Cities Acting to Regain Control Over Cable Rates : Communications: Fees have soared since 1984. A new federal law allows local regulation, but some say it would be too costly.

Unable to set cable TV prices for nearly a decade, frustrated local officials are taking steps to stem those soaring rates and control the costs of a confusing maze of add-on charges levied by cable companies.

Armed with the 1992 Cable Act passed by Congress last fall, officials in cities throughout Ventura County say they are gearing up to regain control of basic cable rates, which have increased at twice the pace of inflation since deregulation in 1984.

In Thousand Oaks, the City Council has already voted to administer new federal price guidelines for basic service, though cities and counties cannot apply for such federal certification until June 21.

The Moorpark City Council will consider the issue Wednesday, and the Ojai council is expected to act soon. In every other city in the county--and within county government--officials say they have begun reviewing the Federal Communications Commission’s new cable rules.

Residents of Ventura County, blocked by mountains from clear broadcast signals, are a captive audience for cable companies operating here without competition, officials said.

“I have been absolutely frustrated by the rate increases and having no way to do anything about them at all,” Moorpark Mayor Paul Lawrason said.

Ojai Councilwoman Nina Shelley said her community is “unhappy with the rates. We just had an increase 60 days ago, and $2 or $3 to the homebound elderly makes a big difference.”

County Public Works Director Art Goulet, who oversees cable franchises in unincorporated areas of the county, said he thinks the Board of Supervisors will want to retake control of basic cable rates.

“Cable television has become a utility for most folks,” Supervisor Vicky Howard said. “I think we’re going to have to get back into the loop.”

Even as city and county staffers review more than 500 pages of new cable regulations, however, questions remain about how local government can afford to monitor the industry.

It probably would cost tens of thousands of dollars a year to properly oversee rates and services regulated under the new law, city officials said. And most cities already receive the maximum 5% franchise fee from cable companies.

With costs in mind, in fact, Santa Paula Mayor Margaret Ely and Ventura Mayor Greg Carson said that regulating cable rates is not a top concern to them. Absent citizen complaints, they said, it would not make sense to spend money on a cable expert while cutting essential services to balance shrinking budgets.

“It’s a question of priorities,” Ely said. “People can watch TV or not. But children have to be educated, and the community has to be served. . . . And this doesn’t (fit in) right now.”

If cities decide not to regulate local cable companies, customers probably would have no other place to complain about excessive costs. The FCC has informed local officials that franchise fees should cover oversight costs, and the FCC would not assume the cities’ role unless they could prove financial hardship.

While city officials ponder how to reassert local control over cable franchises, the operators themselves are trying to determine exactly what the voluminous regulations spawned by the Cable Act mean to them.

For example, cable officials say that they don’t know yet whether Ventura County rates are higher than federal guidelines allow and must be cut, because the FCC’s rate formulas are so complicated and imprecise.

Everything from the number of channels offered to installation fees and equipment costs and depreciation is factored into the federal cost-per-channel formula.

The federal benchmarks are said to represent the costs of cable services in competitive markets. Cable companies compete directly in only 45 of the nation’s 9,400 franchise areas, according to industry statistics.

Under the new rules, cable rates would be rolled back to September, 1992, levels if the current rates exceed federal benchmarks.

FCC officials say this could put $1 billion back into the pockets of cable customers nationwide. Most of the 57 million subscribers should begin seeing a $1 to $3 reduction in their monthly cable bill by August, they said.

After rollbacks to 1992 levels, additional cuts of up to 10% would also be required if the prices still exceeded the new federal guidelines.

“This whole situation is so confusing that the FCC last week held three separate seminars in Washington for the (cable) systems,” said Richard Yelen, marketing director for Ventura County Cablevision, which serves about half of the county’s 180,000 cable subscribers.

“Then the trade journals came out and said basically that no one still knows what is going on,” Yelen said.

Under the new law, local cable companies would be forced to reduce their rates to benchmark levels by cities and counties in coordination with the FCC.

Local officials would regulate rates for basic cable service and equipment. This so-called first tier of service is made up of the retransmission of channels broadcast from stations in Ventura, Santa Barbara and Los Angeles counties and of public access channels. It now offers an average of 16 channels and costs $14.26 a month, up 66% since 1984.

Cable companies could appeal city rulings to the FCC, basing their appeals on the actual cost of offering the basic service.

Any price rollback for this basic tier would also lower rates for more expensive upper tiers because the cost of basic channels is part of their package, according to an FCC spokeswoman.

Prices for an upper tier of service--made up of the basic channels plus specialty channels for sports, news, religious programming and music and other programs--would be controlled by the FCC if local governments or customers complained about those rates.

Rates for this upper tier, which average 37 channels in the county and cost $22.68 a month, have increased 21% in the last two years alone, according to a survey by The Times.

The so-called premium movie channels, including HBO, Showtime and Disney, and boxing matches and music concerts carried as pay-per-view events, would not fall under price regulations.

Other new FCC rules released in March, also provide local governments with new basic standards for service that may augment those set out in the cities’ existing franchise agreements.

