 0 5 10 15 20 25 30 35 40 45 �- Percent of Total February, 1996 V Customer Service (telephone) Customer Service (site visit) Billing Dispute Outage Reception Programming Construction Dissatisfaction COMPLAINT PROFILE March, 1996 305 total complaints 0 10 15 20 25 30 35 40 45 Percent of Total March 1996 COMPLAINT PROFILE April, 1996 182 total complaints , Customer Service (telephone) Customer Service (site visit) Billing Dispute Outage Reception Programming Construction Dissatisfaction 00 i �p 0 5 10 15 20 25 30 35 40 btu Percent of Total April 1996 45 w COMPLAINT PROFILE May, 1996 198 total complaints i Customer Service (telephone) Customer Service (site visit) Billing Dispute Outage Reception Programming Construction Dissatisfaction U 5 10 15 20 25 Percent of Total May 1996 30 35 40 45 COMPLAINT PROFILE June, 1996 172 total complaints Customer Service (telephone) Customer Service (site visit) Billing Dispute Outage Reception Programming Construction Dissatisfaction (rate increase) i 0 5 10 15 20 25 30 35 40 45 b� Percent of Total June 1996 COMPLAINT PROFILE July, 1996 240 total complaints W0ft5 Customer Service (telephone) Customer Service k (site visit) Billing Dispute Outage Reception Construction Dissatisfaction CC RATE INCREASE C.O 0 5 10 15 20 25 30 35 40 45 �1 Percent of Total July, 1996 COMPLAINT PROFILE August, 1996 145 total complaints , Customer Service (telephone) Customer Service (site visit) Billing Dispute Outage Reception Programming Construction Dissatisfaction c 0 5 10 15 20 25 30 35 40 45 Percent of Total August, 1996 Customer Service (telephone) Customer Service (site visit) Billing Dispute Outage Reception Programming Construction Dissatisfaction COMPLAINT PROFILE September, 1996 113 total complaints 5 10 15 20 25 30 35 40 45 Percent of Total September 1996 COMPLAINT PROFILE October, 1996 128 total complaints , Customer Service (telephone) Customer Service (site visit) Billing Dispute Outage Reception Programming Construction Dissatisfaction 0 5 10 15 20 25 30 35 40 45 Percent of Total October 1996 Ref# LOCATION PROBLEM _ DATE 101) S.W. 43r-Avenue and 2 Terrace No down guy (end of line) 103) 104) 105) 106) 107) 108) 109) 110) [Down guy required] 03/07/97 S.W. 44 Avenue @ 3 Street CATV below Bell [No vertical clearance] 03/07/97 2810 S.W. 7 Street CATV on Beil at the pole [No vertical clearance] 03/06/97 316 S.W. 62 Avenue No down guy (end of strand) [Down guy required] 03/06/97 435 S.W. 67 Avenue Service drop crossing on Bell 03/06/97 3320 N.W. 20 Street Improper down guy 03/06/97 303 N.W. 36 Court Service drop improperly installed (could be illegal) 03/06/97 3501 N.W. 3 Street Drop not grounded at house 03/06/97 18 N.W. 33 Avenue Improper down guy [Sidewalk guy required] 03/06/97 CATV Cable Plant ' Problems Found The locations listed on the attached sheet are alleged violations of the Cable Television Ordinance 9332 for failure to comply with the operation or maintenance standards set forth in sections 605, 606 and 608 of the ordinance. The attached list of problems are allegedly in violation of section 605 "Cable Television Installation", parts (b)(d)and(e). 9 8 - 9'.$ CATV Cable Plant Problems Found The locations listed on the attached sheet are alleged violations of the Cable Television Ordinance 9332 for failure to comply with the operation or maintenance standards set forth in sections 605, 606 and 608 of the ordinance. The attached list of problems are allegedly in violation of section 605 "Cable Television Installation", parts (b)(d)and(e), Section 608 "Maintenance" part (a) and the maintenance standards as required by the January 14, 1987 agreement to keep the `B" cable in "...good and sound mechanical condition...". 3 98- 912 Ref# LOCATION PROBLEM _ DATE 01) 970 N.W. 27 Court "B" Amplifier is missing 103/06/97 02) 3100 N.W. 2 Street "B" Amplifier is missing 03/06/97 03) S.W. 17 Avenue & 7 Street "B" Amplifier is missing 103/06/97 04) S.W. 63 Avenue & 4 Street "B" Amplifier is missing 03/06/97 05) S.W. 5 Street & 58 Avenue "B" Amplifier is missing iO3/06/97 06} 2770 N.W. 11 Street i "B" Line Extender missing 103/06/97 07) 3261 N.W. 2 Street "B" Line Extender missing 103/06/97 08) 15 S.W. 44 Avenue "B" Line Extender missing 03/06/97 09) S.W. 68 Avenue & 4 Street "B" Line Extender missing ! 03/06/97 10) 2515 S.W. 7 Street "B" Line Extender missing f 03/06/97 11) 726 N.W. 28 Street "B" Tap is missing 03/06/97 12) 736 N.W. 28 Avenue "B" Tap is missing 03/06/97 13) 2746 N.W. 5 Street "B" Tap is missing 03/06/97 14) S.W. 54 Ave. between. 5&6 Streets. "B" Feeder cable is missing ; 03/06/97 15) S.W. 62 Avenue @ 4 Street toots C--Acrnnhho is micsinn 103/06/97 16) Grove Street (underground) 1st pole North. of Hardee Dr. -to- 1st pole South. of Hardee Dr. "B" Feeder cable is missing 103/06/97 CATV Cable Plant Problems Found The locations listed on the attached sheet are alleged violations of the Cable Television Ordinance 9332 for failure to comply with the operation or maintenance standards set forth in sections 605, 606 and 608 of the ordinance. The attached list of problems are allegedly in violation of section 605 "Cable Television Installation", parts (b)(d)and(e), Section 608 "Maintenance" part (a). F 98- 912 Ref# LOCATION PROBLEM _ DATE 201) N.W. 5 street one pole East of 37 Avenue Broken down guy 03/10/97 202) 140 S.W. 18 Court Drop wrapped around Bell 03/10/97 203) 1676 S.W. 19 Terrace Drop messenger broken (Drop hanging is low over the street) � 03/10/97 204) S.W. 52 Court between Broken service riser on " B" power supply The riser is lyinq on the cable strand 03/10/97 205) 340 S.W. 48 Street 207) 1829 S.W. 19 Street 208) S.W. 32 Avenue at 8 Street Feeder cut and unterminated (A & CAN not attached to new Not attached to new 2 1 03/07/97 103/10/97 r- 03/10/97 COMPLAINT PROFILE November, 1996 88 total complaints MUM Customer Service (telephone) Customer Service (site visit) Billing Dispute Outage Reception Programming Construction 00 Dissatisfaction co 0 5 10 15 20 25 30 35 40 45 Percent of Total November, 1996 COMPLAINT PROFILE December, 1996 101 total complaints Customer Service (telephone) Customer Service ` (site visit) Billing Dispute Outage Reception Programming Construction Dissatisfaction t tD 0 5 10 15 20 25 30 35 40 45 0-t- bo Percent of Total December, 1996 250 it 150 it c 50 o 00 0 COMPLAINT PROFILE TOTAL COMPLAINTS 1996 'af7lf�k�a4CR[+k9'e1V+•#AFaX3.Y.4T'HK �'. ... .. � JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Customer Service (telephone) Billing Dispute Dissatisfaction Customer Service (site visit) Outages Programming Reception Construction I COMPLAINT PROFILE 1996 2,124 total complaints 0 5 10 15 20 25 30 Percent of Total �1 1996 24 22 20 18 16 14 12 10 8 6 4 2 0 OUTAGE DURATION PROFILE JANUARY THROUGH JUKE, 1996' MI�Ip1041sw%Yes,+R�":�t+sP4FecxwxM'n4�:'.yExm�.x .. V .Ea•".�y'(&7�'.. Jan Feb Mar Apr May Jun (33) (25) (29) (21) (39) (39) Months with Total Outages per Month ■ 0-1 Hour ❑ 1-2 Hours ® 2-3 Hours 3-5 Hours ■>5 Hours OUTAGE CAUSE PROFILE JANUARY THROUGH JUKE, 1996 16 14 12 10 Jan Feb Mar Apr May, Jun (33) (25) (29) (21) (39) (39) Months with Total Outages per Month c Y'� ■ Cable ❑ Fuse/Brkr ® Power El Active ■ Passive SERVICE OUTAGE PROFILE S NW 36 St, N City Boundary, W NW 7 Ave, E Bay (Lt. Haiti and Up. Eastside NETS) (8) S City Bndry, N Coral Way, W NW 37 Ave, E Bay (S. half of Coral Way and Grove NETS) (7) S SW 8 St. N City Bndry, W City Bndry, E 37 Ave (Flagami NET) (6) S Coral Way, N Miami River, W 37 Ave, E 17 Ave (W. Lt. Havana 8 NW Coral Way NETS) (5) S Miami Rv., N NW 36 St, W NW 7 Ave, E Bay (Dwnlwn, Edgewlr, E. half Ovlwn NETS) (4) S Coral Wy., N Mia Rv., W 17 Ave, E Bay (E. Lt, Hay., half Coral Way, S. qtr. Dwn(wn NET) (3) SNW 36St, N NW 71 St. W NW 17Ave, E NW 7 Ave (Model City NET) (2) S River, N NW 36 SI,W NW27 Ave, E NW 7 Ave (Allapattah 8 W half Overtown NETS) (1) C.O BY CONSTR UCTION PHASES (8) January through June, 1996 0 5 10 15 20 25 30 35 TOTAL OUTAGES 1997 a Y.� UPDATE 140 120 100 80 60 40 20 °O 0 TOTAL COMPLAINTS 1997 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC COMPLAINT PROFILE 1997 391 total complaints Customer Service (telephone) Customer Service ti (site visit) Billing Dispute Outage Reception Programming Construction Dissatisfaction co oc 0 20 40 60 80 100 120 140 160 180 200 1 Total Complaints 1997 COMPLAINT PROFILE January, 1997 ar 3 Customer Service (telephone) Customer Service (site visit) Billing Dispute Outage Reception Programming Construction Dissatisfaction COMPLAINT PROFILE February, 1997 42 total complaints , 0 5 10 15 20 25 30 35 40 45 r� Percent of Total February, 1997 Customer Service (telephone) Customer Service (site visit) Billing Dispute Outage Reception Programming Construction Dissatisfaction COMPLAINT PROFILE March, 1997 49 total complaints �4l"sJ 0 5 10 15 20 25 30 Percent of Total March 1997 35 40 45 Customer Service (telephone) Customer Service (site visit) Billing Dispute Outage Reception Programming Construction Dissatisfaction to COMPLAINT PROFILE April, 1997 62 total complaints 0 5 10 15 20 25 30 35 40 45 Percent of Total April 1997 COMPLAINT PROFILE May, 1997 34 total complaints wx Customer Service (telephone) Customer Service (site visit) k Billing Dispute , Outage _ Reception Programming Construction i Dissatisfaction 0 5 10 15 20 25 30 35 40 45 Percent of Total May 1997 Customer Service (telephone) Customer Service (site visit) Billing Dispute Outage Reception Programming Construction Dissatisfaction (rate increase) Od b�► COMPLAINT PROFILE June, 1997 61 total complaints 3 j. 8 A di ht 77. 0 5 10 15 20 25 30 35 40 45 Percent of Total June 1097 COMPLAINT PROFILE July, 1997 .- total complaints allCustomer Service Customer��===l (site visit)f 7� mmm Billing Dispute Outage Reception Construction Dissatisfaction Programming i 0 5 10 15 20 25 Percent of Total July, 1997 30 35 40 45 alli m 50 40 30 20 OUTAGE DURATION PROFILE January through March, 1997 Total Outages Per Month 0-1 Hour ■ 1-2 Hou ■ 2-3 Hou ■ 3-5 Hou I! ■ >5 Hours 100 90 80 70 60 50 40 30 20 cao 10 M 0 t+� OUTAGE CAUSE'PROFILE January through March, 1997 Jan (45) Feb (117) Mar (89) Total Outages Per Month ® Cable ■ Fuse/Brkr ■ Power ■ Active ■ Maintena nce $80 $75 $70 $65 $60 Do Cr $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 RATE COMPARISON DADE COUNTY Basic Exp. Basic Addr. Conv. Install, Pre -Wire Install Not Pre -Wire ■ Miami TCI, 6. channels, 59,000 subs ■ Gold Coast, 69 channels, 55,364 subs El TCI-S. Dade,63 channels, 54,240 subs ❑ Adelphia, 64 channels, 77,504 subs ® Dynamic, 56 channels, 84,270 subs $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 q, RATE COMPARISON NATIONAL %.aoie service Addr. Conv. Install, Pre -Wire Install Not Pre-W ire ■ Miami TCI, 61 channels, 59,000 subs ■ Warner, Cincinnati OH, 60 channels, 60,000 subs 0 TCI, St. Louis MO, 60 channels, 59,000 subs ❑ Time Warner, Minneapolis MN, 120 channels, 73,000 subs ® TCI, Oakland CA, 59 channels, 71,142 subs CUSTOMER SERVICE TELEPHONE 8:00 PM 3:00 PM 12:00 PM 10:00 AM Y. RESPONSE TIME 0 5 10 15 20 25 30 35 40 45 Not less than 95% of all customer service and repair calls shall be answered within 2 minutes by a human voice on a 24-hour, 7-day a week basis -Resolution 87-1139 ❑ Weekend ■ Weekday EQUAL EMPLOYMENT OPPORTUNITY BREAKDOWN IAMI TCI WORKFORCE ETHNIC BREAKDOWN 06 Famala Asian Male 1% Hispanic Male 41% Ite Male 5% Black Male 14% EQUAL EMPLOYMENT OPPORTUNITY BREAKDOWN i I ( MIA41 TCI WORKFORCE JOB CLASSIFICATION BREAKDOWN Offic Semi -Skill( Operator 19% Marketing 17% ian skilled Labor 3% Management 11% killed Craft Worker 13% 50 45 40 35 30 25 20 15 10 5 0 EQUAL EMPLOYMENT OPPORTUNITY BREAKDOWN Miami TCI City Available Workforce ■ Asian Male ■ White Male ❑ Black Male Hispanic Male ■ Female SUMMARY CABLE PLANT f�ti�T�1x.3tu'tix'R`�'9 Hr4z .L.1�'!n_„y;:jE_ • Current cable isystem is a 15- ear old plant buil t in the early 1980's as a 400 MHz, 57-channel system using the most reliable hardware and electronics available at that time. • Over the course of the last 15 years, normal wear and countless changes and relocations have contributed to the physical deterioration of the cable plant. • Examination by City staff shows signs of system `i degradation and negative effects of " the pushing" bandwidth past its limits. SUMMARY- SUBSCRIBER DISSATISFACTION • There is a gen Pral perception that City subscribers are not getting service commensurate with their investment • Available programming has not kept pace with customer demands and with the programming offered by other local cable companies • There is a general dissatisfaction with the telephone support offered by TCI customer service. • Billing inconsistencies and lack of proper explanations p of billing changes and outage credit procedures present additional problems. hi h • Outages account for a � g percentage of subscriber complaints CONCLUSION �eee.e �e ee.eases°uv..wx�:.,�m-±�°�*nv+.ae•,::... .,,;... .. r • Cable plant rebuild needs to be completed as expediently a� possible to provide expansion of programming, increased reliability and updating of cable plant, and a decrease in number of outages. • TCI Customer Service performance needs to be improved • TCI communication with subscribers on billing issues needs to be enhanced i �q� SEP-23-98 14:59 FrOCTCI 3034883207 T-033 F.08/25 Job-525 MTCI shall, at a minimum, provide one free service connection and cable service to each outlet, including basic service, the cable programming service tier to one (1) outlet for each floor, not to exceed three (3) floors, in all public or private schools (as defined by, and which receives funding pursuant to, Title I of the Elementary and Secondary Education Act of 1965, 20 U.S.C. §421(a) ec�se ., as amended), (grades K-12). MTCI will make arrangements for each school to receive a free education program listing guide to each connected sehooL Additional copios of such program listing guides will be provided, if requested by a school, at cost. Such educational program listing guides will identify and describe programming on MTCI's cable system that is appropriate for use in the classroom and will provide suggested curriculum support ideas. MTCI will make arrangements for each school to receive school materials, to the extent they are available, for teachers that explain the educational applications of the broadband cable systems and services offered on the cable system. The materials will be provided to all connected schools. Simultaneous with MTCI making commercially available an on-line service for personal computers within the City of Miami, MTCI will, upon request by the local school department, provide schools within the City which receive cable service with, at minimum, one (1) free connection to such on-line service. At a minimum, such on-line service will provide access to the Internet. Upon request, each connected school will receive at minimum one (1) free cable modem and free, unlimited access to the on-line service for use during the school year. Additional cable modems and operational support and services (for example, assisting schools in setting up and maintaining reliable Internet connections), will be provided to connected schools upon request and at the actual and direct costs of MTCI. In addition, MTCI will sponsor local workshops in each region to cducatt teachers about Us on-line service and to provide connected schools with an opportunity for hands-on training. COMMERCIAL LEASED ACCESS MTCI shall provide commercial leased access channels and leased access rates in accordance with applicable law. SERVICE POLICY Upon request and payment of all applicable charges and provided that the requesting person grants MTCI access to his or her promises in order to furnish, maintain, and continue to offer cable service to that person, MTCI shall 98- gig SE?-23-96 WSS Fror0ci 3034H3207 T-033 F.09/20 Jcb-525 throughout the term of the Franchise Agreement properly furnish, maintain, and continue to provide all cable services distributed over the cable system to any person at his or her place of residence or commercial location within the City. The only permitted exception to the service policy requirement is in the areas where services requested is at a location with a density of less than 25 subscribers per aerial mile and 40 subscribers per underground mile. Cable service may be trade available to the areas not meeting the density requirements on the basis of subscribers pro rata capital contribution and aid of construction not to exceed MTCI's direct cost of the extension of its cable plant. CIA Z1:9 *11 '1 U 014.3 KV I M ' MTCI will agree to abide by customer service standards as adopted by the City which are comparable to those attached to this latter. The attached customer service standards will need to be customized to apply to the specific business practices of MTCI. TERM The City shall agree to grant a franchise renewal agreement for a term of ten (10) years. MTCI will agree to waive its claim against the City for the $825.000 credit arising out of Resolution No 88-711. In exchange for MTCI waiving its claim to the credit. the City agrees to consent to an inter -company realignment whereby MTCI is merged into a parent company, TCI Cablevision of Florida, Inc.; the City agrees to consent to the AT&T change of control; and agrees to consent to the pending Media One transaction (if MTCI files the appropriate FCC Form 394 in connection with the Media One transaction). In exchange for the following from the City: (i) The granting of a three (3) year extension of the current franchise agreement between the City and MTCI; 00 Approving an inter -company realignment whereby MTCI is merged into a parent company, TCI Cablevision of Florida, Inc.; (iii) The granting of consent to the AT&T change of control; and, 98- 912 SEP-23-98 14:59 Fran:TC1 303J86320t -033 P 10/N Jub-52E (iv) The granting of consent to the transfer of the pending Media One transaction; MTCI is willing to offer the following: (i) Waiver of its claim to the $825,OW credit; (ii) Payment of costs incurred by the City in connection with MTCI's cable franchise not to exceed two hundred twenty-five thousand dollars ($225,000.); (iii) Payment of an additional twenty-five thousand dollars ($25,000) for the City's use in developing an enhanced maintenance plan of the cable system. Please realize that MTCI strongly believes that either of these offers provides the City of Miami with the basis for an acceptable franchise renewal agreement between the City and Miami Tele-Communications, Inc. Or, alternatively, it provides the ability for an extension of the current franchise agreement allowing the City to negotiate a franchise renewal with the proposed transferee, Media One. In addition, it provides the City with the ability of not pursuing the franchise renewal through the time consuming and costly formal renewal process. In that light. I would request that a copy of this letter be provided to the Mayor and each Commissioner prior to the public hearing scheduled for September 28, 1998. In the event that either of these offers meets approval of the Mayor and Commissioners, I would also request that the City refrain from proceeding with the formal process and grant us at least thirty (30) days to finalize the drafting of an acceptable franchise agreement document or the necessary documents outlining an extension and the appropriate consents. I took forward to hearing from you at your earliest convenience regarding this matter Thank you for your time and consideration_ Sincerely, TCI Communications, Inc. On Behalf Of Miami Tete-Communications, Inc. Mtchaei�--- Corporate Director - Franchising cc: Madie Gustafson Tom Barberini Dick Kirby Bonnie Lopez Ed Garcia 9 8 - 91,E CITY OF MIAMI, FLORIDA MIAMI TCI ASCERTAINMENT REPORT 98- 913 TABLE OF CONTENTS I. Review of Findings and Recommendations from Cable Ascertainment Process II. Findings and Recommendations III. Where to From Here? IV. Franchise Chronology V. Financial Performance and Franchise Fee Review VI. Technical Performance Review of MTCI VII. Customer Service Analysis/Future Needs of the Community VIII. Matters to Address in Renewal Proceedings IX. Conclusion 08/22/97 Page 1 MTCI Ascertainment Report I. Review of Findings and Recommendations from Cable Television Ascertainment Process In its role as a franchising authority, the City has engaged in an "ascertainment" process related to the proposed renewal of MTCI's cable television franchise. In general, the ascertainment effort has involved a review of the performance of the current cable operator under existing law and terms of the current franchise agreement, as well as an assessment of future community needs and interests that may pertain to the cable system. During ascertainment, the City has 1) completed a technical analysis of MTCI's current cable infrastructure; 2) conducted a financial performance and franchise fee review of MTCI and 3) reviewed a variety of data and documents pertaining to the community's future telecommunications needs. The essence of the ascertainment process is being transmitted for the,public record in this document. II. Findings and Recommendations An overview of the findings and recommendations contained in the documents named above will be presented to the City Commission as provided under Ordinance 9332 (as amended). In general terms, the findings and recommendations of this report can be summarized as follows: A. Sufficient concerns have surfaced regarding MTCI's customer service performance during the franchise term as to justify the inclusion of minimum customer service standards applicable to all cable operators conducting business in the City in any franchise renewal agreement reached with MTCI. B. Technical issues have been identified by the technical audits performed on MTCI's system which raise concerns over maintenance of its current 15-year old plant, as well as its ability to accommodate the digital overlay proposed in its Renewal Questionnaire response in a manner that will ensure ongoing quality service for MTCI's existing analog cable subscribers as well as its future digital cable subscribers. C. Financial disputes have been ongoing between the City and MTCI throughout the term of the franchise. MTCI has been generally non -responsive and uncooperative on these issues as demonstrated by their failure to reinstitute franchise fee payments to the City which by its calculation were due no later than July 1, 1997. This appears to reflect willful non-compliance on the part of MTCI, and seems unduly arbitrary in light of the difficult financial times the City currently faces. 