This report recommends that the City Council adopt a resolution issuing a rate order to Century Southwest Cable Television, Inc. ("Century" or Athe Company@). The rate order establishes basic cable service, equipment and installation rates and orders Century to issue refunds as appropriate.

The FCC sets forth specific procedures for franchising authorities and cable companies to follow in establishing rates. The City and Century have followed these procedures. The October 31, 1997 settlement of issues regarding Century Select and basic rates does not apply to Century=s annual basic cable service, equipment and installation rate filings which is the subject of this report.

Century submitted its rate justification to the City on May 1, 1998. The City reviewed the rate filings to: (1) uncover deficiencies in Century=s completion of the rate filings; and (2) verify the information the Company submitted. A supplemental request for information was sent to Century on November 25, 1998. The Company responded on December 11, 1998.

$ Century requested a digital installation rate of $118.35 based on its assumption that it will take 4 hours to complete such installation. Century failed to provide time studies or other documentation to support this number. Century stated that Abased on preliminary testing and technical and operational discussions with other cable operators, Century has determined that the 4-hour average used in the FCC Form 1205 filing conservatively approximates the time it takes to perform a digital installation.@

Century stated during the course of the City=s review that their subscribers would want to know a fixed rate for a digital installation and would not be satisfied with having this installation performed on an hourly basis. However, Century did not submit time studies or other data in support of the four hour estimate.

Therefore, the City does not have support for a 4 hour installation. FCC rules permit operators to charge either an average rate or charge the actual time incurred multiplied by the hourly service charge.

Since Century has not met its burden of demonstrating the reasonableness of the average installation time, staff recommends that Century charge subscribers based on the actual time it takes to perform this installation. The rate would be the hourly service charge of $29.59 times the actual amount of hours spent on installation.

$ Century stated that it had not as yet introduced the digital package, and provided only a cost of $.73 for the digital remote based on current negotiations. Staff recommends approval of the digital remote control rate contingent on Century submitting documentation showing it purchased the remote control device at the cost set forth in its rate filing. If the actual cost differs, the rate will need to be adjusted accordingly.

$ Century included a license fee of $15 in calculating its digital converter rate, and provided a confidential proposal documenting the license fee. Staff recommends approval of the license fee as proposed in calculating the digital converter rate. However, if there are variances between the proposal cost and actual cost, the rate should be adjusted accordingly.

Public comments were received on a broad range of Century service, rate and franchise issues. Comments related to rates charged by Century Cable for basic cable service, equipment and installation costs for this time period were taken into account in staff=s recommendation and are presented in Attachment C for Council=s reference.

Based on the adjustments suggested above, the financial consultant=s report, and FCC permitted increases, the recommended maximum permitted rates are set forth below:

Attachment B B Financial Report

Attachment C B Letters From the Public