HomeMy WebLinkAboutM-87-0067QO
CITY OF MIAMI. FLORIDA
INTER -OFFICE MEMORANDUM
TO Honorable Mayor and
City Commission Members
FROM Cesar H . Od I o
City Manager
DATE, January 8, 1987 FILE
SUB:ECT Miami Cablevislon:
Transfer of Ownership
"B" Cable Issue
REFERENCES
ENCLOSURES
Letter
Relative to the proposed transfer of the Americable Joint venture
Interest In Miami Cablevision to Miami Telecommunications, Inc.
(TCI), the licensee Is requesting permission from the City
Commission to delete the presently approved subscriber dual cable
system, commonly referred to as "A" and "B" cables.
Section 301 of the City of Miami Cable Television License
Ordinance requires the licensee to Install, complete, operate and
maintain a dual cable system ("A" and "B" cables, carrying 52
channels each).
During the process of granting the cable license, each of the
companies seeking a license to operate a cable system In the city
proposed to build a dual cable system (Including TCI).
At the time, the technical state-of-the-art allowed a maximum
capacity of 400 MHz (52 channels) on a single cable. The current
state-of-the-art Is 550 MHz (90 channels) on a single cable.
This advance In the technology gives the desired higher channel
capacity without the expense of a second cable. This Is why the
cities of New York, Chicago, and Washington, D.C. -- prior to
the construction of the system -- allowed a design change from
dual to single cable.
The licensee, Miami Cablevislon, built the dual subscriber system
proposed In Its technical plan. The system was operated and sold
to subscribers as a dual cable, 104-channel system until October,
1985. At that time, the company restructured Its channel lineup,
moving some of the services carried on the second, or "B", cable
to the "A" cable. Some services were eliminated; a few were left
on the "B" cable. These were gone by the spring of 1986,
although the "B" cable remained active. Miami Cablevision
Informed the City that the realignment of services was a
temporary measure necessary to allow technical Improvements to be
made to the cable system with the least disruption to
subscribers.
87-67
,OWN'
Cesar H. Odlo
January 8, 1987
Page 2
The "A" cable Is now fully loaded with services. Without the "B"
cable, a new programming service cannot be added -- unless It
replaces a programming service currently carried on the "A"
cable.
Cable television has been called the "television of abundance"
because of Its unique capability to carry a wide variety of
programming services. Miami Is special. A high capacity cable
system may someday be considered a necessity here, rather than a
luxury. This Is the advantage that the Miami Cablevlslon dual
cable system offers.
Attorney Stanley B. Price states, In his letter to the Mayor and
City Commission dated January 6, 1987, that his client, Miami
Telecommunications (TCI), Is willing to proffer benefits to
subscribers in consideration of the elimination of the dual cable
system, Including offers to:
-- freeze existing rates, for basic service, for a period
of at least one year;
any additional pay channel which will be subscribed to by
the customer will be at the rate of $2.00 per month over and
above the first pay channel rather than the existing rate of
$11 .95;
reduce the amount of deposit on converters from the existing
$75.00 rate to $25.00;
-- eliminate the second outlet charge, which Is presently $5.00
per month;
-- unscramble the existing signal for basic channels which will
result In a benefit to cable ready television sets and video
recorders, since they will not require a converter;
-- provide, at no cost, each of the customers of the City of
Miami's License System, the American Movie Classic Channel;
-- provide customers of the Cable System with a monthly
magazine guide.
87-67
Cesar H. Odio
January $, 1987
Page 3
Operating as a single cable system can reduce company costs
considerably. If these savings are returned to the subscriber In
the form of Improvements In the auallty of service with a
reduction in rates. the subscriber benefits. However, for the
reasons cited earlier, It would not be prudent for the City to
abandon the 'B' cable. The following recommendations strike a
reasonable balance.
1. Recommendation: The licensee agrees to provide the consumer
benefits proffered In the attached letter to the Mayor and
Members of the City Commission.
2. Recommendation: The licensee agrees to transfer ownership
of the second, or "B", cable to the City of Miami.
By transferring ownership to the City, the licensee Is relieved
from any further dual cable system obligation. An ordinance to
amend the Cable License Ordinance to delete the dual cable system
requirement would not be necessary. An agreement, similar to the
agreement transferring ownership of the Institutional network to
the City, could be executed. The agreement, by Itself, would
effectively amend the ordinance requirements.
3. Recommendation: The licensee agrees to maintain the
Institutional network under the control and direction of the
City.
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JULIC A 5 YYILLIArSON
January 6, 1987
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GENE ESSNED
Hand Deliver
The Honorable Xavier Suarez
and
Members of the City Commission
City of Miami
3500 Pan American Drive
Miami, FL 33133
�saZ f14.,.