08/22/97 Page 2 MTCI Ascertainment Report 98- 912 III. Where to From Here? No specific City Commission action, other than to receive and accept this report, is needed at this time. In the near future, the City will begin discussions with MTCI to develop a new cable franchise reflecting the products of this ascertainment effort. IV. Franchise History The following is a summary of significant events during the current franchise period. 1. December 17, 1980 - City Commission adopted enabling Ordinance No. 9332 (as amended), requiring franchisee to pay City quarterly fee of 5% of gross revenue with a minimum of $125,00 per quarter (to be adjusted per CPI) and crediting payments in excess of 5 % against future payments. 2. December 17, 1980 - Resolution 80-888, approving a request for proposals for Cable television service within the City of Miami and allocating $9,000 to cover cost of proposals. 3. March 20, 1981 - City issued cable franchise Request for Proposal. 4. April 9, 1981 - Resolution 81-291, authorizing City Manager to enter into an agreement with Telecommunications Management Corp. to evaluate cable television proposals to be received by the City of Miami. 5. April 10, 1981 - Responses received from RFP. 6. May 15, 1981 - Ordinance 9267 passed- establishing a Trust and Agency Fund entitled Cable Television and appropriating funds for the operation in the amount of $25,000. 7. July 23, 1981 - Ordinance 9298 enacted establishing a Trust and Agency fund entitled Cable Television and increasing the appropriation for fund in the amount of $25,000 from revenue received from cable television companies' non-refundable bidding fee (5 bidding companies each submitted $10,000 non-refundable application fee). 8. October 6, 1981 - Agreement between Miami Tele-Communications and Americable of Greater Miami to form Joint Venture. 9. October 19, 1981 - City Commission adopted Ordinance No. 9332, granting a Cable Television License to MTCI and Americable of Greater Miami, Ltd, effective November 19, 1981. 08/22/97 Page 3 MTCI Ascertainment Report 98- 91's - Required quarterly fee payment to City of 5% of gross revenues with minimum fee of $225,000 per quarter - Excess payments to be credited against future payments in excess T of minimum - Additional obligations of cable operator - $2,000,000 for facilities and equipment - $1,000,000 annually starting in third year, facilities, staff and training - $200,000 to community access corporation - 3% of gross revenue or $600,000 annually, whichever is greater - $200,000 for drug enforcement program 10. November 12, 1981 - Ordinance 9347 enacted, amending section 1 of Ordinance 9267 (as amended by Ordinance 9298) establishing a trust and agency fund entitled cable television and increasing the appropriation for said fund by $200,000 from revenue to be received from the cable licensee based on cable licensing fees for the purpose of paying costs relating to the preparation, advertising, receiving and evaluating and awarding of a cable television license. 11. November 19, 1981 - City's Cable Television License with MTCI and Americable of Greater Miami, Ltd. became effective for 15 years. 12. September 9, 1982 - Resolution 82-843 enacted, establishing requirements for process to be followed relating to the transfer of ownership interest in the cable TV licensee. 13. December 16, 1982 - Resolution 82-1155 enacted, approving the proposed transfer to TCI Development Corporation of TCI-Taft Cablevision Associates' interest in MTCI. 14. December 16, 1982 - Resolution 82-1174, authorizing and approving the granting of security interests in the cable television system and other property of Americable and MTCI. 15. April 6, 1983 - Ordinance 9567 enacted, amending Ordinance 9332 by adding provisions of Resolution 82-1174, granting certain security interest in the cable TV system and other property interest of the cable licenses and ensuring that future borrowing or financing by licensee have prior approval of City Commission. 16. May 10, 1984 - Ordinance 9831, deferring the requirement to offer 2-way interactive service from MTCI's technical plan. 17. July 31, 1984 - Resolution 84-934, freezing MTCI's accumulated penalties, imposing additional penalties relating to the cross connection of cable, permitting the imposition of penalties for other violations and requiring notification to the City Commission once the total 08/22/97 Page 4 MTCi Ascertainment Report tJ 912 accumulated penalties reached the sum of $1,750,000. 18._ October 10, 1984 - Ordinance 9915, modifying the _procedures for assessing penalties by City Manager, making recommendations concerning penalties to a panel of arbitrators, providing for a hearing by arbitrators, and making their decision final and binding unless appealed to the City Commission, cost of proceedings to be part of arbitrators findings, arbitrators compensated by the City. 19. September 12, 1985 - Ordinance 10035 amending Ordinance 9332, removing communication access corporation requirement and support therefor (sections 402 and 403) (removed $2 million for facilities and equipment and 1 Million for operating budget), removing section 404b dealing with the submission and approval of a plan by the licensee with respect to the dollar commitment for support of local origination programming, amending section 901 a by deleting the word "minimum" as pertaining to prepaid quarterly license fees, amending section 1001 reducing the security fund to 1 Million upon full completion of the cable system construction and with full compliance with specification to be confirmed by an independent proof of performance analysis. 20. September 11, 1986 - Ordinance 10146, amending section 204i regarding the forfeiture of the cable licensee's security fund in the event of transfer, sale or assignment within five years of the effective date of Ordinance 9332 (as amended), amending section 405a to eliminate obligations by the City to provide direct financial support to the community access corporation, amending section 406a to provide a termination date of 10/1/96 on licensee contribution to City drug enforcement efforts, amending section 1001 to reduce the 2 million security fund by $500,000 upon substantial completion of construction of the cable television system. 21. September 11, 1986 - Agreement between City and MTCI, granting full title and interest of MTCI's Institutional Network (INET) to City upon completion and proofing as set forth in Ordinance 10035, providing for MTCI to correct cross -connections in streets rehabbed by City, providing for MTCI to be compensated by the City for the time value of money for license fees paid per section 901 in the approximate amount of $2.6 million prepaid through 6/30/84 as provided in 10035 at a rate equal to that the City earns on its invested liquid funds, forgiving outstanding fines of $977,244.79, forgiving refund due MTCI by City of $550,000 for drug enforcement efforts and eliminating any further obligation by MTCI for drug enforcement efforts, crediting of $450,000 owed by MTCI for payment through 10/1/86 as deduction from interest payable by City on prepaid license fees, crediting MTCI of 1.65 million for access programming contributions and forgiving all other related amounts, refunding $500,000 of security fund leaving balance of $1,500.000 and further reducing security fund to 1 million. 22. September 11, 1986 - Resolution 86-746, authorizing City Manager to execute September 11 agreement. 23. January 14, 1987 - Agreement between City and MTCI approving transfer of Americable half interest in joint venture to MTCI ($13,000,000), requiring completion and 08/22/97 Page 5 MTCI Ascertainment Report 98- 91_2 activation of INET by 2/15/87, requiring proofing of subscriber system by 2/15/87, requiring the maintenance of `B" cable in sound mechanical condition to enable reactivation with minimum effort, requiring MTCI to maintain the INET (under direction of City). Additionally this agreement bound MTCI to the 9/16/86 agreement on cross connects, the affirmative action obligations of Ordinance 9332 (as amended), new customer service office for customer convenience, freezing of existing rates for basic service for a period of at least one year, offering of a promotion for not less than 45 days to provide one additional pay channel at $2.00 per month, reduction of the deposit on converters for at least 12 months, unscrambling of the signal for basic channels, elimination of the monthly service charge for additional outlets for a period of not less than three years, provision to each customer of the American Movie Classic Channel as available to MTCI (customers can elect to receive credit of not less than 25 cents as an alternative), and provision of a free monthly magazine guide for programming for a period of not less than three years. 24. November 30, 1987 - Resolution 87-1139, adopting customer service standards and requiring TCI to comply within 60 days or City will initiate steps to find TCI in noncompliance. 25. March 4, 1988 - Agreement, providing that the balance of prepaid franchise fees, interest, access contribution paid, less fees earned by the City, and drug enforcement contributions of $2,965,444.54 were to be held in escrow and applied to the franchise fee liability for the year 1996; franchise fees for years 1988-1995 will be paid as due, remaining locations of INET to be constructed and activated by 5/30/88; all rehab areas of City turned over to MTCI will be completed by 11/19/88; City agrees to accept the proof of performance of the subscriber system as complete and to release the $500,000 from the security fund; MTCI agrees to maintain B cable in sound mechanical condition; and all claims or penalties against MTCI are considered resolved. 26. July 21, 1988 - Resolution 88-711, approving an agreement between TCI and City that resolved approval of the INET and settlement of outstanding penalties and resumption of license fee payments to the City. Balance of pre -paid license fees as of December 31, 1987 was $918,743 with $450,000 to be credited to fees owed to City and $468,743 to be held in escrow and applied to license fee liability in final year of franchise. Credit of $825,000 is due to City as compensation for cable operator not providing service to certain locations due when license is extended to original 15-year term. 27. December 15, 1988 - Resolution 88-1153, approving the reduction of the cable television security fund that Miami TCI is required to maintain from 1.5 million to 1 million. 28. December 7, 1989 - Ordinance 10678, amending Section 804 of City cable TV Ordinance 9332 (as amended), changing minimum of days after due date of a delinquent cable TV fee that notice to disconnect is given to subscriber from forty-five (45) days to thirty (30) days. 29. January 11, 1990 - Resolution 90-28, imposing financial penalties against MTCI of $2500 per day beginning January 11, 1990. 30. June 26, 1990 - Resolution 90-613, expressing City opposition to Dade County ordinance 90-73 requiring each cable licensee in incorporated areas to pay Dade County 2% of 08/22/97 Page 6 MTCI Ascertainment Report 98- 91,E gross revenues on quarterly basis (currently 1 % of City's franchise fees paid to the County). 3 L April 17, 1992 - Agreement, instructing MTCI to adhere to amended Article VIII, Chapter 54 of the City code (adopted by resolution 10943, January 9, 1992 and referring to resolution 10438, May 19, 1988), requiring that anyone seeking to use public rights -of -way for placement of pathways in connection with the operation of a private telecommunications system shall be required to pay an annual fee to the City based on the actual linear feet of pathway. 32. May 18, 1992 -Administrative Policy issued establishing Miami NET 9. 33. July 6, 1992 - Agreement between the City and MTCI to enter into economic development incentives program (authorized by resolution 92-136 and 92-39), for an amount not to exceed $500,000, to have MTCI locate within the City of Miami a telecommunications relay center for the hearing and speech impaired, as partial or total reimbursement for the expenses associated with such eligible activities which the MTCI will incur in establishing the center. 34. July 22, 1993 - Resolution 93-479, expressing the intent of the City to adopt and administer cable televisions rate regulations for the basic service tier consistent with FCC regulations. 35. November 18, 1993 - Opening of formal renewal period for the City of Miami franchise. 36. January 31, 1994 - MTCI requested commencement of formal renewal process (under section 626a of the Cable Communications Act of 1984). 37: April, 1994 - MTCI proposed merger with Liberty Media. 38. April 18, 1994 - MTCI submitted FCC Form 393 as required by renewal process. 39. May 18, 1994 - Closing of formal renewal period for the City of Miami franchise. 40. March 2, 1995 - MTCI submitted rebuild plan. 41. June 7, 1995 - FCC found that MTCI rate of $13.89 monthly for basic service was in excess of permitted maximum of $13.55 monthly and orders reduction within thirty (30) days. 42. June 14, 1995 - In meeting with City staff, MTCI requested thirty (30) year renewal term and agreed to credit City $825,000 toward outstanding debt. They also requested assistance from the City in the prosecution of individuals who illegally access the cable system; changes in the language of the license ordinance to allow annual report to occur after MTCI fiscal year end, rather than City fiscal year-end; and requested that license ordinance provision requiring MTCI to set aside twenty (20) channels for access programming be reduced. In regard to the $2.2 million owed MTCI by the City, MTCI offered to excuse $1.6 million upon approval of a 30-year renewal. 08/22/97 Page 7 MTCI Ascertainment Report 43. June 22, 1995 - Letter from MTCI to City submitting proposed changes to cable license ordinance. 44. September 28, 1995 - City sent letter to MTCI acknowledging receipt of June 22, 1995 rebuild plan, indicating that ascertainment phase of formal renewal is in process, and requesting completion of renewal questionnaire. 45. October 5, 1995 - City submitted letter to TCI requiring evidence of refund to subscribers. 46. October, 1995 - Public Notice of Franchise Renewal on NET 9. 47. November, 1995 - MTCI submitted renewal questionnaire requested by the City. 48. February, 1996 - City initiated public inquiry into future cable -related community needs and interests and performance of the cable operation under the existing Franchise by inserting solicitation in February, 1996 cable statements. 49. February 12, 1996 - Technical Audit performed by the City's engineering consultant, William Pohts. 50. March 13, 1996 - Internal Audits and Reviews completed draft audit to determine compliance with Ordinance 9332 and amendments and agreements. 51. March, 1996 - Pohts' Technical Audit Report submitted. 52. April 5, 1996 - City sent certified letter to MTCI indicating violations outlined in technical audit report. 53. April 22, 1996 - MTCI sent hand delivered letter to City refuting claims in the City's violation letter of April 5. 54. April 29, 1996 - City sent certified letter to MTCI in response to MTCI refutation of City's violation letter and another certified letter citing violations relating to financial audit being conducted. 55. August 5, 1996 - MTCI sent City informal proposal for franchise renewal. 56. August 7, 1996 - City sent MTCI letter acknowledging receipt of proposal and indicating that it would be viewed as an "informal proposal". 57. August 30, 1996 - Office of Telecommunications prepared an internal analysis of the performance of MTCI covering the period January, 1996 through July, 1996. 58. October 30, 1996 -Ordinance 11410, establishing 3 month extension of MTCI cable 08/22/97 Page 8 MTCI Ascertainment Report franchise from November 18, 1996 to February 18, 1997. 59. January 6, 1997 - Draft report received from external auditors, in regard to balances owed to/from MTCI and the City of Miami. 60. January 27, 1997 - MTCI faxed analysis of the monies owed to/from MTCI and the City of Miami, indicating a balance owed MTCI of $1,537,982.64 as of 12/31/96. 61. February 3, 1997 - Office of Telecommunications prepared an internal analysis of the performance of MTCI covering the period January, 1996 through December, 1996. 62. February 19, 1997 - MTCI advised by letter that the City was not in agreement with MTCI's analysis of the balance of payments. 63. February 20, 1997 - Ordinance 11443 enacted, establishing 3 month extension of MTCI cable franchise from February 18, 1997 to May 18, 1997. 64. April 17, 1997 - Letter from City to MTCI advising them that City wishes to pursue formal renewal process and listing significant milestones. 65. April 28, 1997 - Letter from City to MTCI seeking agreement on monies owed MTCI of $456,532 and requesting reinstatement of quarterly franchise payments. 66. May 7, 1997 - Ordinance establishing month -to -month extension of MTCI cable franchise from May 18, 1997 considered. 67. May 16, 1997 - Letter from MTCI to City expressing disagreement with April 28, 1997 letter that sought agreement on monies owed TCI. 68. May 21, 1997 - Letter to MTCI from City requesting additional documentation in support of their position prior to meeting on the issue of monies owed MTCI. 69. May 22, 1997 - In response to subscriber complaints regarding MTCI's service and proposed rate increased, the City commission adopted Resolution 97-364, requesting the City Manager to develop an RFP for a competing cable TV provider and Ordinance 11504, replacing ordinance proposed during May 7 Commission meeting to set MTCI's franchise extension period as month to month. 70. May 30, 1997 - MTCI sent City documents supporting position regarding disagreement with City's financial analysis. 71. June 17, 1997 - Meeting held with representatives from City and MTCI to resolve financial disagreements. MTCI reiterated its disagreement with the $825,000 credit included in Res. 88-711 for not serving port of Miami and questioned additional amounts identified in the City's audit findings. MTCI agreed to further research the financial issues and to do a technical 08/22/97 Page 9 MTCI Ascertainment Report 98- 91,E presentation scheduled for August 6. 72. July 24, 1997 - City Commission meeting to discuss status of MTCI franchise renewal. 73. July 25, 1997 - Letter from MTCI to City with written legal opinion as to disposition of $825,000 and reiterating MTCI's position that credit is not due the City. 74. August 6 1997 - TCI Technical Presentation to City administration. Letter advising MTCI of financial violation hand delivered to MTCI at this meeting. Response from MTCI due within 15 days (August 21). 75. August 15, 1997 - Letter sent to MTCI identifying technical violations. V. Financial Performance and Franchise Fee Review Article IX of City Ordinance #9332 at Section 901(a) states in relevant part: "The licensee shall pay to the city an annual sum equal to five (5) percent of the annual gross revenues of the system from all services in the city, which sum shall be paid quarterly as provided in Section 902 of this ordinance ..." (emphasis supplied) Section 902(b) states in relevant part: "The licensee shall report, in such detail as the director of finance may require, before the twentieth day of each January, April, July and October its gross revenues for the proceeding calendar quarter and shall remit therewith the amount by which the amounts specified in Section 901(a) ... exceed the applicable minimums..." Section 904 further provides: "In the event that any payment is not made on or before the applicable date fixed in Section 902, interest on such payment shall apply from such date at three (3) percent above the then prevailing prime rate of interest." The City of Miami used its internal auditing staff to perform a financial investigation of the MTCI system to determine compliance with the Cable Television License Ordinance No. 9332 (as amended); the September 16, 1986 and August 1, 1988 Agreements between the City and MTCI; as well as the Resolution No. 88-711; and Resolution No. 88-1153. The audit covered the period between October 1, 1994 through September 30, 1995. The City also hired the public accounting firm of Rachlin Cohen & Holtz to review the City's internal audit findings and recommendations and such other of MTCI's records as might be required to determine MTCI's compliance with its financial obligations to the City. 08/22/97 As part of this process, the following steps were taken: Page10 MTCI Ascertainment Report 9 S - 91.E • City Ordinances related to franchise fees were reviewed • Annual reports of revenue submitted to the City were reviewed • City Internal Auditors were interviewed to develop an understanding of the sources and procedures for the revenue reports to the City • External auditors (RCH) were employed to perform audit work • Revenues not reported to the City were compiled • Subscriber billings were compared to amounts paid to the City and discrepancies were analyzed Summary of Audit Report Findings: 1. Unpaid Advertising Revenue MTCI reported advertising revenues attributable to the City of $112,794 in January, 1995 for the month of December, 1994. The correct figure according to MTCI personnel should have been $107,829. MTCI reported advertising revenues of $42,135 in April, 1995 for the month of March, 1995. The correct figure should have been $105,146. MTCI deducted agency commissions, an expense of doing business, from the gross revenues in reporting and paying franchise fees. Agency commissions deducted from gross revenues totaled $683,517. MTCI deducted additional commissions, an expense of doing business, from the gross revenues totalling $180,105. These items total an underreporting of revenues in the amount $863,621, which when allocated to the City, equals $182,598 of underreported revenues. Total underreported advertising revenues equals $240,643. This figure when multiplied by 4% franchise fee equals $9,626 of franchise fees due the City. Recommendation: To preserve the City's collection rights, the Finance Department should invoice MTCI for additional revenue in the amount of $9,626. 2. Additional Revenue Due City from Business Interruption Insurance MTCI's audited Financial Statements at December 31, 1994 stated that MTCI received $565,000 for business interruption insurance during 1994. This matter was brought to the attention of MTCI during the January 24, 1996 meeting between MTCI and the City. MTCI's representatives at this meeting verbally agreed to pay the City $22,600 (4% of $565,000). No such payment has, to date, been received from MTCI. Recommendation: To preserve the City's collection rights, the Finance Department 08/22/97 Page 11 MTCI Ascertainment Report M I I V� ILI should invoice MTCI for additional revenue in the amount of $22,600. 3. Certified Annual Report Not Inclusive Section 708 of the Ordinance 9332 (as amended) requires that certain statements be included in MTCI's Certified Annual Report to the City. The City's Internal Auditor reviewed the annual report at December 31, 1994 and even though certain required statements are not of a financial nature or part of the audit scope, the auditor observed that the following statements were omitted: (1) a summary of the previous year's activities and development of the system, including technical performance of the system, development of local origination programming, development of access services and facilities, adequacy of the institutional network, services begun or dropped, subscriber gain or loss, statistics on penetration by each service offered, development of interactive capability, application of state-of-the-art technology, development of technological advances in the industry, level of and response to customer complaints, progress in local hiring, affirmative action, and minority business enterprise participation, and development of training programs and internships. (2) a reconciliation of payments to the City to the revenues as reported in MTCI's audited financial statements. more of MTCI. (3) a list of officers, directors, and partners of MTCI. (4) a complete reporting of any ownership of one percent or Recommendation: MTCI should ensure that when its certified Annual Report for December 31, 1997 is prepared, the above mentioned required statements are included in this report as well as in all future Certified Annual reports provided to the City. 4. Documentation of Quarterly License Fees Not Provided The auditors requested MTCI to provide their quarterly revenue statements including proof of payment (canceled checks) for the period January 1, 1988 through December 31, 1992. Recommendation: MTCI should provide the City with the quarterly revenue statements, including the canceled checks for the period January 1, 1988 through December 31, 1992. 08/22/97 Page 12 MTCI Ascertainment Report 5. Additional Revenue Due City from In -Home Wiring and Shopping Channel The auditors noted that In -Home Wiring Maintenance and Home Shopping Incentive Pay was omitted from the calculation for revenue due the City. Therefore, the City is due $4,155 as follows: In -Home Wiring Maintenance $3,308 Home Shopping Incentive Pay $ 847 Total due City $4,155 Recommendation: The Finance Department should invoice MTCI for additional revenue as detailed above in the amount of $4,155. 6. Other Possible Revenue Streams to the City as follows: The auditors noted four categories that were not included as revenue 5087.0001 - Revenue Applied to Copyright 5087.0002 - Revenue Not Applied to Copyright 5087.0003 - Copyright Fee Revenue 5087.0005 - FCC User Revenue Recommendation: MTCI should ensure that the four revenue categories listed above are included in the gross revenue base on which franchise fees to the City are based. 7. Correct Percentage to be Determined The auditor noted that certain revenue streams to the City were reduced by a percentage calculation prior to the City receiving their 4% license fee revenue as follows: (1) Advertising: 21.79% (49,474 City Subscribers - 227,068 Total Subscribers) (2) Fiber Lease: 08/22/97 Page 13 MTCI Ascertainment Report J (i) Vyvx: 21.64% (49,474 City Subscribers.= 228,631 Total Subscribers) (ii) Teleport: (3) Shopping Channel: 46.59% (40.79 Plant Miles _ 87.56 Total Plant Miles) 97.4% (49,474 City Subscribers _ 50,211 Total Subscribers) The percentage calculation as noted in 1, 2(i) and 3 is based upon 49,474 City Subscribers. However, according to MTCI's own documentation, total City Subscribers as of January 20, 1996 were 58,749 (which could increase City revenue). Recommendation: MTCI should compute new percentage calculations based upon City Subscribers base of 58,749. 8. Credits to be Applied on the City's Behalf Resolution 88-711 and the related Agreement attached thereto at Section (4) (Exhibit E) specifies that a credit to the City from MTCI in the amount of $825,000 would become due to the City "if and when the term of the license (Cable Television License Ordinance No. 9332, as amended) is extended to the original 15 years". As set forth in Section 202 of the Ordinance, the term of the original franchise negotiated between MTCI and the City of Miami was for fifteen years. It is this initial or "original" period, not any subsequent renewal period which constitutes "the original 15 years" referred to in the Resolution. As further evidenced by the language of the Resolution and the Agreement attached thereto, there were significant issues that if left unresolved, could have resulted in the termination of the contractual relationship between the City and MTCI. In recognition that some future circumstance might arise which could result in a shortened franchise term and in an effort to lessen the financial impact of the credit, the City allowed MTCI to postpone payment until the end of the franchise's fifteen year term. The City satisfied its obligations under the Resolution by allowing the franchise granted to MTCI to continue for the full 15 year period originally approved by the City. The City, as a result, is thus entitled to the credit in question. Recommendation: MTCI was provided written notice of this position and of MTCI's resulting financial deficiency with respect to franchise fee payments owed to the City on August 6, 1997. The City should continue pursuing collection of the outstanding franchise payment due 08/22/97 Page 14 MTCI Ascertainment Report 98- 912 through the procedure set forth in Ordinance 9332, as amended. 9. Non -Payment of Franchise Fees MTCI ceased remitting franchise fee payments to the City of Miami effective November 1995. In response to inquiries from the City, MTCI advised the City that the Company was entitled to withhold payments pursuant to certain previous agreements between the City and the Company which authorized such withholding during the last year of the cable television franchise. The last year of the franchise began in November of 1995. With respect to the amount of funds to be withheld, on January 27, 1997, MTCI provided the City a financial reconciliation wherein MTCI alleged that monies due to the Company from the City as of December 31, 1996 amounted to $1,537,982.64. The findings of Rachlin Cohen & Holtz, the independent accounting firm retained by the City, do not agree with the balance claimed by MTCI. Rachlin Cohen & Holtz concluded instead that the balance due to MTCI from the City as of December 31, 1996 was actually not in excess of $456,532. This outstanding balance does not reflect amounts that may be due to the City from MTCI that have been accrued as a result of MTCI's violations of provisions of the existing ordinance, including but not limited to those technical violations of which the Company was noticed by letter dated April 5, 1996 and again on August 15, 1997. This continuing financial dispute between MTCI and the City has demonstrated a general lack of regard for and commitment to the needs of the City on the part of MTCI, particularly in light of the difficult economic times currently being experienced by the City. Recommendation: MTCI was provided written notice of this position and of MTCI's resulting financial deficiency with respect to franchise fee payments owed to the City on August 6, 1997. The City should continue pursuing collection of the outstanding franchise payment due through the procedure set forth in Ordinance 9332, as amended. 10. Reports to the Director of Finance Section 706 of Ordinance 9332 (as amended) provides that "On or before each of the dates on which payments pursuant to this ordinance are to be made, ....and at such other times as the director of finance or the city manager may designate, the licensee shall furnish ... a report of revenue by service category and a reconciliation of that revenue..." Under the City's Ordinance, MTCI is required to make quarterly franchise fee payments. The financial reports required under Section 706 above are due on the 08/22/97 Page 15 MTCI Ascertainment Report 98 - 912 same schedule. Within the last year, MTCI has, on at least two separate occasions, not provided the City with the required reports in a timely fashion. Failure to comply with the deadlines established in Section 706 constitutes a violation of the Ordinance. Recommendation: MTCI should provide all future financial reports required under this section contemporaneously with the quarterly franchise fee payments required under the Ordinance. Summary Recommendations: The issue of calculations of gross revenues and franchise fees has been a ongoing source of contention between the City and MTCI. The City audit determined that MTCI owes the City over $400,000. This figure has increased as MTCI has operated without paying any franchise fees since December, 1995. This amounts to MTCI owing the City over $1,000,000, including applicable interest and late charges. This value increases if the City were to require MTCI to re- calculate franchise fees using the appropriate subscriber base and including advertising and home shopping revenues. Based on the financial reconciliation by the City auditors, it is the City's position that the balance due to MTCI from the City of Miami, as of December 31, 1996, is not in excess of $456,532. The Company, as a result, was obligated to resume franchise fee payments to the City no later than July 1, 1997. To date, no such payments have been received. MTCI's continuing non-payment of these fees constitutes a violation of Section 904 of Ordinance 9332 (as amended). VI. Technical Performance Review of MTCI A. The City of Miami conducted a technical audit of the MTCI cable system within the City in February, 1996 with the report issued in March, 1996. This audit was conducted by William F. Pohts, an independent cable TV industry engineering consultant with advisory assistance from City personnel. MTCI was made aware of the results of the audit and was officially notified of the numerous violations found on April 5, 1996. MTCI thereafter provided written objections to the ordinance violations in question. Subsequent technical audits performed by the City's Engineering staff in March and August, 1997 reconfirmed the existence of technical deficiencies. It is the City's view, as a result, that the technical operation of the system is not in compliance with the terms and conditions of the Ordinance at this time based on the following violations: 1. Section 311 — Stand-by Power. — Section 311 of Ordinance 9332 (as amended) states "The Licensee shall maintain equipment capable of providing stand-by powering for headend, reception and processing, and distribution plant for a minimum of twenty-four (24) hours. The equipment shall be constructed so as to automatically notify the cable office when it is in operation and to revert automatically to the stand-by mode when the AC power returns." 08/22/97 Page 16 MTCI Ascertainment Report 98- 912 During the technical audit in February, 1996, a significant number of the backup power supplies in the distribution system were found not to be in working order. Many of the power supplies examined lacked a working battery to power the back-up supply and others were inoperable _because of technical failure. As evidenced by MTCI's "Outage Breakdown for 1995" report which is attached hereto as Exhibit A, power was the cause of approximately forty percent of the outages experienced by MTCI's subscribers during this period. It is the City's view therefore that at least one third of all the outage problems from 1995 alone would have been eliminated or otherwise reduced had MTCI maintained proper operating standby power supplies. Although MTCI asserts that it has replaced many of the power supplies since that time and has continuing plans for replacement of the remainder, they remain in violation of this section until such time as all the power supplies in the distribution system have been either replaced or are otherwise fully operational. The City believes that such findings are indicative of a lack of due diligence on MTCI's part with respect to its obligation to provide ongoing system maintenance throughout the term. of the franchise. This issue of system maintenance will be addressed in further detail later in this report. 2. Section 605 — Cable Television System Installation — Section 605 of Ordinance 9332 (as amended) states in relevant part: (b) "All wires, cables, amplifiers and other property shall be constructed and installed in an orderly and workmanlike manner" (d) "The licensee shall at all times install and maintain its wires, cables, fixtures and other equipment in accordance with the requirements of all applicable building codes and regulations and electrical safety ordinances..." (e) "The licensee shall at all times keep and maintain in a safe, suitable, substantial condition, and in good order and repair, all of its structures, lines, equipment and connection in, over, and under and upon the streets, sidewalks, alleys and in public ways or places of the City wherever situated or located." The technical audit and subsequent inspections of the existing cable plant found the system to be out of compliance with the terms of Section 605 of the Ordinance. Violations include, but are not limited to MTCI's failure to maintain all equipment in a suitable condition and in good order as well as a failure to replace under -performing equipment. The attached list at Exhibit B identifies specific violations that were found on recent inspections in March and August of this year. Based on the technical audits and inspections performed, MTCI is in ongoing violation of Section 605 of the City's Ordinance. 3. Section 606 — Technical Standards — Section 606 of Ordinance 9332 (as amended) states: 08/22/97 Page 17 MTCI Ascertainment Report 98- 919 (a) "The licensee shall construct the system, in accordance with the technical specifications and performance standards set forth in the plan required under section 301 of this Ordinance, using materials of good and durable quality. All work-_i_nvolved in construction, installation, maintenance and repair of this system shall be performed in a safe, thorough and reliable manner." (b) "The Licensee shall fully comply with all technical standards imposed by federal or state law or regulations." MTCI's cable system did not meet the technical standards and requirements imposed by the Ordinance and Federal regulations. In order to judge past performance of the system, the FCC requires that a Cable Operator maintain a "Public File" containing FCC Proof of Performance measurements. MTCI's public file was missing the sections explaining the methodology of how the measurements were made, as well as the qualifications of the personnel who made the measurements. To compensate for this missing information, Mr. Pohts performed a spot check at various sites throughout the system. Based on the measurements taken during the technical audit, the system failed to meet FCC performance requirements in terms of signal and balance levels at the sites selected. According to Pohts, these conditions should have been avoided by regular preventive maintenance. This situation is in direct violation of Federal regulations and of Section 606(b) of the Ordinance. During random system audits performed in March, 1997 and re -verified in August, 1997, the City Engineering staff also noted additional violations of Section 605 that are listed in detail in Exhibit B attached. It is the opinion of the City's engineering experts that this failure to maintain the system in compliance with the Ordinance requirements has directly resulted in system under performance and effects MTCI's ability to meet not only the current needs and interests of the Community they serve but their future needs as well. The audit reports prepared by the City's consultant as well as its internal staff concluded that MTCI's preventative maintenance program should be expanded and that any equipment not meeting minimum performance standards be replaced. Moreover, the audits also identified numerous system performance abnormalities including, but not limited to, signal levels and balancing that do not meet FCC requirements. Accordingly, MTCI is in violation of Section 606(a) and Section 606(b) of the Ordinance. 4. Section 607 — State -of -the -Art Technology — Section 607 of Ordinance 9322 (as amended) states "The Licensee shall undertake any construction and installation as may be necessary to keep pace with the latest developments in the state-of-the-art of the cable industry, whether with respect to increasing channel capacity, improving technical performance or otherwise." According to MTCI's Renewal Questionnaire response, MTCI is currently operating a system in the City of Miami with a 400 MHz capacity. This capacity is not considered state of the art for a cable system serving a major city the size of Miami. This level of system capacity is not consistent with system capacity provided to similarly situated jurisdictions served by 08/22/97 Page 18 MTCI Ascertainment Report 98- 912 MTCI or their parent corporation. In North Miami, for example, MTCI recently rebuilt the city's system to a 750 MHz capacity. While MTCI represented that this system is currently only being utilized up to a 550 MHz. An upgrade in system capacity was also an element in the City of Pembroke Pines' recent agreement with MTCI. Upgrades are also being included in renewals in which TCI is involved in other parts of the country as well. Tucson, Arizona, a TCI served community, for example, recently received a commitment from the company for an upgrade to 550 MHz as well as financial contributions for the city's I -NET and public, educational and government access channels. It is also important to note that MTCI's stance is inconsistent with the upgrade requirements included in the Social Contracts approved by the FCC that affected systems owned by two of MTCI's major competitors, Time Warner and Media One (formerly Continental) across the nation. As a specific condition of these contracts, Media One, for example, agreed to upgrade its systems to 750 MHz while Time Warner agreed to upgrade existing systems to either 550 or 750 MHz depending on the system's current capacity. The calls and complaints received from City subscribers indicate that there is a demand for additional services such as increased programming or data services which may require greater channel capacity than that present in, the current system. To best serve the community, it is necessary for MTCI to meet the demands of these citizens. By failing to meet these demands, MTCI has violated this section of the Ordinance. 5. Section 608 — Maintenance — Section 608(a) of Ordinance 9322 (as amended) states "The Licensee shall put, keep and maintain all parts of the system in good condition and repair throughout the life of the license granted hereunder." The Pohts' technical audit findings included herein and the City staff violation report attached hereto as Exhibit B have cited numerous instances within the cable system in need of maintenance and repair. Accordingly, MTCI is in violation of 608(a) of the Ordinance. In addition, MTCI has provided inconsistent information regarding the technical condition and capacity of the existing system in the City. MTCI, in their updated Renewal Questionnaire response, indicated that the City's system is a 400 MHz system. During their presentation to City administration on August 6, 1997, MTCI represented that the City's system actually had a 450 MHz capacity. In an effort to reconcile these disparate representations, the City cable engineering staff reviewed technical proofing reports of tests performed in 1988 to verify MTCI's completion of the subscriber system construction which indicated that the system was built to a 400 MHz capacity (see attached results at Exhibit C). While MTCI may have continually tried to push the system beyond its stated limits since that time, subsequent City proofing tests performed in 1995 and again in August of 1997, (see attached results at Exhibit D) have shown signal "rolloff' at levels above 400 MHz. The City's most recent performance measurements appear- to indicate that the current system is being stretched to approximately 426 MHz. In a technical presentation to the City on August 6, 1997, MTCI stated that the implementation of their new digital cable offering would utilize three channels "recaptured" from the existing analog channels. To minimize the impact on current subscribers (since only approximately 231 subscribe to this service in a 60,000+ subscriber system), the channels selected for digital conversion would be the DMX music channels. The City's technical staff believes these channels already operate beyond the 400 MHz range where the signal "rolloff' has been observed. The City is thus very concerned about the performance of the new digital products proposed by MTCI which will in 08/22/97 Page 19 MTCI Ascertainment Report effect be operating above the calibrated tolerances of the physical cable system. While MTCI has indicated that their engineering staff has determined that the existing system is capable of handling this digital product, the City is unaware of any technical enhancements that have been made to the system since 1988 that would allow it to operate reliably beyond the 400 MHz range. 