Re: Proposed Transfer of Cable Television License
To Miami Telecommunications, Inc.
i
Dear Honorable Mayor, and
'
Members of the City Commission:
The undersigned represents Miami Cablevision
in regard to the proposed transfer of a joint venture
-9 "'
interest pursuant to the provisions of that certain license
issued by the City of Miami to Miami Cablevision.
Pursuant to the provisions of §301 and §302 (System
Characteristics and Service Obligations) of the City Code,
:.,.;
#'
the licensee is respectfully requesting permission from
the City Commission to delete the presently approved
subscriber Dual Cable System, commonly referred to as "A"
and "B" cables. This request is made based upon the
following salient factors which we believe should be given
.:'
serious consideration by the City Commission:
1. Most major cable television markets including
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New York, Chicago, and Washington, D.C., have authorized
'
the deletion of the Dual Cable System for a myriad of reasons
4
which will be discussed below. At the present time, Miami
Telecommunications, Inc., is in the process of deleting
Y,
the Dual Cable System requirement from its existing franchise
in the City of Pittsburgh, Pennsylvania.
87-6 7
The Honorable Xavier Suarez
and 1
Members of the City lommission
January 6, 1987
Page Two
2. Dual Cable Systems create mass confusion
upon the general public based upon its complexity of use.
Following the dismantlement and deactivation of the "B"
cable equipment in the system, and at the headend, Miami
Cablevision has experienced a decrease in the amount of
service calls from approximately 400 calls per day down
to the present 40 to 50 calls per day.
3. As noted by otker cable jurisdictions, there
presently exists insufficient quality programming to satisfy
the capacity of an "A" and "B" Dual Cable System.
4. The elimination of the Dual Cable System
has enhanced the existing efficiency of the system and
has eliminated a reduction in outage time.
In consideration of the Commission's decision
to eliminate the Dual Cable System, my client is willing
to proffer the following consumer benefits, totalling over
$13 million in cost savings, over the next two (2) years:
A. For the convenience of customers, a new
customer service office will be constructed w' -.. the
City of Miami at a capital improvement cost of $ ,0
B. My client agrees to freeze existing rates,
for basic service, for a period of at least one (1) year.
Assuming a $3.00 a month increase which was contemplated
by the Company, this is an initial savings to the consumers
of the City of Miami of $1,088,000. As you are aware,
rats increases fall outside the purview of City review.
C. Any additional. pay channel which will be
subscribed to by the customer will be at the rate of $2.00
per month over and above the first pay channel rather than
the existing rate of $11.95. This has the effect of a
Javings of approximately $3,940,000.
D. My client will reduce the amount of deposit
on converters from the existing $75.00 rate to $25.00
creating a cost savings to the general public of $1,098,450.
E. My client has agreed to unscramble the existing
signal for basic channels which will result in a benefit
to cable ready television sets and video recorders, since
they will not require a converter.
F. My client has agreed to eliminate the second'
outlet charge, which is presently $5.00 per month, creating
a cost savings to consumers of $1,080,000.
FINE JACOBSON SCHWARTZ NASH BLOCK a ENGLANO, P. A.
87.67
A r
The Honorable Xavie Suarez
and Members of the City Commission
January 6, 1987
Page Three
G. My client has agreed to provide, at no cost,
to each of the customers of the City of Miami's License
System, the American Movie Classic Channel. This pay channel
would normally cost $7.95 per month. This will result
in a benefit to the Miami consumer of $3,816,000. '
H. My client has agreed to provide each of tha,
customers of the Cable System with a monthly imagazine guide
for programming on the system. This guide retails at $2.00
per month, thereby creating an out of pocket cost to my
client of $1,756,000. This benefit also obviates the need
for the consumer to purchase several monthly periodicals,
as they do now, to obtain the same programming listings.
We strongly believe that the cost savings and
benefits which will accrue to the City of Miami resident,
far out -weigh reactivating a Dual Cable System. The Dual
Cable System is not economically viable and will preclude
any licensee from obtaining a reasonable rate of return
and high level of customer satisfaction.
We respectfully request the Commission also
c.., ratifying the transfer of the joint venture interest in
°4 Miami Cablevision License to Miami Telecommunications,
,p. ... Inc.
We look forward to making this presentation to
you on Thursday, January 8, 1987, and we appreciate the
courtesy you have extended to us in this matter.
.�3 r
k Respectfully yours,
k
Stan B. Price
SBP:lc
21817.0001
cc: Mr. Charles Hermanowski
Mr. Lawrence J. Carlton
The Honorable Cesar Odio ✓
` The Honorable Lucia A. Dougherty
FINE JACOBSON SCHWARTz NASH BLOCK & ENGLAND, P.A.
87-6 % ;,4