6. Section 710 — Books and Records — Section 710(a) of Ordinance 9322 (as amended) provides in relevant part "The city shall have the right to inspect at any time during normal business hours all book, record, maps, plans ... performance test results and other like materials of the Licensee regarding the operation of the system." Subsection (b) states "The city may require the licensee to make all such records available for audit at one (1) office of the licensee in Dade County, Florida..." As mentioned in the paragraph 4 addressing Section 606 Technical Standards, MTCI's Public File was not available at the time of the technical audit and portions of the FCC performance reports were incomplete and/or missing. Subsequent to the technical audit, MTCI claims to have corrected a portion of this discrepancy. This requirement represents an ongoing obligation for MTCI under both federal and local law and should be readily available upon request B. As indicated previously, the City hired a outside engineer, William F. Pohts, to conduct a technical audit of the MTCI system in February, 1996. A summary of his findings are as follows: Methodology Used: 1. Dale Kelchner, Cable Engineer for the City of Miami, and William F. Pohts accompanied Robin Eccleston, MTCI Technical Supervisor, for the audit. Also in attendance were Mike Price, of the City of Miami and other members of the MTCI technical staff. During the site visit, meetings were held with MTCI management including MTCI's then General Manager, Anthony Pope; the Technical Plant Manager, Jorge L. Gonzalez; and the MTCI area engineer. Pohts reviewed the Cable Television System Technical Audit Questionnaire completed by MTCI, the franchise agreement, MTCI's response to the City's Renewal Questionnaire and various other related documents. The technical audit concentrated on the portion of the overall system located within the City of Miami. During the site visits performed, the system design, public file, FCC Proof -of -Performance records, general and preventative maintenance records, system construction and present operation were reviewed by Pohts with MTCI technical personnel. Actual performance was observed at about a dozen locations randomly selected throughout the City. 08/22/97 Page20 MTCI Ascertainment Report • At the sites observed, the system was found to be operating below optimum levels of technical performance. During the technical evaluation, several pieces of MTCI's test equipment were also found to be either unavailable or inoperable. 2. The following chart shows the signal paths at the Miami Headend for the programming carried on the MTCI Subscriber Network. 08/22/97 Page 21 MTCI Ascertainment Report 98- 91JI i CONVERTS CH24 TO CH; MLAMI HEADEND . r1 i.,C ..]. r ��� • • • 1 • • • 1 lk (CoT6• 08/19/97 NeMuk Upstream CH T 10 UpWean CH T.10 Upstream from Metro Dods tram Tele•Ma i CH3 County k Adn9 (!weed Access) Tele•tu0 Is also cornbhed Wuh Master Headend agxk on the digltd f ber io South Dade Headend Page 22 MTCI Ascertainment Report 98- 914 3. System performance was evaluated by first observing the performance of all Subscriber network channels on a Sony 20 inch television receiver at the Miami Headend. This was done to_ give a quick review of the headend performance as well as to establish a reference point from which to be able to determine the degree of signal degradation attributable to the distribution system. Noticeable impairments included: CHANNEL # OBSERVED IMPAIRMENT 13 Severe ghosts (multiple images) in pictures 14 Ghosts in pictures 18 Slight interference in pictures (horizontal lines) 22 Noisy (snow) pictures; pictures not sharp; and impulse noise bursts in pictures 29 Noisy appearing pictures - appears to be from old movie 33 Video crosstalk interference in pictures; and apparent intermods 36 Noisy pictures; low chroma (color intensity); pictures not sharp; and video crosstalk interference in pictures 44 Noisy pictures 58 Color shift in pictures 60 Color shift in pictures; purple people 4. A considerable amount of time was spent trying to review the past records of FCC Proof -of -Performance measurements. All measurements in the public file, the sections explaining the methodology of how the measurements were made, as well as the qualifications of the personnel who made the measurements, were found to be missing. Mr. Pohts attempted to have the technical crew explain how they had performed the measurements, but they either could not remember the details or claimed that they had been done by someone who was no longer there. After spending further time going over details of at least one way in which the measurements could be done for each parameter, it was decided to go into the system and begin checking performance on a "spot" check basis. About a dozen locations were chosen to represent 08/22/97 Page 23 MTCI Ascertainment Report all areas of the City and included some previous FCC test points, Fire Stations, and other locations which would represent where the worst case performance could exist to check both the Subscriber and Institutional Networks. The first few locations indicated that something was wrong with Channel 2 in the system. Carrier to Noise Ratio (C/N) was being measured as 38.8 and 31.8 dB when the minimally acceptable FCC figure is 43 dB. After further checking MTCI determined that a major problem had developed with some headend equipment which would result in failing performance throughout the system; C/N measurement was discontinued at this point. Another problem which quickly became apparent was that several locations were demonstrating that signal levels and balancing across the spectrum were not meeting FCC Technical Standards. As an example of both conditions at one location, at 394 SW 0 Street, levels ranged from a low of 2 to a high of 24 dBmV. However, although the above conditions were noted and of course need to be repaired/corrected, the overall performance of the channels did not display noticeable impairments greater than those observed at the headend reference observations. Signal ingress interference was also not present at any of these locations. These conditions suggest that performance abnormalities should be correctable by regular preventative and general maintenance, provided sufficient amounts of maintenance were to be performed. Further indications of the need for increased maintenance efforts was demonstrated at the headend when personnel attempted to correct Channel 2 difficulties and adjust Channel 3 signal levels. Various attempts were needed to get the equipment modules to make good connection and correct observed intermittent performance. Similar conditions were observed on the Institutional Network performance. At Fire Station #7, Channel 9 was measured to be -6 dBmV right at the main entrance cable. This condition also should be correctable with regular preventative and general maintenance, provided sufficient amounts of maintenance were to be performed. With Miami's location on the ocean, water and moisture problems for connectors and equipment should be of major concern to a cable operator. To help reduce these problems, Mr. Pohts recommended that an extra cover of plastic over the cable connector be installed by MTCI in the future. As part of the technical audit, Mr. Pohts also randomly selected a few standby power supplies and asked that they be activated while he observed them. He was told by MTCI that he would just be wasting his time since most of the supplies were not working. Mr. Pohts reported that of the 260 supplies which MTCI began replacing in 1995, only 80 had been replaced as of the date of the audit. 08/22/97 Page 24 MTCI Ascertainment Report 98- 913 C. Signal Leakage. MTCI's response to the signal leakage question III.2.._in the City's Renewal Questionnaire was: "... Any leaks found to be in violation are repaired immediately while non - violating level leaks are repaired within 48 hours." Yet MTCI policy from the Director of Engineering states: "Leaks of 150 µV/m or greater will be repaired at once. Leaks of 50 µV/m or greater will be repaired within 24 hours. Leaks of 20 µV/m or greater will be repaired within 14 days." A leak of 20 µV/m is in violation. The MTCI Engineering directive does not agree with the Renewal answer. Upon a quick check of the leakage log records, a few leaks of about 60 µV/m were listed as having been repaired about two weeks after detection; so actual practice does not agree with either policy. However, the MTCI Engineering directive is a good policy to follow. To achieve it will probably mean more personnel being assigned to leakage detection and repair. Mr. Pohts believes that it is unlikely that the Renewal answer is achievable by MTCI in Miami and certainly not without considerably more technical personnel being made available. D. In March of 1997, Dale Kelchner, Cable Engineer for the City of Miami also performed a technical audit to verify the condition of the existing cable plant and the maintenance being performed. The violations discovered on this date were re -confirmed in August of 1997. Mr. Kelchner, along with the other City staff who performed these audits have not only a familiarity with the City's system but between them have a combined experience of over forty years in the area of cable system construction, installation and maintenance. The results of these audits revealed areas where the condition of the system is poor and where maintenance procedures are not being followed by MTCI. A complete list of the violations noted are attached hereto as Exhibit B. Of special concern to the City is the current status of the "B" cable portion of the dual subscriber network installed by MTCI. Resolution 88-711 specifically provides that in return for MTCI's maintenance of the "B" cable in sound mechanical condition and the satisfaction of the other grounds set forth therein, the City will consider its claims for penalties against MTCI resolved. Inspection by the City's cable engineer would indicate that the "B" cable is no longer operational and appears to have been cannibalized rather than maintained during the period of MTCI's franchise with the City. MTCI as a result, is in violation of Resolution 88-711. E. Summary and Recommendations: 1. The MTCI cable television system serving the City of Miami was originally 08/22/97 Page 25 MTCI Ascertainment Report 98- 912 built as a dual cable Subscriber Network along with an Institutional Network and operated from a headend located in the City of Miami. 2. During the term of the franchise, the `B" cable portion of the Subscriber Network was placed in inactive status pending identification of future needs; the Institutional Network was transferred to the City; and the system as a whole is now served from a Master Headend located outside of the City. 3. A technical audit of the system were performed in February 1996 by William F. Pohts in conjunction with MTCI and City personnel. The system design, construction, operation and maintenance procedures and records were reviewed. 4. The technical audit concluded that the system's preventative and general maintenance should be expanded and improved for both the Subscriber and Institutional Networks. 5. FCC Technical Standards should also be reviewed and future Proof -of - Performance and Public File records should be expanded to include those sections not previously being completed. 6. Demand for compliance was made on April 25, 1996. Fifteen days thereafter, the City Manager was entitled to conclude that there was a basis for assessment of fines pursuant to Section 1002 and/or 1003 of Ordinance 9332, as amended. 7. Additional technical audits were performed by the City's Cable Engineer on March 11, 1997 and again on August 2, 1997. 8. Notice of the deficiencies found was provided in writing to MTCI on August 15, 1997. 9. Absent MTCI's compliance, the City Manager will be entitled to pursue the assessment of penalties, pursuant to Section 1002 and/or 1003 of Ordinance 9332 (as amended). VII. Customer Service Analysis/Future Needs of the Community The City of Miami solicited public comments to determine whether MTCI is meeting the needs and interests of the community. The City gathered data from subscribers specifically regarding the level of the cable operators customer service. In addition, the level of Public/Education/Government support and access facilities provided by MTCI was considered as an indication of whether the needs of the community are being met. A graphic representation of the staff findings on the issue of customer service and needs is included as Exhibit D. 08/22/97 Page 26 MTCI Ascertainment Report 9 S - 91,E Methodology Used: 1. The City solicited comments from the Public to determine whether MTCI is meeting the needs of their subscribers. This notice was broadcast over the Subscriber Network in October 1995 on the City's Institution (I -Net) channel, NET9. Additionally, a public interest notice was inserted in the cable bill in February, 1996 requesting subscriber feedback. The areas that this inquiry addressed were customer service, billing, programming, outage, reception, construction and general dissatisfaction. The City's records relating to customer complaints received about MTCI during the franchise term, as well as MTCI's technical reports were also reviewed as part of this process. 08/22/97 a. Customer Service The majority of the complaints about MTCI related to customer service. Specific comments included: ' - Excessive waiting time on telephones, particularly on weekends and evenings - Too much advertising while on hold; sometimes promoting programming that has already occurred Lack of proper equipment or job knowledge exhibited by on site personnel Lack of customer service follow-up on reported problems b. Billing In terms of billing, subscribers were most concerned with: Having to call and request credit for outages, rather than MTCI being proactive and correcting the situation without customer involvement - Unannounced, confusing changes in billing cycles Frequent billing increases with no increase in service Excessive late fee charges when compared with other area utilities Lack of time between mailing of bill and its due date c. Programming The most common customer concerns and/or requests regarding the programming on MTCI's system were: - Frequent channel line-up changes or channel deletions with insufficient notice to customers Page 27 MTCI Ascertainment Report 98- 913 - Desire for fewer split channels (one channel for day viewing and another for evening viewing) - Establishment of an on -screen channel guide.- - Increased channel selection, including C-Span2, MSNBC, Cartoon Network, ESPN2, History, Sci-Fi, WGN, Sundance, Court TV, Ole TV d. Reception/Outage/Construction The final inquiry examined customer responses to the cable reception, system outages, and issues over construction. Comments included: - Frequent outages in some areas compounded by the inability to reach customer service personnel and failure of customer service to correct in a reasonable time frame. - Consistent reception problems on some channels - Reception problems often not corrected in first site visit with on -site personnel frequently unsure of correct resolution - More underground installations (rather than aerial) to enhance general appearance of residential areas Based on the City's review, MTCI has failed to meet the community needs and interests of the City of Miami. MTCI's subscribers do not feel that they are getting the level of service that they are paying for. MTCI's programming has not kept pace with customer demands and with the programming offered by other local cable companies. MTCI's telephone support was the number one subscriber concern noted and methods for improvements must be addressed in any future franchise renewal negotiations. Subscribers also cited billing inconsistencies and the lack of proper explanations of billing changes and outage credit procedures as major sources of concern. The City has also received numerous complaints on the manner in which outages reports are handled. In its response to the City's Renewal Questionnaire, MTCI indicated that it takes action on outage reports only after two (2) customer complaints are received. Based on the subscriber complaints received by the City, MTCI customer service representatives seem to have difficulty determining whether there are multiple outages in a specific area. The caller is often told that no one else has reported an outage when it is obvious to the caller that an entire neighborhood is experiencing a problem. The current reporting system, as a result, would seem to create unnecessary delays in MTCI's initial response to outage problems and a resulting increased level of customer dissatisfaction. A more proactive approach may be to have a regularly updated recorded list of outages and correction actions being taken throughout the franchise area. The potential benefits are two -fold in that it would provide timely information to the subscribers affected while freeing up the company's phone system and customer service representatives for other matters. Because the cable operator has not adequately addressed the concerns of the public which they serve, it is the City's view that MTCI is not meeting the needs and interests of the City of Miami. 08/22/97 Page 28 MTCI Ascertainment Re ort 068- 912 2. In an effort to better address the needs and interests of the community, federal law provides that a percentage of the cable system may be allocated to Public, Education, and Government (PEG) programming. Section 401 of Ordinance 9322 (as amended) specifically requires that MTCI, at a minimum, supply twenty (20) channels in the system, without charge, for the purpose of transmitting such programming. MTCI is currently in violation of Section 401 of the Ordinance since the City, at present, only has access to one of the twenty channels provided for under MTCI's license agreement. The City is presently experiencing ever increasing demands both internally from City departments as well as by the community at large for additional air time and opportunities for programming on the City `s access channel(s). In addition to the Commission meetings and other government related programming and information already being aired, the City has received requests from civic groups, residential associations, and members of the business community interested in helping promote the City's image as a financial and cultural center for increased programming on the City's channel. This increased programming demand has resulted in a growing channel capacity problem. The City also has a corollary need to develop the capability for remote location programming. Through the use of a remote truck or some other technical solution MTCI could suggest, remote capability would allow the City to be more responsive to requests for coverage of special events of community interest such as neighborhood meetings, park department activities, etc. The City is therefore interested in preserving MTCI's existing obligation in this area or in lieu of increasing the number of channels, some appropriate level of compensation that will allow the City to satisfy the community's interest in this type of programming. Based on current demand, the City would require a minimum of four channels for such purposes at the outset of any renewal period with the rest to be phased in over the remainder of the renewal term. MTCI's general statement in its response to the Renewal Questionnaire is that it is committed to accommodating public, educational and government access by providing access to its cable facilities is not responsive to the City's existing and future needs. The lack of financial or technical commitment to PEG access programming heretofore demonstrated by MTCI is further indication of MTCI's seeming indifference to the interests of the community it serves. In its Franchise Renewal Proposal, MTCI also significantly reduced the number of outlets and municipal buildings it will provide with service. The only buildings listed in the Franchise Renewal Proposal are public school buildings, fire stations, and the police department without any references to supporting other municipal offices. A significant omission from this list was a commitment from MTCI to provide wiring to every classroom within the City as well as to every library and park facility. The omission regarding school wiring, in particular, seems inconsistent with the industry trends and is especially significant in light of the clear federal initiatives to bring increased services such as the internet to every classroom in the country coupled with similar commitments from MTCI's major competitors, Media One (formerly Continental) and Time Warner. 08/22/97 Page 29 MTCI Ascertainment Report With respect to the City's future I -Net needs, the City requires at the outset that the capabilities provided under the existing system be addressed and, at the minimum, maintained in any upgrade to the system proposed by MTCI- MTCI's-statement in its Renewal Questionnaire response that it will provide technical assistance should the City elect to rebuild the network with fiber optics is not responsive to the City's ongoing concern regarding maintaining, among other things, the capability to transmit data between city buildings. The City was and is continuing to look to MTCI to develop a partnership that in the face of changing technology will allow the City to plan a technical solution for the I -Net that will ensure its usefulness for years to come. The lack of detailed proposals regarding the technological options available to the City during any renewal period or on such items as the electronics involved in transmitting increased data traffic and MTCI's unwillingness to contribute financially or otherwise towards any resulting capital or ongoing maintenance costs of this network renders MTCI non -responsive to the needs of the City on this important issue. MTCI can not meet the needs of this community if they choose not to support local community activities and organizations. By offering only one channel in their Renewal Proposal and indicating minimal commitment towards community organizations and operations, MTCI continues to fail to meet the needs and interests of the community. VIII. Matters to Address in Renewal Proceedings The City reviewed the MTCI draft Franchise Renewal Proposal, the response to the technical audit and customer service review submitted by MTCI on August 5, 1996, the materials from MTCI's August 6, 1997 technical presentation, MTCI's response to the City's Renewal Questionnaire along with its own franchise related documents in performing this analysis. Overall, the draft franchise Renewal Proposal represents an offer by MTCI to provide the City and subscribers in the City with a substantially lower level of service than that which the operator is obligated to provide under the existing agreement. The following items are illustrative, but not inclusive, of the Renewal Proposal's inadequacy: A. System Requirements. The Renewal Proposal does not include provisions with respect to service characteristics and obligations as contained in Article III of the existing ordinance nor does it include the maintenance or state-of-the-art requirements contained in Article VI. Under its draft Renewal Proposal, MTCI essentially has no obligations with respect to the minimum capacity of the system at the time of renewal or as to any upgrade throughout the term. Moreover, it is evident that the upgrade plan described in the July 10, 1996 Renewal Proposal and its statements regarding no plans for an upgrade included in its response to the Renewal Questionnaire appear not only to conflict with each other but with the Company's earlier proposal to upgrade the City to 750 MHz. MTCI's most recent representations regarding no planned upgrade are also not consistent with how upgrades in other local jurisdictions of the 08/22/97 Page 30 MTCI Ascertainment Report 98- 91$ same or smaller size both within and outside of Florida have been treated by MTCI within the last few years. B. Public/Education/Government/Support and Access Facilities. Based on the documents provided to the City for renewal consideration, MTCI has substantially lowered the level of PEG support. For example, under the current Ordinance, the City is entitled to a minimum of 20 channels for municipal use. MTCI offered the City one channel in its Renewal Proposal and in its response to the Renewal Questionnaire only included a vague commitment of support for PEG access. In addition, MTCI has significantly reduced the number of outlets and municipal buildings to which it will provide service. In fact, the only buildings expressly listed in the Renewal Proposal are public school buildings, fire stations and the police department with no reference to municipal offices, libraries and public parks. The information submitted to date by MTCI also does not include any financial or production support for PEG related activities, nor does it include any specific proposals other than an offer of technical assistance predicated on a City re -build with respect to the City's I -NET. Moreover, MTCI is offering the City an emergency override capability only at those minimum services required by the FCC. In order to provide PEG programming currently in demand by civic groups and general citizenry, the City now finds it necessary, at the minimum to have the capacity to utilize additional channels and to implement the equipment and facilities needed to broadcast from remote locations not currently accessible by I -NET cable. C. Franchise Fee Payments. MTCI's draft Renewal Proposal states that the operator will pay to the City annually five percent (5%) of all gross revenues received by the grantee from the operation of the cable system to provide cable service to the service area. The current Ordinance provides for quarterly payments. There is no reference to the mandatory reduction for payments to Dade County, nor is there a provision for adjusting compensation should applicable law permit. In addition, it is not clear that the proposed draft definition of gross revenue will in fact capture all revenues, including but not limited to, revenues generated from home shopping, data transmission and leasing capacity on the system. D. Financial Settlement. Neither the Renewal Proposal nor any of the other documents submitted thereafter by MTCI addresses a reasonable resolution to the outstanding issues with respect to the "balance of payments" between the City and the operator. E. Administration and Enforcement. In general, the draft Renewal Proposal eliminates virtually all of the City's procedures with respect to the administration and enforcement of the cable television franchise including, but not limited to, reporting requirements, all fines and other remedies with respect to violations and failure to perform. In addition, the Proposal did not include indemnification, bonding requirements, or cost reimbursements required by the current Ordinance as a measure of protection to the City and its residents. 08/22/97 Page 31 MTCI Ascertainment Report 98- 915 F. Reporting. In addition to existing reports provided by MTCI to the City, reports on telephone response statistics from the MTCI's ACD (Automated -Call on Demand ) system, including -the number of calls received per hour, average time taken to answer, average call length, average hold time, percent of time all trunk lines are busy and explanations of any recurring or abnormal problems would be helpful to the City in evaluating the company's customer service record. In addition, it would be helpful for the City to receive reports indicating additions, changes or deletions to the number, location and type of cable services provided to public buildings. IX. Conclusions The current cable system is a 15-year old plant built in the early 1980's as a 400 MHz, 57-channel system using the most reliable hardware and electronics available at that time. However, over the course of the last 15 years, normal wear and countless changes and relocations have contributed to the physical deterioration of the cable plant. Also, surveys of the system by City staff as well as an independent consultant have shown signs of system degradation and the negative effects of "pushing" the system past its limits. Additionally, public inquiries indicate that City subscribers generally perceive that for the rates being charged they are not receiving the same level of programming services as other local communities, in all facets of programming: sports, news, and entertainment. Some segments of the community lack the financial resources to keep up with the rate increases. Other segments of the community have difficulty understanding the billing practices and the provisions of various sales promotions. They subsequently find themselves with services that they do not want and cannot afford. The procedure for reporting outages is very frustrating for many customers. MTCI requires that outages are reported by two people. However, even when two or more neighboring subscribers call to report a local outage, customer service personnel often cannot relate the two incidents to make a determination that there is a valid outage. Another area of complaint relates to installation practices. Subscribers frequently experience missed appointments or find that the personnel dispatched either are not prepared for the scope of work or do not have the appropriate supplies and tools or skills. Based on the continuing financial dispute, the deficiencies noted both in the independent technical audit as well as the survey by City staff, the results from the public inquiries, the technical enhancements proposed by MTCI, and the PEG support currently offered by MTCI, the City concludes that Miami Tele-communications, Inc. is not currently serving the needs and interests of the City of Miami in the manner that would be anticipated of a relationship between a major cable television company and a major metropolitan City. 08/22/97 Page 32 MTCI Ascertainment Report 98- 912 List of Exhibits Exhibit A MTCI Outage Overview for 1995 Exhibit B City's Technical Violation Report Exhibit C System Capacity Tests Exhibit D Customer Service Analysis Exhibit E Resolution 88-711 08/22/97 ?age 33 MTCI Ascertainment Report 1 � 9119 'r _ W�- Exhibit A MTCI Outage Overview for 1995 98- 919 OUTAGE BREAKDOWN FOR 1995 ACTIVE PASSIVE RELATED VANDALISM RR ATF PMAIPP TnTDI JAN 4 2 2 8 FEB 2 2 MAR 3 5 5 13 APR 5 3 2 14 24 MAY 6 1 5 11 , 23 JUN T 3 12 5 27 JUL 11 5 5 23 44 AUG 5 3 5 9 22 SEP 10 3 4 15 .32 - OCT 11 4 4. 12 31 -NOV 10 6 3 :5 24 DEC 2 5 2 9 TOTAL 74 -30 .52 - 103 259 % ,. 28.57% 11.58% -20.08% .:: 39.77% 100% =PEFZ 98- 912 Exhibit B City's Technical Violation Report CATV Cable Plant Problems Found The locations listed on the attached sheet are alleged violations of the Cable Television Ordinance 9332 for failure to comply with the operation or maintenance standards set forth in sections 605, 606 and 608 of the ordinance. The attached list of problems are allegedly in violation of section 605 "Cable Television Installation", parts (b)(d)and(e), Section 608 "Maintenance" part (a) and The construction standards in the September 11, 1986 agreement Section 7 b) "No cables or wires may be attached to street light only poles" and c) "All crossings must follow utilities" and d) "Rear easements shall be used whenever available" 7 Ref# LOCATION PROBLEM DATE 301) S.W. 43-Avenue at 3 Street Cable attached to "street light only" pole 103/07/97 302) 6520 S.W. 2 Street Cable attached to "street light only" pole I03/07/97 303) 6 Street at 63 Court Improper crossing over 63 Court [CAN not crossing with utilities] j 03/07/97 304) 4600 S.W. 4 Street Service drops crossing "clean street" [service is available from rear easement] 103/07/97 305) 4610 S.W. 4 Street Service drops crossing "clean street' [service is available from rear easement] 1 03/07/97 8 98- 91.2 Exhibit C System Capacity Tests 98- 912 LOCATION: Durham Blvd & N.E. 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F� W I t , „ ¢ , f 1- ^F \ .•1 tt -: 11 W tt a 4• 1 + i t W 1 1 ..7 tT• t 1 F- to 1 1 1L it 0 3 ,, It 1 1-. to i.1 di i i 0 -,. 1 1 19 fil ,, U 1 11 (D 'n 11 Lt 1 LOCATION: Headend DATE: November 17, 1995 + rar-• :;'a + + 11.. ISN + 1 " +yAi I t Stll E. I I U IAX t i ct: �S I 1 t l fri 1. .4 I w G t•11 0 0 FBI 1- w II 4- 1 '1'11 "1 -*I! w I I J p' I lb 3 I 1'dt�• if1 1 1 la. t'.aN 1 1 Z B:IYJ I 1 S Nqa 1 1 0 Ix 11 LL. CAN + 1 'Z ::0-4 1 + xs .I+ u Qxx +I ¢ 19Jr I t f- /U 17 w w +1 w II .z QX t Iuos 11 . f I I a. Cc I t -1 It it u: tz 1 1 ,� 1 1 a,<-. to (p + 1 W -j I I LI, W. 11 ry I I Ul lJ I 1 U. .-1 .] 11 ...1 / 1 0 Aj ..... ..... ..� .. ..... ... ... i .. ... .. .. ...... M "rum" I T. t7i 11 H I w 04 t 1' 41. n d a' t l �. 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MOD I I 1 I:I I t,7 11 1`J t L.U.ISI FYii.�Mrra�. 1/ 11 1 W O i-:j 0 I +~ � •11 m !1 � � t! � i 1' l LOCATION: 3573 Stewart Avenue DATE: November 17, 1995 1 Nr•- _yS 1 It. ON 7 orq 1 =0 :.. 11 tj Wx 11 'r I= 1 1 Wry t1 .L 11 a .F.. 1 I lfl iu a F ii v 0 Fri 1^ w ii ¢ 1- a --. •-1 w J n. 'r. 1V 11 �a 11 o In 11 U 1 1 Nr- 'N U_ ON 1 z ON 1 TT L . ' U Ox ¢ IT,.x � I r . Coco:: 11 Iz• �' a IE 1 i � (y..1I OD ............. ..... p ...... ....... .... ...... v 71 a ...... ...... =" - ..... ► w :....................:........ a :N J WE :.........:............... ... .x .� N Lr- Pp r--^ 1 II 7 t1 11 t 1 x 11 H 11 17 IL W 11 X 1 1 F- +11 �, •i +11 w II J C• I N1n ?ram I I U_ ON1 t 2 Nf`J 1 1 mm x. I 1 u ©x z sx 1 Z. m(ft11 .m 11 4. .= 1 m GIV 11 Q 11 In y 1 i p) 1 1 1 111 1 1 N 1 1 wo J I I N i NUNN w .1.....,1..._._ - - I i 1 Ir � 11 11 1 x W 14 a .C. Z W a !- a W i- 1 1 W 1 1 I t F- + 1 1 ` -a `� 1 1 W I M(p 11 m It G a 4 N 11 n 11 W IA 11 V 1 ;i, Exhibit E Resolution 88-711 - ,.,. - - 4 98- 912 J-88-708 7/7/88 L 'i RESOLUTION NO. ` 1 "1 1 1 A RESOLUTION APPROVING AN AGREEMENT BETWEEN MIAMI TILE -COMMUNICATIONS. INC. AND THE CITY OF MIAMI TO RESOLVE OUTSTANDING ISSUES IN DISPUTE: PROVIDING TERMS OF APPROVAL OF TEE INSTITUTIONAL CABLE NETWORK (I -NET) AND TIM RELEASE OF $500,000 FROM TEE SECURITY FUND: PROVIDING FOR TEE SETTLEMENT OF OUTSTANDING PENALTIES CURRENTLY ASSESSED AGAINST TEE CABLE LICE/SEE: FURTHER PROVIDING FOR RESUMPTION OF LICENSE FEE PAYMENTS TO TEN CITY AND INTEREST ON TEE BALANCE OF PREPAID LICENSE FEES. WHEREAS. the City Manager has undertaken negotiations with Miami Tel*-Cos+auaications. Inc. in an effort to resolve a number of outstanding *able issues and to avoid the possibility of costly and lengthy litigation: and YSEREAS. these issues include: (1) terms of approval of completion of the cable system. including the I -Net, by the City Manager and .release of i500.000 from the Security Fund: (2) settlement of outstanding penalties currently before the Arbitration Panel: and (3).resumption of license fee payments and reduction of interest on the balance of prepaid license fees: and WHEREAS. approval of the Agreement vill result In benefits to the Citl-VT 'I&M including the resumption of license fee payments r*troactive to January 1, 1988 and the reduction of credits due to the cable company. NOW. THEREFORE. BE IT RESOLVED BY THE COMMISSION OF TEE CITY Or MIMII. FLORIDA: Section 1. The Agreement betveen Miami Tel* - Communications. Inc. and the City Of Miami Ss hereby approved in substantially the form as attached hereto. CITY COMMMISSION - ' " " " - • - - MEETING OF r JUL Section Z. This Resolution shall be effective immediately upon adoption. PASSED AND ADOPTED this llsc day of jt,'. 8. UVZER L. E2. MAYOR ATT 1lATTY 311RAI CITY CL Et - -- - PREPARED AND APPROVED BY: A. QD NY . III DEPM CI ATTORNEY AP AS TO PORN AND CORRECTNESS: .. .. 0 OBGE CITY AQJ:bmm:X746 -z- 9 8 - 912 L98-711 AGREEMENT THIS AGREEMENT, executed on the /'r day 19n1, by and between the CITY OF MIAMI (hereinafter "CITY"1, a Florida corporation and MIAMi TELE-COMMUNICATIONS, INC. (hereinafter "MTCI"), a Florida corporation. WHEREAS, the City and MTCI have more clearly defined certain operating procedures to help establish a better working relationship between the parties; and ' WIIEREAS, the City and MTCI desire to create a more .economical environment for both parties; and WHEREAS, there are certain issues of concern by the City requiring resolution: NOW .THEREFORE, in consideration of the sum of Ten Dollars (SIO.00) and other valuable consideration, the City and HTCI, parties hereto, agree as follows: (1) MTCI shall be compensated by the City for the time value of money for license fees prepaid pursuant to Section 1)01 of the License Ordinance- through June 30, 19F14. It is agreed between the parties that the time value of money shall accrue at the annual rate of One Dollar (11.00) per year. The amount of interest accrued-t1rough December 31, 1987 is Seven nolIars (S7.00). (2) The balance of the prepaid license fees, less fops earned by the City, and other contributions is Sgl£1,743 as of December 31, 1987. The amount of $450,000 which MT(.1 owes for payments pursuant to Section 406 of the License Ordinance through October i, 1986 will be credited to the henefit of the City in the form of a deduction from the amount of prepaid license fees. The remaining amount of prepaid license fees. S461,743, will be held in escrow and will be applied to the license fee liahility In the final year of the license term. Interest will continue to accrue at the annual rate of four percent (41) per year. gs- (3) license fees for the years 1988-1995 will be paid as they become due as specified in the City of Miami Ordinance No. 9332. (A) The remaining locations of the I -Net as listed in Attachment A, will he constructed and activated as follows: (a) locations listed under the heading Priority A, will he completed by 4une 30, 1988; (b) locations listed under the heading Priority 6, will be completed by July 30, 1988. This will complete the I -Net system for the City. The Miami Marine Stadium, the Port of Miami, and Watson Island are specifically excluded by reference herein. MTCI shall credit the City in the amount of $825,00r) as compensation for the cost to the City of providing equivalent service to these three locations. In order to avoid any negative financial impact upon MTCI and its subscribers, this compensation will he due in the form of a credit to the City if and when thr term of the license is extended to -the original 15 years. (5) MTCI agrees to follow the plan to correct/mndify service cross -connections in streets rehabilitated by the Department of Public Works as presented in Exhibit C of the September 16, 1987 Agreement. The City shall not make approval of completion of construction contingent upon correction/modification of the service cross -connections. (6) The City Manager will recommend that the City Commission release $500,000 from the Security Fund when the system is complete. It is understood between the parties that the system will be considered complete when the City receives a favorable report from its independent engineering consultant. regarding MTCI's proof -of-performance of the subscriber system and when the I -Net is complete. (7) As part of the Agreement dated January 14, 19n7, MTCi will maintain the "B" cable system in sound mechanical condition. More specifically, sound mechanical condition means that thr, "n" cable system will he maintained in such a manner that.. all cable ends will hn terminat^d to the appropriate hardwarF, as decignAtP4 by thr -. y ct,•m rl--i ein consist of the applicable or appropriate housing or shell but not necessarily inclusive of the electronics that are an internal part of the housing or shell. It is understood that deterioration and weather impairment such as electrical storms could and would cause damage to these electronics, And that it is more economically feasible to not necessarily place or maintain these electronics within the housing or shell until such a Limp that it is deemed economically feasible and necessary to activatr the "B" cable system. (A) The following outstanding penalties and passible penalties against MTCI shall be treated as follows: (a} cross -connections penalty totalling Sn77,245 shall continue to he held in abeyance in accordance with the Agreement dated September 16, 1986; (b) imposition of penalties before the Arbitration Panel totalling t467,500, composed of (1) Sec. 302(a) - S152,500, (2) Sec. 1002(4) - $130,000, (3) Sec. 1002(4) - $62,500, (4) Sec. 1002(4), S122,5n0 shall be withdrawn. 'It is further understood by MTCI that MTCI shalt be subject to and bound by all terms and conditions of City of Miami Cable Television License Ordinance No. 9332, and all amendments thereto, including resolutions, agreements or other documents pertinent •eltvf'$fp�icable to the cable television system, CITY OF MIAMI, a municipal Corporation of the State of Florida ATTEST ;I tiGICJ - 1161�ezl � 07 n•Q� X_/ BY. Met-y Hirai. QityClrc7— esar o, sty 1fan�ger U "r � MIAMI TELF-COMMIJNICAT1nnS, mC. _ BY: J 1Cs IL t1L ti %--s a i— ecre �stal- _ ---------- APPROVED AS TO FORM AND 410)1RIICTNFSS: r i_. erna ei, ATE Attor ey .— �AJ STATE OF FLORIDA COUNTY OF DADE BEFORE ME, an officer duly authorized to administer oaths and take acknowledgments, personally appeared D.r._I3r.vT _____ Vice President of Miami Tele-Communications, Inc. and that said individual, to me well known to be the person who executed the foregoing document, acknowledged before me, under oath, that he executed the same freely and voluntarily for the purposes therein expressed. WITNESS MY HAND AiJO OFFICIAL SEAL AT MIAMI, T)ADE COUNTY, FLORIDA TIM 24th DAY OF July . 1988. �08 �yu c-------- State of Flor TT(da at Large My commission expires: M1TA#? PoM Tt STlnr rr rt re tll AT ir!!11'SInV rv- n9� 7 i•TI Moro tcrq r•��r•t n• . r �. 98- 912 Formal Proposal For Renewal of Cable Television Franchise City of Miami, Florida Prepared and Submitted by Miami Tele-Communications, Inc. 1306 Northwest Seventh Avenue Mami, FL 33136 E July 10, 1998 78194.1 98- 919 L INTRODUCTION & DUE PROCESS CONCERNS A, Summary of Proposal Miami Tele-Communications, Inc. (throughout this proposal, "MTCI"), has operated the cable television system serving the City of Miami, Florida pursuant to a franchise agreement granted in Ordinance No. 9332, passed and adopted October 19 , 1981, as amended and extended (the "Franchise"). MTCI obtained control of the Franchise in 1989, and has operated the system since that time. Although MTCI believes that the City should have allowed MTCI more time to prepare this Proposal, MTCI is offering, as detailed in this document, to enter into agreements that reflect either of the following two alternative plans to meet the future cable -related needs and interests of Miami and its cable customers. First, MTCI believes that City should simply grant a three year extension to the franchise to facilitate a transfer of operations to MediaOne, which, as MTCI has informed the City, has agreed to take over the system in the near future. In light of this transfer, MTCI firmly believes that the best course of action for the City would be to grant an extension of the franchise for thirty six months (until July 2001) to permit the orderly transfer to occur, and to let the City strike a franchise renewal agreement with MediaOne. MTCI would provide the City with annual credits of $275,000 (that add up to a total credit of $825,000 that MTCI would give the City) for the three year extension of the franchise. Separately, if the City does not wish to deal with the ultimate owner of this cable system, MTCI proposes the following proposal to operate the cable system for an additional ten year term:_,- „ 4 • A major market upgrade of the cable television system serving the City within thirty six months of the effective date of any renewal. • Upgrade to a minimum of 750 Mhz bandwidth. • Two-way capable plant. • Fiber -to -the -node architecture, serving nodes of 1200 homes on average, readily scalable to 600 homes or less per node to deliver advanced services. 78194.1 • Backup power to assure reliability. • One free outlet of cable service, and one..free cable Modem hookup, plus service to all schools in MTCI's service areas. • Up to five channels for public, educational and governmental (PEG) programming. • A capital commitment of up to $250,000 per year to support PEG programming (assessed to customers under the FCC's rules) • Continuation of the current institutional network (I -Net) owned by the City, with a commitment to work with the City to meet any I -Net needs that may arise in the future that cannot be met using the existing network, so long as the cost is reasonable or is paid by the City. MTCI strongly believes that these core components of its proposal satisfy any conceivable community need or interest in cable television. If the City has any questions about this proposal after reading the details contained below, MTCI is available to clarify for the City any information that might assist the City's understanding. MTCI believes that either of these proposals, the details of which were provided to the City's counsel in advance of this filing, is a sound basis for suspending the formal franchise renewal process without prejudice to the rights of either party. The parties should then meet to discuss the details of a franchise renewal agreement to determine if there is a basis for an agreement or not. If the parties determine that they are unable to work out an agreement informally, either party could restart the formal process, with no harm to either side. For its part, MTCI is prepared to defend this proposal and its qualifications for a franchise renewal in the #o •rmaiatdministrative and judicial process, but believes that course of action entails needless expense for both parties, and will delay for cable customers and residents of Miami the certainty available through MTCI's proposals. Additionally, as in the past, MTCI cannot divert its resources to the informal negotiation without a suspension of the formal process, because to do so divides MTCI's resources from the most efficient pursuit of either course of action. 78194.1 - 2 - 98- 912 B. Background, Informal Negodadons, and Due Process Issues T 1. Beginning of the Franchise Renewal Process The parties had already had some informal discussion of possible renewal issues, but to protect itself, MTCI timely invoked the protection of the federal law governing franchise renewals, 47 U.S.C. § 546, in a letter to the City dated January 31, 1994. There ensued informal discussions between the City's staff and MTCI's staff on renewal issues. MTCI provided the City with a detailed renewal questionnaire response on June 22, 1995, and later complied with the City's technical audit of the system in 1996. There were a series of discussions and letters between the parties in 1996 and 1997 regarding various issues raised by the City. To be sure, the parties had different views on a number of issues, including the calculation of franchise fees, but on the whole, the dialogue continued in a generally positive manner through most of 1997. 2. The City's Report and Organizational Problems of the Parties On August 18, 1997, the City issued a report on the City's efforts to ascertain the future cable -related needs and interests of the community, which also included a discussion of the City's review of MTCI's performance under its franchise ("Report"). The City confirmed for MTCI in a letter dated October 10, 1997 that the Report was intended as a "final and clear representation of the needs and concerns of the City based on internal and external analysis, both financial and technical, and the results of public inquiry." Despite the,gubd fl ith efforts of the staffs of both the City and MTCI, this process has been hindered by extraordinary changes in both the City and at MTCI. The City experienced staff turnover in 1996 and 1997, followed by the appointment of a fiscal oversight board in 1997. The City recognized that this turmoil had been a problem for the process in its October 10, 1997 letter: 78194.1 It is unfortunate that the renewal process has experienced so many delays due to managerial shifts on both sides and has become so encumbered by the redirection of the MTCI business approach and system upgrade strategy. All of these factors have -3- effectively impeded the parties' informal renewal progress and have resulted in the institution of the formal proceedings in which we currently find ourselves. The disorganization worsened after this letter was sent. The mayoral election of November 1997 was marred by fraud, leading to a court ruling in May 1998 that struck down the election and raised major questions about the City's leadership, including fundamental questions as to who is mayor, who is on the City Council, who is City Manager, and who is City Attorney. In recognition of these obstacles to informal negotiation, and the good intentions of staff on both sides, the City repeatedly extended MTCI's franchise and extended the date for the filing of a proposal in response to the Report.' During informal discussions with the City staff in November and December, 1997, MTCI was informed that the City intended to revise its cable communications ordinance and a draft franchise agreement, but that it would not be able to complete that process by the end of 1997. MTCI awaited a draft of the ordinance and agreement, but did not receive any such document. During the first quarter of 1998, MTCI requested from the City's outside counsel documentation of the various franchise extensions, but never received any such documentation. The City did inform MTCI verbally of an extension through April 24, 1998. Documentation produced by the City during the week of June 29, 1998 to MTCI, in response to a Freedom of Information Act (FOIA) request, verifies that the franchise was formally extended through April 24, 1998. MTCI intends to clarify with the City in' separate correspondence that the City understands and shares MTCI's belief that it is operating under the former franchise until such time as the franchise renewal process is complete. ' The City has stated its intention to consider whether MTCI failed to meet a deadline for filing a proposal purportedly set by the City for April 24, 1998. MTCI fully explained in a letter from counsel dated July 2, 1998 that it did not receive adequate or legal notice of that purported deadline, and referred the City to the only legal authority on the issue, Eastern Telecomm Corp. v. Borough of East Conemaugh, 872 F.2d 30, 35 (3rd Cir. 1989). 78194.1 - 4 - 98-- 913 3. Inadequate Time for Preparation The due date for MTCI's response to the City's August_ 18, 1997 Report, like the history _of the franchise extensions, has been a moving target. The date has been extended and postponed as the parties negotiated and dealt with internal issues on both sides that kept them from the process. Indeed, the City postponed the initial due date in a letter dated October 10, 1997 in recognition of the delays in the process and changes in management at both MTCI and the City, and to allow the parties to continue informal negotiation. Subsequent changes in the City's staff and further negotiations, plus MTCI's announcement of its intention to transfer the system to MediaOne, led to further postponements. MTCI was under the firm understanding that the City planned to issue revised franchise documents for further negotiation when, at a meeting on April 7, during a discussion of a number of renewal issues, the City verbally informed MTCI that the City expected a written proposal in response to the Report by April 24, 1998. A conference call scheduled for April 16 was rescheduled to April 20, 1998, and during that call MTCI informed the City that it could not provide a written formal proposal by April 24. MTCI confirmed this in writing on April 27, 1998, and further proposed that (a) the City should extend the franchise for 18 months to facilitate a transfer to MediaOne, (b), the parties could resume negotiations, or (c) the parties could continue with the formal process pending the City's provision of certain information. MTCI stated that it could prepare a written formal proposal within 90 days of receiving the requested information. In a letter to MTCI dated �une 2, with an attached draft resolution, the City informed MTCI that the City expected MTCI to provide a formal proposal no later than July 10, 1998 — allowing just 38 calendar days, and less than 30 business days, in which to prepare a proposal.' MTCI informed the City of MTCI's belief that more time was necessary ' Also attached to the June 2 letter was Resolution No. 98-305, which became effective April 3, and which had not yet been provided to MTCI. That resolution confirms the City's understanding that (a) the City had previously extended both the Franchise and the deadline for filing a proposal because the City expected to give MTCI a franchise only until MediaOne obtained the system, and (b) the City still planned to revise its cable ordinance as part of the informal negotiation process. 78194.1 -5- • to prepare a thorough response to the City's deadline. In a letter to the City dated July 2, 1998 MTCI reasserted its belief that it would need a total period of 90 days — until August 31, 1998 (with no break for negotiation) — to prepare a response in a. manner that is consistent with its due process rights. On the day before MTCI filed this proposal, the City denied that request, leading MTCI to file this proposal and related material. MTCI believes, however, that the City's failure to extend the due date for this proposal is a violation of MTCI's due process rights. It is also a waste of taxpayer money to proceed with a formal proceeding when the City expects to reach an agreement with MediaOne. Despite these obstacles and unworkable time constraints, MTCI has worked diligently to prepare a response. It has: conducted in-depth analyses of the Report and the City's evidence of community needs and interests; reviewed MTCI's own evidence of community needs and interests, and sought further evidence from the community; proceeded to rigorously analyze the costs of meeting the requirements of the Report; considered alternative proposals that would meet the Cable Act standard of renewal; and balanced the primary interests our customers have indicated in studies done by both the City and MTCI - a desire for new choices in programming services and an overriding sensitivity to rate increases. Despite these obstacles and the short time for preparation, MTCI is submitting detailed inf6rmation regarding: the operator's past compliance with the franchise and applicable law; the quality of the service provided under the expiring franchise; the operator's legal, technical and financial qualifications; and a detailed proposal for the future. _ ,.,, _ _ 4 C. Legal Standard For Cable Franchise Renewal Section 626 of the Cable Communications Policy Act of 1984, 47 U.S.C. § 546 (as amended), establishes the legal criteria for determining whether a franchising authority should grant a cable operator renewal of its franchise. Under the Cable Act, the decision of whether to renew a cable operator's franchise must be based solely on the following four criteria: 78194.1 - 6 - 9 8 -- 912 (A) Whether the cable operator has substantially complied with the material terns of the existing franchise and with applicable law; (B) Whether the quality of the operator's service, including signal quality, response to consumer complaints, and billing practices, but without regard to the mix or quality of cable services or other services provided over the system, has been reasonable in light of community needs; (C) Whether the operator has the financial, legal and technical ability to provide the services, facilities, and equipment as set forth in the operator's proposal; and (D) Whether the operator's proposal is reasonable to meet the future cable -related community needs and interests, taking into account the costs of meeting such needs and interests. ' The following sections of this Proposal track these mandatory criteria. IL PAST COMPLIANCE MTCI meets the standard for compliance with its Franchise, the City's Ordinance, and all applicable state and federal law. Under Section 626(d) of the Cable Act, the City may not base a denial of renewal on a failure to substantially comply with the material terms of the franchise unless the City has provided MTCI with notice and the opportunity to cure, or in any case in which the City has waived its right to object, or MTCI has provided the City written notice of a failure or inability to cure and the City has failed to object within a reasonable time. 47 U.S.C. § 546(d). Under this standard, the City may not deny MTCI's renewal proposal oa the grounds of failure to substantially comply with the material terms of the franchise, as MTCI has cured all notices of non-compliance from the City, or has otherwise demonstrated that it was in compliance. A. Technical Audit issues By letter dated April 5, 1996, the City notified MTCI of certain alleged violations of the Ordinance, including alleged violations of Sections 311 (stand-by power), 504 (emergency override), 605 (cable system installation), 606 (technical standards), 607 78194.1 - 7 - (state-of-the-art technology), 608 (maintenance), and 710 (books and records). ("April 5 Notice"). By letter dated April 22, 1996, MTCI responded in full to all of the allegations in the City's April 5 Notice. By letter dated August 15, 1997, the City restated and supplemented the allegations originally set forth in the April 5 Notice. ("August 15 Notice"). By letters dated September 5, 1997, October 6, 1997, and November 3, 1997, MTCI fully responded to the allegations in the August 15 Notice by either explaining how MTCI was already in compliance or by notifying the City that specific problems had been cured. Unfortunately, prior to receiving MTCI's letter responses regarding its compliance and cure, on August 18, 1997, the City incorporated as allegations of non- compliance in its Report all of the allegations set forth in the April 5 and August 15 Notices. While MTCI has timely explained in several letters that the City's allegations of non- compliance are either groundless, or MTCI has timely cured potential problems identified by the City, MTCI will again demonstrate below that it is in full compliance with the Ordinance. Section 311 — Stand -By Power. Section 311 of the Ordinance requires MTCI to "maintain equipment capable of providing stand-by powering for headend, reception and processing, and distribution plant for a minimum of 24 hours." The City has alleged that the report of William Pohts ("Pohts Audit") dated March 1996 found "the majority" of MTCI's "backup supplies to be inoperable." As explained in MTCI's April 22, 1996 and September 5, 1997 letters, MTCI was always in full compliance with Section 311. MTCI maintained a stand-by generator adjacent to the headend which provides for twenty-four (24) hours of back-up power. In addition, as demonstrated by the Technical System Profile attached to the -4 September 5, 1997 letter, MTCI replaced all power supplies serving the subscriber network during 1996 with new, uninterruptable stand-by units from Alpha Technologies. Indeed, the City's own engineer, Dale Kelchner, recognized MTCI's compliance with Section 311 in his July 16, 1996 analysis of the Pohts Audit. Analysis of the Miami TCI Cable TV Technical Audit, Dale Kelchner, CATV Engineer, City of Miami, July 16, 1996, at 2 ("Kelchner Analysis"). Accordingly, MTCI is and was in compliance with Section 311 of the Ordinance. 78194.1 - 8 - 98- 91.2 ' , Section 504— Emergency Override: Section 504 of the Ordinance requires MTCI s system to include an emergency alertcapability which will permit the Mayor or the Mayor's designated representative to override remotely the audio of all channels involved in retransmission of television broadcast programming or to allow for video crawl over all channels." In the April 5 Notice, the City states that "[t]o the City's knowledge, the system does not provide the above required override capability." In its April 22 response, MTCI stated that its system was capable of providing emergency override in compliance with Section 504. Again, the Kelchner Analysis contradicts the City's position. Mr. Kelchner states that he was with Mr. Pohts during the discussion of the override system with MTCI personnel and that "[ijt was my understanding that the system works and is capable of being dialed into via telephone." Kelchner Analysis at attached letter. The City no longer included allegations of non-compliance with Section 504 in its August 15 Notice or the Report. Accordingly, MTCI is in compliance with Section 504, and the City has accepted that fact. Section 605 — Cable Television System Installation: In its April 5 Notice, the City alleged that MTCI was in violation of Sections 605(b), 605(d), and 605(e) for "failure to maintain all equipment in workmanlike and suitable condition and good order and failure to replace under performing equipment." As MTCI pointed out in its April 22 response, however, the City's letter and the Pohts Audit were entirely conclusory, and did not make any allegation regarding specific equipment or incidents that constituted the alleged violations. Without such information, MTCI could hot possibly know what it was being accused of, or cure any alleged violation. Once again, the City's own staff identified the defects in the 241- - 4 City's position. In the Kelchner Analysis, Mr. Kelchner states as follows: 78194.1 Most of the problems mentioned by Mr. Pohts are vague and in narrative form. ... The locations used to perform the technical evaluation of the cable system are not listed. The specific results of these tests are not given. There is no definite statement as to what equipment is not operational.... I do not feel comfortable making any compliance -related judgments based on the information in this report. Kelchner Analysis at 4. 1 I • Elaine Collett Buza, a City Telecommunications Staff member expressed her concern to the City Attorney, A. Quinn Jones III as follows: "the Pohts report upon_ which the violations are based is very vague in terms of quantifiable[sic] measurements and exact locations of cited violations -this seems to be problematic for success...." Facsimile from Elaine Collett Buza to A.- Quinn Jones III, July 23, 1996. In an attempt to supplement its wholly unsupported allegations, in the August 15 Notice, the City included a short list of specific alleged violations. This list is also included in the Report. In its September 5, 1997, October 6, 1997, and November 3, 1997 letters, MTCI reported to the City that it had cured all of the listed alleged violations, except for two. As to the two "un-cured" locations, MTCI provided the City with details regarding the steps that were being taken to remedy the situation. The City has never notified MTCI that the proposed steps were unacceptable. Section 606 — Technical Standards: In the April 5 Notice, the City alleged that MTCI was in violation of Sections 606(a) and 606(b) of the Ordinance on the grounds that (i) "all work involved in maintenance and repair of the system is not being performed in a safe, thorough and reliable manner and that certain materials currently comprising the system require replacement;" (ii) "failure to maintain the system in compliance with the aforestated requirements has resulted in system under performance, as well as placement of unsightly and possibly unsafe equipment in and over the City's rights of ways..."; and (iii) "the audit identified numerous system performance abnormalities, including, but not limited to, signal levels and balance levels that do not meet FCC requirements." Again, MTCI responded in its __.., , - 4 April 22 letter that the allegations in the April 5 Notice were too vague and broad to provide any meaningful notice of the alleged violations. The City did not identify any specific violations. Regarding compliance with FCC technical standards, MTCI pointed out that it had conducted all FCC technical tests, had made the results available to the City, and had passed every test. Again, City Staff admits that the City's allegations are without support. In his analysis, Mr. Kelchner stated as follows: 78194.1 - 10- A technical audit [needs] to be more specific. The test locations should be listed and the tests performed with the appropriate results, displayed in a statistical manner, not just "verbiage": The auditor should also specifically identify any equipment which does not meet standards and what those "standards" are. I do not feel comfortable making any compliance -related judgments based on the information in this report. In the Report, the City re -asserts the vague allegations set forth in the April 5 Notice, but the City also attempts to supplement the allegations by identifying specific alleged violations. In its September 5, 1997, October 6, 1997, and November 3, 1997 letters, MTCI reported to the City that it had cured all of the listed alleged violations, except for two. As to the two "un-cured" locations, MTCI provided the City with details regarding the steps that were being taken to remedy the situation. The City has never notified MTCI that the proposed steps were unacceptable. MTCI is and has been in full compliance with the technical requirements of the Ordinance and FCC technical standards. In addition, MTCI notes that the City is prohibited from enforcing FCC technical standards. As of February 6, 1996, Congress explicitly removed the City's authority to enforce FCC or other technical standards. 47 U.S.C. § 524. Accordingly, the City cannot cite alleged violations of technical standards as grounds for denial. Section 607 — State -Of -The -Aft Technology: Section 607 of the Ordinance requires MTCI to "undertake any construction and installation as may be necessary to keep pace with the latest develg2rpen4 in the state-of-the-art of the cable industry...." In the April 5 Notice, August 15 Notice, and the Report, the City alleges that MTCI is in violation of this provision. The City asserts that "state-of-the-art" cable systems are between 550-750 MHz, and that MTCI's 440 MHz system is therefore not state-of-the-art. The City's assertion of what constitutes "state-of-the-art" is contradicted. by the evidence and by the statements of its staff. As MTCI explained in its April 22 response, the vast majority of cable systems in the country are actually less than 450 MHz systems. Accordingly, its 440 MHz system is fully within the state-of-the-art. This is confirmed by the 78194.1 -11- 98- 912 statements of Mr. Kelchner. In his Analysis, Mr. Kelchner states that "[m]ost 'state of the art' systems are currently operating at 450 MHz." Kelchner Analysis at. -I. In addition, in 1997, MTCI upgraded its system to offer additional channels via digital technology. MTCI's system is one of the first in the country to introduce this new technology, and therefore, could not be considered anything other than state-of-the-art. At best for the City, there is a genuine disagreement as to what constitutes state-of-the-art, but such disagreement cannot be the basis for a claim of non-compliance, particularly given that the City's own staff support's MTCI's position on the issue. Section 608 — Maintenance: Section 608(a) states that "The Licensee shall put, keep and maintain all parts of the system in good condition and repair throughout the life of the license granted hereunder." In the April 5 Notice, August 15 Notice, and the Report, the City alleges that MTCI is in violation of Section 608 because "[t]he audit has determined that all parts of the system within the City are not in good condition and repair." The City's original allegation in the April 5 Notice was conclusory and failed to identify any specific violation. In the August 15 Notice and the Report the City introduced a list of alleged violations of Section 608. As discussed above, subsequent to the August 15 Notice, MTCI has cured, or provided the City with acceptable plans to cure, all of the alleged violations listed. As'to the generalized allegations, as discussed above, the City's cable engineer has identified substantial inadequacies in the allegations set forth in the Pohts Audit regarding maintenance, and he has stated that he would "not feel comfortable making any compliance - related judgments based on the information in [Mr. Pohts'] report." Ultimately, in 1997, MTCI upgraded its system to offer a package of channels transported via digital technology. In order to offer digital channels over its system, the plant was necessarily in excellent condition. There is no support for the allegation, therefore, that "all parts of the system within the City are not in good condition and repair." Section 710 — Books and Records: Section 710 provides that "The City shall have the right to inspect at any time during normal business hours all books, records, maps, plans ... performance tests results and other like materials of the Licensee regarding the 78194.1 -12- 98- 912 operation of the system." In the April 5 Notice, the City alleged that MTCI had violated Section 710 because certain reports were not available for review by the City's auditor. In response, MTCI stated that "subject to applicable law and to the extent we are required to produce such reports, including applicable FCC proof of performance tests, MTCI will make available its books and records regarding the operation of the system." The City has apparently accepted MTCI's response, as in the Report, the City no longer alleges that MTCI is violating Section 710, but merely reiterates that the requirement represents an ongoing obligation for MTCI. B. FInancial Issues MTCI has paid the City a franchise fee of 5% on a quarterly basis, as required by the Franchise. The amount of fees paid currently exceeds $1 million per year. Since 1993, the total fees exceeds $3.8 million, with much more paid in earlier years. The benefits of these payments to the City cannot be overlooked in considering whether or not to grant MTCI's proposal for renewal. There is a great deal of history associated with MTCI's franchise fees, including an FCC decision ordering the City to credit MTCI with fees that were held to exceed the federal cap, and other disputes. In the Report, the City identifies certain issues regarding financial performance and franchise fees based on the audit performed by Rachlin Cohen & Holtz. The City alleges several purported discrepancies in the manner in which MTCI has calculated its franchise fee payments, including an allegation regarding a credit of $825,000 arising from a separate agreement entered into by MTCI and the City on August 1, 1988 as a result of the FCC decision. The City concludes in the Report that "the issue of calculation of gross revenues and franchise fees has been an ongoing source of contention between the City and MTCI." The City further concludes that as of December 31, 1996, the City owes MTCI no more than $456,532, and that MTCI was obligated to resume franchise fee payments no later than July 1, 1997. 78194.1 - 13 - By letter dated August 22, 1997, MTCI responded to the City's allegations (as originally set forth by the City in a letter dated August 6, 1997). In its response, MTCI denied the_allegations regarding the miscalculation of franchise fees. In addition, MTCI stated that while it had repeatedly set forth in previous correspondence with the City the basis for MTCI's belief that the City owed MTCI $825,000 under the August 1988 Agreement, as a sign of good faith, but without accepting the City's calculations or waiving any of its rights, MTCI would credit the $456,532 against its franchise fee payments for the first and second quarters in 1997. Indeed, after crediting the disputed amount, MTCI paid the City S47,609.76 by check dated September 1, 1997 for franchise fees due through the second quarter of 1997 in excess of the $456,532. As the City recognizes, the issue of the $825,000 credit due MTCI under the August 1988 Agreement, and the calculation of franchise fees has been extensively discussed and debated in correspondence and meetings between MTCI and the City. In those communications, MTCI has fully explained why the City owes MTCI $825,000, and why MTCI has complied with the financial portions of its franchise. MTCI is prepared to demonstrate that it has substantially complied with its material franchise obligations. M. QUALITY OF SERVICE Under the governing standards for franchise renewal, a franchising authority is required to review whether, during the franchise holder's last franchise term, the cable operator provided a quality of service that was reasonable in light of community needs, including signal quality, response to consumer complaints, and billing problems, but without regard to the mix or quality of cable services or other services provided over the system. MTCI more than meets this criterion. The legislative history. of the Cable Act makes clear that, in reviewing past quality of service, the City may only consider the quality of service provided by MTCI: 78194.1 The assessment made on this criterion should consider the operator's performance over the life of the franchise, unless the franchise has been transferred with the franchising authority's consent. In that case, the -14- 9891.9 applicable period of consideration would be the period in which the franchise was held by the operator seeking renewal. Cable Franchise Policy Act and Communications Act of 1984, H. R. Rep. No. 934, 98th Cong., 2d Sess. at 74 (1984) ("H.R. Rep."). MTCI developed internal operating guidelines for all areas of its business, some of which have become industry models. MTCI believes that excellent service will provide the strongest foundation for a successful long term relationship with its customers and the communities it serves. To ensure this, MTCI has staffed its system with employees trained to meet all situations. Today's staffing levels include 13 Customer Service Representatives, 70 Field/Service Personnel, 11 Sales/Marketing Personnel and local management in its MTCI system office. Over 200 telephone representatives staff the regional call center, available to respond to customers 24 hours everyday. This section will demonstrate the MTCI has provided quality service to its customers in Miami. A. System Design The Miami TCI Cable system consists of approximately 741.95 miles of aerial . . .__. __ and 35.98 miles of underground cable passing approximately 171,864 homes. The system was designed using a tree and branch architecture typical of coaxial systems designed in the early 1980's. But MTCI has already demonstrated that it does not treat franchise requirements as a minimum, but instead, MTCI will react to market needs and conditions whenever it is feasible to do so. Although the current system was designed and built to operate at 400 MHz (capable of 52 channels), through innovation MTCI has been able to reliably pass signal at 440 MHz to its subscribers. Then in 1997, MTCI introduced digital compression technology to the system to deliver even greater programming choices, at a cost of more than $3 million. At the present time there are 63 active analog video channels, and 27 digitally compressed video signals, for a total of 90 video channels. The system also has 10 digital music channels. A separate trunkline from the head -end to each of the eight "phases" provides insulation between the "phases" during outage situations and also provides the capability to 78194.1 -15- 98- 912 "narrowcast" signals to specific areas. The maximum cascade at any system location is 16 trunk stations, one bridge amp and two line extender amplifiers. In the case of line extensions,- a third line extender may have been added. All line extenders in excess.of one in cascade are tuned in order to meed distortion criteria. Active two way plant exists in at least 5 miles of trunk for the purpose of transporting video signals form remote locations. The rest of the plant is two way capable and requires only drop in electronics to activate the two-way service. B. Technical Compliance MTCI provides cable service in Miami which meets or exceeds the technical requirements contained in the FCC's Rules and Regulations, as they existed on June 1, 1993. Should these guidelines be further amended or modified by the FCC, the Company will voluntarily comply with any additional standards that are established. Further, MTCI will comply with all regulations regarding the monitoring of the cable system for signal leakage, and will document its monitoring activities. The cable system was certified as complete by the City Manager in November 1988, including both the subscriber system and the institutional network. The City Manager then recommended to the City Commission that the full amount of the construction performance and payment bonds be released. He also recommended that the company's required security fund deposit be reduced from $1,500,000 to $1,000.000. Resolution 88- 1153, passed by the City Commission in December 1988, approved the reduction. In September 1986 the City Commission approved reduction of the $2,000,000 security fund to 4 $1,500,000 because the system was substantially complete. MTCI has continued to provide high quality cable television service to its customers in Miami. To ensure this, a number of changes have been implemented in the system for better technical service. Engineering standards have kept pace with improved technology. We have voluntarily adopted technical service policies that are designed to more efficiently meet the needs of customers in Miami. These policies will remain flexible and may be changed from time to time to better address the needs of the Community. 78194.1 - 16 - 98- 9i$ 1. CLI Compliance To meet FCC requirements for signal leakage monitoring and Cumulative Leakage Index (CLI) testing, MTCI conducts regular inspections of its aerial plant and all distribution arteries. All signal cable is tested for wear and damage, and all worn or improper fittings are replaced. 2. Safety Record TCI is recognized throughout the industry for the emphasis it places on employee safety and customer safety. The training materials used by its employees are regarded as standards within the industry. The Company regularly maintains and inspects its vehicles and equipment to ensure they are in top working condition. Additionally, a nationally recognized driver safety program has recently been initiated for all technicians and installers who must drive a vehicle in performing their job duties. 3. Syndicated Exclusivity/Network Non -Duplication The FCC requires that local cable television operators who import distant broadcast signals must blackout certain programs at the request of local broadcasters who have purchased exclusive local rights to those syndicated or network programs. These rules are referred to as syndicated exclusivity and network non -duplication. While we regret the inconvenience this ruling has caused some of our customers, we must remain in compliance, regardless of how it affects our regular schedule. The Company has laced an emphasis on remaining in compliance with these r.riR p r rules in a way that is sensitive to customers. All customers have been made aware of these rules through advertisements and billing inserts. When a specific program must be blacked out, compliant programming is substituted. Should too many requests for blackouts occur on a distant broadcast signal that is being imported, the Company may choose to drop that distant signal and replace it with another signal that is not subject to these required blackouts, thereby ensuring that our customers are not subject to unpredictable lapses in their viewing schedule. 78194.1 - 17 - 98- 912 MTCI has provided cable service in Miami which exceeds the FCC's technical requirements and has complied with any new requirements that have been set forth by the FCC. Further, the Company continues to look for ways in which it can enhance the cable service it delivers to its customers within the Community. In the future, MTCI will continue forward in its commitment to this operating philosophy. C. Customer Service Customer service is the core of the cable business. MTCI's performance with respect to the FCC's customer service standards, 47 C.F.R. 76.309, has been at or above the minimum standards. The standards cover three specific aspects of customer service. With respect to the first aspect, Cable system office hours and availability, MTCI exceeds the minimum requirements of "normal business hours." The company makes itself available to customers twenty-four (24) hours a day. With respect to the second aspect, Installation. outages, and service calls, MTCI also exceed minimum requirements that service interruptions be responded to within twenty-four (24) hours. The company responds to service interruptions upon notification by two (2) or more subscribers in a particular area. Installations are required to be done within seven (7) business days form request. Ninety-five (95) percent of the time, the company performs installations in less time. With respect to the third aspect Communications between cable operator and cable subscribers, MTCI has met or exceeded the minimum standards. D. Complaints MTCI has responded to the need to effectively and adequately addresses subscriber complaints. The major areas addressed were: a. Telephone problems. In the past, some callers occasionally reported difficulty reaching the company because of busy signals and length of time on hold. Historically, MTCI has responded appropriately. For example, in 1987, MTCI purchased a $50,000 auto -response system that vastly improved local response time. Whenever there is an outage in the system, incoming 78194.1 - 18 - 9 8 -- 912 telephone calls increase. The days during each month.when subscribers receive their bills in the mail are also busy telephone days. In 1996, MTCI made an $8 million. investment in a regional Customer Service Satisfaction Center. More than 200 hundred Customer Service Representatives are in place to respond immediately to any customer requests. MTCI's surveys of its customers, and the record of telephone statistics, confirm that these measures have been highly effective in creating a high level of customer satisfaction. b. Service interruptions. MTCI realizes that nothing is more frustrating to a customer than a cable outage. Every amplifier and every splice in the network has an increased potential for failure. Backup power supplies introduced to the system have greatly reduced outages. In the future, the fiber optic design of the upgraded system will use substantially fewer electronics and splices, offering much greater reliability. Service interruptions will become increasingly rare. C. Shared channels; new program services. There are many splendid program services now available via satellite, and new services are announced almost daily. MTCI's customers want more choice of programming services, and complain that a favorite service may now be carried only part time on a channel shared with another service carried only part time. This situation is the result of federal regulations requiring the carriage of 14 broadcast TV signals. The solution to the channel shortage will be found in the upgraded system which will substantially increase channel capacity. d. Billing problems. Although ample written notification to subscribers of past due accounts that are subject to disconnection is provided by MTCI, our records of customer complaints indicate that some customers still do not know about our disconnection policies. To address this, the new Scientific-Atlanta addressable converter will enable the company to notify the 78194.1 -19- 98 - 9111 delinquent subscriber by a message displayed on his or her TV screen whenever it is turned on. MTCI prominently displays service information on the subscriber monthly bill. The company's lobbying office hours are 8:00 a.m. to 6:00 p.m., Monday through Friday, and 8:30 a.m. to 5:00 p.m. Saturday. Live Customer Service Representatives are available by telephone 24 hours a day, seven days a week. The company continues to provide service for trouble calls on normal situations within 24 hours. It has three technicians performing service calls until 7:00 p.m. and has added another full-time dispatcher whose line is open until midnight, seven days a week. Each subscriber receives written notice of complaint procedures at the time of installation. The booklet also contains information about company policies and services, and is mailed annually thereafter. All complaints received from subscribers are logged, investigated and recorded with the disposition of the complaint. The company also furnishes the City a complete outage log and trouble call report on a quarterly basis. E. Free connection for public buildings. Section 502 of the License Ordinance requires MTCI to connect public buildings specified by the City to its subscriber system and to provide without charge to one outlet on each floor of the building. The company is supplying free service to all of the 41 schools within the City, plus more than'80 other City -owned buildings and facilities. IV. COMMUNITY INVOLVEMENT As a Company, we are committed to finding ways to increase our effectiveness in serving our customers, and to providing quality programming and service to our customers. It is good business; it is good corporate citizenship. When a Company operates a business in a community, not only does that company have the obligation to meet the needs of its customers, it also has the responsibility 78194.1 - 20 - 98- 912 of playing an active role in the community it serves. MTCI believesAhis philosophy is the basis for its success. The following programs demonstrate our commitment to this philosophy: 1. TCI Education Project Vital to our nation's future is the education of our youth. The most critical part of this process is establishing a good, solid education system at the community level. Our Company recognizes the importance of education and has recently developed a comprehensive program to improve the quality of education in communities it serves. The TCI Education Project, sponsored by the Company and its subsidiaries, provides high quality educational programs and data services to high schools across the nation. Schools are not charged for the cost of programming or cable installation. TCI has already wired the schools in its service areas nationwide that have requested cable service. MTCI has wired 100% of the schools in the City. Even though a school is wired, schools must sign up to receive the materials provided through the TCI Education Project. The Company does not charge schools for the programming or for the. installation. Much of the programming will have no advertising, and schools may delete advertising that does appear. The programs offered cover a variety of topics and have been selected based on their academic merit. Included are programs on: Fine Arts Current Events Computers History English Geography Journalism Foreign Languages Math Business Science This project has been designed as a supplemental tool to be used by the most important person in the educational process: the teacher. The teacher can decide what programming is 78194.1 - 21 - 98- 912 most appropriate for the students. Support materials accompany many programs, thus making for an easy_ integration of the program into the teacher's curriculum. _ 2. Assistance to City MTCI has voluntarily provided assistance over the years to the City. For example, MTCI provided staff and equipment to cablecast City Commission meeting until the City was prepared to do so itself. The company has provided countless hours of technical assistance to City staff to keep the City's access channels programmed by Metro -Dade County Government and Dade County Public Schools. 3. Community Involvement Throughout the years, the company is pleased to have been assistance to the community through its support of community and City projects. To name a few: 78194.1 • Annual sponsorship of the City of Miami Parks and Recreation Department Program for Persons with Disabilities Golf Classic. • Videotaping and cablecasting a number of community events including Martin Luther King Day parade and the Program for Persons with Disabilities Talent Show. • Sponsor for the Miami Film Institute, the Coconut Grove Bed Race, and the Royal Caribbean Golf Classic. • Office Depot Corporate Run/Walk • Sponsored the.NAtyonal C-Span Coach to come to Miami for the National High School Conference. -22- 98-- 9111 IV. LE -GAL, FINANCIAL AND TECHNICAL QUALIFICATIONS A. Basic Qualifications MTCI's legal, financial and technical qualifications are beyond reproach. The franchisee is legally qualified to do business in the State of Florida. MTCI has access to more than sufficient resources to ensure its financial capability to meet any reasonable and cost justified commitments for the future. Finally, MTCI and its staff have the technical capability to implement any technical proposal and to meet future cable related needs and interests of the citizens of the City of Miami. B. Ownership and System Management MTCI is a wholly -owned subsidiary of TCI Southwest, Inc. The ultimate parent is Tele-Communications, Inc. The cable system's management structure consists of a General Manager, a Customer Service Manager and a Technical Operations Manager. The General Manager is responsible for the overall operations of the cable system.. The GM is also responsible for the dissemination of information to the system from regional, division, and corporate offices. The Customer Service Manager is responsible for all business, customer service and marketing functions. The Technical Operations Manager is responsible for all technical aspects, including enginq5:dpg, p;&the system. It is the responsibility of the management team to integrate and communicate individual issues from the franchise agreement into the day to day operation of the system including notification to regional, division and corporate offices of those issues. For example, the management team is involved in the development and preparation of the annual budget that is submitted for approval to the corporate office. The current Supervisory personnel responsible for maintaining the system is the Technical Operations Manager and his/her Supervisory staff. 78194.1 - 23 - 98- 912 V. ASCERTAINMENT OF COMMUNITY NEEDS AND INTERESTS In preparing its response to the RFP, MTCI has undertaken its own broad - based ascertainment research. A. Results Of MTCI's Ascertainment Studies MTCI retained an independent survey and marketing firm, Talmey-Drake Research & Strategy, Inc. to conduct statistically valid telephone interview surveys of cable television customers of the City of Miami system. This firm and its principals have been conducting professional polling services and market survey research since 1980. The firm conducts hundreds of public opinion surveys each year, including: opinion polls and election . surveys for the Denver Post/NewsCenter 4 (the Denver NBC affiliate); hundreds of public opinion surveys on cable television related subjects; and an annual poll for Cable World magazine, a leading cable television industry trade publication. The results of this survey are summarized below. An important point about the survey is that it covered a sample that accurately reflects the cultural and ethnic diversity of MTCI's cable customers. The survey included respondents who identified themselves a� 35% Hispanic, 30% White/Anglo, 17% Black/ African American, and 18% other/refused. 1. M17_ ,_usJpmers Are Satisfied With MTCI's Service The majority of MTCI customers are satisfied with MTCI's service. Nearly 70% of customers stated that they were either very satisfied or somewhat satisfied with cable television service. Similarly, more than 60% of customers responded that they are very satisfied or somewhat satisfied with the quality of programming they receive via cable television. Indeed, MTCI's recent surveys show that at least 75% of customers are either very satisfied or somewhat satisfied with the technical quality of their reception. These statistics show not only that MTCI's past performance has met the cable -related community needs and interests, but that MTCI's service is meeting the cable -related community needs and interests for the present and near future. 78194.1 -24- 98- 919 Durham Blvd. and N.E. R_Shore Ct. 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N I N N N r-I rl .-1 r-1 + O ♦ .-I ♦ .-1 + .-1 + .-1 + tf1 + �-i + ♦ te1 ♦ .-t ♦ :A .-1 .-i .-1 r-I O + + + + + + ' + I D yr O + N M + M M M M M M ri Ci N t0 r-1 to .-1 w .-1 to .-I t0 r-i t0 .-1 t 1 9-4 w .-i to to tD � to tD to to to to tD to t0 %D + + + ♦ + + ♦ ♦ ♦ ♦ + ♦ ♦ ♦ + + ♦ r1 rl ri .-i rl .-1 .-i .-I i .-i .-1 .-1 .-a r ♦ ♦ ♦ ♦ ♦ + } + +� + + + + + i x U N t . tcti v Ix t. O J' f4 4. t� .� f. r. ct o— cv fni .� �C 04 S 2 I O I a O� G �+, m y 3 1 Scheduling of all business (excluding service calls and. repair service) will be handled on the following priority basis: • Service changes and rescheduling appointments for existing customers. • Disconnection of service for existing customers. • Installation of service for new subscribers. 4. "The CUSTOMER 1ST" Program In September of 1989, TCI introduced one of the most expansive customer service programs in the cable industry, "The CUSTOMER 1ST". This Company -wide program features 33 points that are designed to better serve our most important asset, our customers. "The CUSTOMER 1ST" program has been implemented in Miami. The program is an overall philosophy and way of conducting business and providing employees with tools that better enable them to efficiently and consistently meet the needs of our customers. "The CUSTOMER 1 ST" program incorporates a number of strategic and important additions to the Company's customer philosophy. Some of the highlights of the program include a 30-day money -back guarantee, repair service by the next business day under typical conditions, increased employee authority to solve problems on the spot, a special priority level of service to make sure all problems are handled to the customer's satisfaction, expanded office hours, increased and improved training programs for employees, and much more. G. PUBLIC, EDUCATIONAL, AND GOVERNMENTAL (PEG) ACCESS, AND SERVICE TO PUBLIC BUILDINGS 1. PEG Access MTCI's ascertainment, like the City's, demonstrates extremely limited, if any, interest in customers for increased PEG programming and production capabilities. The programs on the system are not viewed, and customers are not interested in any franchise requirement that would cost the same as those in Coral Gables on a per -subscriber basis. Yet 78194.1 - 43 - the City has made clear to MTCI informally that it expects some significant PEG commitment as part of a, franchise renewal. Therefore, in an effort to meet the City's perceived requirements, MTCI purposes the following package benefits for public, educational and governmental access. (a) Channel Capacity: • Until completion of the upgrade to the system, continued provision of the channel currently programmed by the City (Net 9) and the three channels programmed by Dade County (total 4 channels). • Upon completion of the upgrade, the City will have the ability to program up to three (3) of these channels (including Net9), dedicated to City Public, Educational and Governmental Access which would be provided to all cable customers residing in areas of Miami served by MTCI. If the City chooses to program three channels, two channels would lose Dade County programming. Alternatively, the City would have the option of continuing to permit Dade County to program these channels. • Up to two additional channels would be provided in the future according to need that is demonstrated by the City through the programming of its existing PEG channels with a sufficient quantity that meets customary thresholds for additional channels. This would give the City up to five PEG channels in total. (b) Capital Contributions • In support of PEG capital, MTCI will provide the City $250,000 per year ($2,500,000 over the life of the renewal franchise) for the purchase of capital equipment and facilities for the provision of PEG programming. This support would be treated according to the FCC's rate rules as a pass -through to 78194.1 -44- 9 8 - 9 la -� customers in the approximate amount of $.32 per customer. -MTCI's-survey i shows that customers would not view this amount as unreasonable, in contrast to the $1.30 per customer required under the Coral Gables franchise. • The proposed annual grant is more than adequate to permit the purchase and maintenance of excellent production equipment and facilities. 2. Service To Public Buildings As part of MTCI's renewal, it will provide one free hook-up, and free basic service, to all City buildings within our service area. The value of this service is approximately $99,130 (at today's rate). In addition, it will provide one free cable modem and free service to each school. The value of this modem service is undetermined, because there is no commercial service rate to apply. H. INSTTTUTIONAL NETWORK FOR CTTY USE Pursuant to its original franchise, MTCI constructed an Institutional Network ("I -Net") for use by the City. The I -Net covers over 90 miles, and provides the City a 400 MHz mid -split, two-way active cable serving approximately 30 buildings and over 200 total transmission points. On November 29, 1988, the City recognized that the I -Net was fully completed, and therefore released the construction performance and payment bonds originally required under Section 602(a) ofjhe Ordinance and reduced the sum of MTCI's Security Fund deposit. On November 29, 1988, the City, by then City Manager, Cesar H. Odio, accepted the transfer by gift of the Miami Telecommunications, Inc. Institutional Network to the City. Pursuant to a separate agreement entered in to by the City and MTCI, MTCI has maintained the I -Net for the City. To the best of MTCI's knowledge, the current I -Net is fully operational, and available to serve the City's needs. As discussed previously, MTCI's ascertainment of cable -related community needs shows that a clear majority of Miami cable customers think that the City should not require the cable system to provide an I -Net at all, regardless of who pays for it. 78194.1 - 45 - 9s- 91; Accordingly, MTCI is not proposing to provide the City with any I -Net support as part of its renewal proposal. The Company would be willing to continue to maintain the City's network pursuant to a contractual agreement. MTCI, however, does not foreclose the possibility that community needs may change, and the economic feasibility of a new or expanded I -Net could improve. With this in mind, MTCI is willing to agree in a renewal franchise to meet with the City to discuss any such changes, and to provide the City with support for additional I -Net facilities in the future if conditions change. This offer would need to be conditioned on there being sufficient time remaining on MTCI's franchise to permit recovery of the added investment, or of the City paying for the costs of the I -net services (from franchise fees). VIL ALTERNATIVE PROPOSAL: THREE YEAR EXTENSION OF FRANCHISE As indicated in the introduction to this proposal, MTCI believes that the City's most logical course of action is to extend the existing MTCI Franchise for three years, on the same terms and conditions, to facilitate the transfer of the system to MediaOne. A period of three years is the minimum franchise length consistent with the franchise renewal provisions of the Cable Act, 47 U.S.C. § 546, and would be adequate to not only complete a transfer to MediaOne, but for the City and MediaOne to reach agreement on a renewal consistent with MediaOne's business. MTCI believes that such an extension is entirely consistent with the evidence of community needs and interest3n a cable system. MTCI's current level of service is very satisfactory to a large majority of customers, who also are highly resistant to any rate increase that would result from any system upgrade. The ascertainment materials do not show any cost justified need or interest that would be unserved by the extension. As an added incentive to grant such an extension, MTCI proposes to provide a strong level of capital support for PEG programming for the three year term. MTCI will make an annual grant to the City in the amount of $275,000 per year for the extension. This amount could be provided in the form of credits due to MTCI from the City for franchise fees paid under the existing franchise. 78194.1 - 46 - VIIL RATES FOR SERVICES MTCI will charge rates during any renewal terms as permitted by federal rate regulations and any other law that may be applicable. The rate impact of MTCI's proposal to serve the community in the future will depend not only on regulation, but also on the willingness of customers to pay additional fees to cover the costs of meeting franchise requirements. The customer surveys conducted by MTCI, however, demonstrate that customers are highly averse to rate increases. IX. CONCLUSION MTCI believes that the most logical course of action for the City, consistent with federal standards governing franchise renewal, is to grant MTCI a three year extension of it Franchise in order to facilitate the transfer of the Miami system to MediaOne, which would then enter into a longer term agreement with the City. MTCI would provide the City with a grant for PEG uses that amounts to $825,000 for the three year term. Alternatively, if the City wishes to go forward with the process during MTCI's ownership, MTCI has proposed the fundamental terms of a renewal that would more than meet any of the City's cable -related needs and interests that are justified in light of costs. The City would have an enforceable agreement for a new 750 MHz system, with fiber optic architecture capable of delivering all conceivable advanced services. The City would also receive a generous grant for PEG purposes of up to $250,000 per year, and the opportunity to s, Y r program up to 5 channels with PEG programming. Although MTCI cannot justify any increased commitment to an I -Net in light of customer disinterest and rate concerns, MTCI would be willing to provide any I -Net facilities that might become justified in the future. In short, the City could be assured of an extremely beneficial cable television franchise for the next 10 years. MTCI satisfies the remaining criteria for franchise renewal under either of these proposals for the future. It has substantially complied with all material terms of the Franchise and applicable law. It has provided a satisfactory quality of service in the past, as 78194.1 - 47 - 98- 912 amply supported by the ascertainment materials of both the City and MTCL . And its legal, financial and technical qualifications are extremely sound. MTCI remains available to provide any further information necessary to understand this proposal, and looks forward to the City's recommendation. 78194.1 -48- 98-- 913 CIT'( OF MIAMI. FLOHII)A INTER -OFFICE MENIORANL M =Rc:m Walter Foeman September 4, 1998 City Clerk SVai«r Request for A _ Public Hearing Donald H. Warshaw REFERENCES City Manager ENCLOSURES: Please accept this as authorization to place the attached notice in the Miami Herald newspaper. This notification is required by the formal cable television renewal process in accordance with federal law (47 USC § 546). ' ChG A�` c: DHW:CMC:AGS:ecb 98- 912 CITY OF MIAMI NOTICE OF PUBLIC HEARING Notice is hereby given that the City Commission will meet at a public hearing on September 28, 1998 at 2:00 p.m. to discuss the renewal of the cable television franchise for Miami Tele-Communications, Inc. Pursuant to federal law (47 USC § 546), the City of Miami has received the formal cable television renewal proposal from Miami Tele- Communications, Inc. This proposal is available for inspection at the Office of the City Clerk of Miami, Florida, 3500 Pan American Drive, Miami, Florida. C: T •r ; ' ;n- ER S OFFICE � Donald H. Warshaw July 24, 199 B JUL c 7 A� , 11:36 City Manager _ Request to Notice Formal Renewal Proposal Aldo Stancato from MTCI Director A) Information Technology Department = __ Your approval is hereby requested to place the attached notice in the Miami Herald newspaper. This notification is required by the formal cable television renewal process in accordance with federal law (47 USC § 546). The estimated cost for this notice is approximately $700. Funds are available from Information Technology budget, account code 460101.6.287. E APPROVED: LAA 2-0:-=:� ?4w-4 onald H. Warshaw Date ,�L City Manager c: DHW:CMC:AGS:ecb 98- 9iit TO FROM Donald Warshaw Interim Cif Man (Willy) Gort CITY OF MIAMI, FLORIDA INTER -OFFICE MEMORANDUM �" I ' .'Aiat,. t.CERS OFFICE DATE: SUBJECT: Sep emreew l�jl9� 4. 44 FILE: v - Attached is a copy of a letter that was sent to my office from Ms. Barbara J. Lange, regarding her TCI Cable service. Will you please incorporate this letter to the report you are currently preparing to present to the City Commission. Thank you for your cooperation. WG/kk MEMOBARBARA LANGE LO :9 Wd L f d3S 96 0 A!E33 98- 912 MRS. Ki a C. LANGE 3198 VIA ABITARE , COCONUT GROVE, FLORIDA 33133 31 August 98 Ms. Bonnie Lopez General Manager Miami Tele-Communication, Inc. 1306 NW 7th Avenue Miami, FL 33101 Dear Ms. Lopez: I am writing to file a complaint about a recent event caused by Miami Teie-Communication, Inc. that has caused me time, frustration and expense. Miami Tele-Communication, Inc. has not offered to refund me for any of my expenses and has delayed the repair of my home. On 10 August 98, after three other appointments where the installers either did not show up or could not do the job or did not speak English, an installer finally showed up to install the digital cabal. I requested a custom job when I originally spoke to customer service rep. I told the installer repeatedly that this was a custom job and I even had my carpenter here to explain how I wanted the job done i.e., I didn't want to see any wires or holes in the outside wall where the wires go in. Unfortunately, the installer did not listen and drilled a hole right over my entrance for the wires. He also could not re - hook up my surround sound and pulled my cabinet door off its hinges and scraped the wood cabinet If that is not enough, after several days of my phone ringing busy (which is impossible because I have Bellsouth call waiting and voice mail) my phone line went dead on 13 August 98. Ralph Salgueiro Technician #495 from Bellsouth came out to fix my telephone line. Mr. Salgueiro looked at the line and said, "who has been fooling with the telephone lines". When I began to explain how Miami Tele-Communication, Inc. had used my phone lines for their new digital cabal service, he asked me to stop and explained how Bellsouth had been having problems with individual phone lines due to Miami Tele-Communication, Inc. digital cabal service. Mr. Salgueiro showed me how the installer had short circuited my phone line and I had a "hard short that jammed my phone line". An hour and $45.00 later my phone was working. 31 August 98 Miami Tele-Communication, Inc. Page 2 _ On 18 August 98 when Miami Tele-Communication, Inc. installers finally showed up I told them to take the digital cabal out and reinstall the old cabal system. My reason, the obvious, with the Miami Tele-Communication, Inc. monopolvon service in Miami, customers are no longer important to the company. For Miami Tele-Communication, Inc. unassailed by doubt, or indeed concern for such horrendous customer service to be attempting to renew their contact with the City is an affront to the public. I spent $60.00 on the installation $45.00 to repair my phone lines and if you never show up to take out the wires and repair the hole I will have a carpenter bill. I expect Miami Tele-Communication, Inc. to issue me a check in the amount of $105.00 for my expenses so far. If you wish to contact me by phone, my number is 305 447- 947 2. cc. Elaine Buza, Telecommunications Coordinator Mayor Carollo Commissioner Plummer Commissioner Teele Commissioner Gort Commissioner Regalado Commissioner Sanchez City Manger Warshaw John C. Malone 98- 91,E p BELLSOUTH Statement Of Work Charges - Basic (t0-97 Installation, Rearra- -mement & Maintenance Customer's Name La N Date (MMDDYY) - %: - cA (Area Codel felephons Numbw/M ID ( ) /�7- /-7 2 19 Address / Class Of Service SOQW vily N"njW Detariffed Work Charges Initial Cha es Additional Initial 8 Additional Units Rate Charges PWT Prewire One Wire and Outlet s $ s i to VCA Install/Rearrange Wire and Jack s s $ s z3ar SCO Install/Rearrange Jach/XHG or Conned Wire $ s s s OWWQ2 Installation Work - T & M Chargies Enter labor Cha es For 1st Hour and Additional 114 Hours Below RW2 Rearrangement Work - T & M Charges (X IT& M Labor Hours $ s s $ o u a TLCPR Trouble Determination GA & SC On $ TLCEQ Trouble Isolation $ RLJRW Repair/Replace JackNVire Is Is S 5 m TMR Maintenance Work - T & M Charges Enter labor Char ps For 1 st Hour a Addftlonal 1/4 Houn Below $ T & M Labor Hours $ s $ ALCFH Additonal Labor Cha e - Fishing Walls s s s $ ALCAH Additonal Labor Charge - Not Normal Hours $ s s s Units Rate ' Y=. M ro RJ11 Standard Single Line Jack W s - $ RJ14 Standard Dual Line Jack E�E- W t s ar RJ11D Standard Dual Hob Jack s s m RJ25C Standard Triple Line Jack S s c RJ31X Jack For Alarm ng Devices s >; EXHG Se arte Entrance Bride s 3`a°'.. $ v OPY Material - Basic $ Deregulated Construction Charges s Other (Explain)s Total Dereaulated Charaes Tariffed Work Charges RWWI I Rearrange D rotedor/NI arffed Flat Rate Premisis Work Charges - NC On S RWWI I Rearrange DircVProtectorMl Ex NC Enter Labor Charges Below - ME�'.1 Initial Charges Additional Initial8 Additional Units Rate Charges Labor Hours - 1/4 Hour Incremoi is Is Is s lr Secpndary Service Charge $ er (Explain) $ TDS Trouble Determination - Sim FLNC,KY - NC,KY-labor Hours Below Flat Rate Charges - FL Only ► 5 TMS Tariffed Maintenance - Simple AL,KY,LA,MS,TN Enter Labor Charges Below et1r � Initial Charges Additional Initial & Additional Units Rate arges m Labor Hours - 1/4 Hour Increments AL KY,LA,MS,TN s Is S Labor Hours - 112 Hour Increments NC On s s i s Other (Explain) $ Total Tariffed Charues s Work Description ear.. Total Charqes Billed Name Dom P" - - Id,-2G Important: Charges quoted by the technician may not be all inclusive. Service order and central office line connection charges, where applicable, are not shown on this invoice. Save this statement for warranty oroof and see other side. Do.not make payment to technician at this time. You will be billed later. CustonttnAgent (Pleele Print) Relatiohsho TO CustOreer SrQnaaMe . LA= r CUSTOMER rr 8 — 91.2 1 V V \/ 1 ( \ \/ 1 u V I InsbTech # � Reassigned To: 2 /) Work Date/Time 7. 7 - Order DateMine -, � - At By .+th 4ddress —� .Mr-- I JV V Ln 9-11.'L 9e7r%C. ur\ M T htiMT ::- ..-:_ Qt --TTt Z4 . _.ems-. _<r:. .-.-.•,,- ... -.�Ja2 Name Account #.- Hm. Ph. # 't ; _ Wk. Ph. # Tag # -_ 1, • -7= a Sales Rep. Campaign O T N Dwelling - ' S� ; = ,; �' _ . ; ^I Outlets _" Cycle A Complex Name ..t c r ;; = i -. 11 c Job Type - ' A' Points 1' PIC+H/U STEREO EQUPT... � � , dBJyt,98. Bf) G. a FIX CODE`: 1'3 't 'a'.' 13 3: a0X CMG 0 FIX CODES 03/ 1 0/58: CHG SVC : 70 3 FIX CODES Installation Charge Deposit Amount Prorate Amount COD Amount Monthly Charges W1 iu We're taking television into tomorrow. �. _ Task 0 I G I TAL QUOTA NO PICTURE,' r:-'1 434 A - 7 C; Code Service Charge SULAN 2: G I TAL. A/C Z &E - �{ r �t1�.Z 1 J�� MAP -AREA Do not give this equipment to anyone other than an authorized TCI employee ... Demand a receipt! I acknowledge receipt of the customer Privacy Notice, a copy of the Policies and the Practices of the local cable company, and a copy of the signal Quality Complaint Resolution Procedure. I accept the installation as satisfactory and the equipment as tunctionar and in good working order. Cable service payments are due in advance, and when an account is delinquent the service may be terminated without notice. There will be reconnection charge to reinstate services. There may be charges that apply to the downgrade and/or upgrade of services offered by the Cable Company. All equipment. including but not limited to Converters and Remote Control Units, shag remain the property of the local cable company. In the event that the equipment is not returned upon termination of Cable Service, or is lost, destroyed or damaged while in Customer's possession or control, Customer agrees to pay replacement cost of equipment to Cable Company. Customer is wholly responsible for battery replacements for the Remote Control Units. If the service problem is not cable related, there will be an hourly charge assessed to the Customer's account. WE ARE NOT RESPONSIBLE FOR DAMAGE TO TV SETS AS A RESULT OF ACTS OF NATURE DURING LIGHTNING STORMS. WE RECOMMEND THAT YOU UNPLUG THE CONVERTER AND TV SET. YOU ARE RESPONSIBLE F Sales Program INIT. CHANGE LONG DISTANCE SVC TO SPRINT 2 STAR = CORE PKG ' 3 STAR - CORE PAY + ANY PAY e 4 STAR = CORE PKG + ANY 2 PAYS 5 STAR = 3 PAYS SURUWW Q Cr Q_ (7- 8 STAR - 4 PAYS BRAVO a IJ ❑ ❑ a ❑ 7 STAR = 5 PAYS GALAVUKW ❑ ❑ ❑ ❑ ❑ ❑ 8 STAR a CORE PKG + ALL PAYS PLUS DMX BONJOUR ❑ ❑ ❑ ❑ ❑ ❑ CORE - STARZ ENCORE, GUIDE DMX ❑ ❑ ❑ ❑ ❑ ❑ Trouble Call Solution Codes OR RETURNING CONVERTERS TO TCI IN GOOD CONDITION. OTHER Comments: Cash ❑ Visa ❑ Check # ❑ Money Order �] Will Bill CC#_ Technical Data Signal Levels Low Band Ch.# DB Super Band Ch.# DB Mid Band Ch.# DB Hyper Band Ch.# DB 7—MC L Disc ❑ Amer. Ex. Charges for Repairs Performed Auth. Code Exp. Date # of Hours S per Hour Start Time End Time Work Completed By 7' Converters Picked Up `� Date f ' L Customer n