The cable industry has attacked the recent rules, warning that big rate reductions could hamper companies’ ability to repay bank loans, invest in programming and offer advanced new services such as interactive cable systems that boast 500 channels or more.

Cable operators in Ventura County have refused to discuss the profits of their companies, most of which are subsidiaries of some of the nation’s largest cable firms.

But several operators said that the years of deregulation allowed them to invest millions of dollars to rebuild old systems that, in some case, relied on obsolete coaxial military cables to transmit signals.

Jones Intercable, which has the Oxnard and Port Hueneme franchise, has spent about $6 million over the last four years on upgrades, according to General Manager John Hutton.

Major improvements in cable reception and program variety have also been made in Thousand Oaks, Moorpark, Simi Valley and Ventura, city officials said.

Cable companies have also added public access channels to their program offerings.

“We have had many complaints over the years,” said Ojai councilwoman Shelley. “But Ventura County Cablevision has spent considerable money in this area to improve its public access services.”

With possible rate rollbacks, however, cable operators say the stagnation that marked the industry in the 1970s could return, denying companies revenue they need to keep pace with technology and customer demand.

“On the surface, you as a customer probably think it’s a good law,” Hutton said. “But what you see by November could be more revealing. . . . Our industry has always borrowed money based on its cash flow.”

Hutton and Yelen said that some provisions of the Cable Act overwhelmingly favor not customers, but broadcast networks that successfully lobbied Congress to gain advantages in the new law.

The Cable Act forces operators to carry publicly broadcast stations in their area on one-third of their channels, whether there is a demand for the broadcast channel or not.

“We may have to take off a channel you want, to add something you don’t want,” Yelen said. “You may end up dropping a CNN or TNT or MTV. That happened up in Benicia (Calif.). One system dropped MTV, and they were picketed.”

Among the cable company executives calculating how much might be lost by rollbacks is Stephen George, general manager of the 10,500-customer, family-owned Avenue Cable in Ventura.

“If I have to roll back my rates 10%, I wouldn’t even meet my expenses,” George said. “We’d have to trim employees and (cut) in other ways. That would drastically impact our service.”

Avenue Cable is one of those that could be hit by rollbacks, because its rates are among the highest in Ventura County after steep rate increases last September.

George argues that his customers benefited even with a $4 hike, because he added four channels and included the Disney Channel, which previously had cost $8.95 by itself, in his $27.50 upper-tier package.

“We had hoped to add more channels,” he said, “now we don’t know what we’re going to do.”

But numerous city officials were not concerned about protecting cable company profits when discussing re-regulation last week.

“We just had two more complaints about billings at the council meeting last week,” Fillmore City Councilman Roger Campbell said. “So we do want to look into this.”

Campbell said his idea is for all six Ventura County cities that deal with Ventura County Cablevision to work together, perhaps pooling resources to hire the same expert on cable rates.

“I think that would be feasible for all of us,” he said.

New Cable TV Regulations

RATES

Regulators: Cities and counties may regulate rates for basic cable service and equipment, using federal guidelines. In Ventura County, basic service averages 16 channels of publicly broadcast stations and public access channels.

Complaints: Cities, counties and subscribers also may complain to federal authorities about rates exceeding federal guidelines in so-called second- and third-tier cable packages, which offer basic channels and an average of 21 specialty channels.

SERVICE

Installation: Cable installation must occur within seven days of a customer’s request.

Phone access: Cable operators must maintain a local, 24-hour, toll-free or collect phone line, seven days a week.

Service calls: Service calls must be answered within 30 seconds at any time of day, and callers should receive busy signals no more than 3% of the time.

Rate changes: Customers must be notified of any changes in rates, programming or channel position at least 30 days before the change.

Hours: Customer service and bill payment locations must be open during normal business hours and be conveniently located.

Timely Repairs: If there is an interruption in service, repairs must begin within 24 hours after the company is informed of the malfunction.

In the home: Repairs in the home must be performed within four hours of the time the cable company promises that the repair worker will show up.

Premium channels: Customers must be allowed to buy premium movie channels, like HBO or Showtime, in combination with the low-cost basic service. Many subscribers now are able to buy premium channels only after they have signed up for a more costly package. Companies have up to 10 years to phase in the service if they now lack the technology to route premium channels to basic-tier customers.

Cable Television Cost Comparison

Install Install Basic Basic Expanded Cable Fee Fee Service Service Service Community Company 1991 1993 1991 1993 1991 Bates Point Cox Cable -- $46.00 -- $15.44 -- 23 Ch.* Bell Canyon Century $84.00 $84.00 None $16.30 $21.25 22 Ch. 49 Ch. Box Canyon Hidden $45.00 $45.00 None None $18.00 Hills 38 Ch. Camarillo Cablevision $44.95 $59.95 $12.95 $13.60 $16.90 (West) 17 Ch. 18 Ch. 41 Ch. Camarillo Cablevision $44.95 $59.95 $12.95 $13.60 $16.90 (East) 17 Ch. 15 Ch. 29 Ch. Fillmore Cablevision $44.95 $59.95 $12.95 $13.60 $16.90 15 Ch. 15 Ch. 28 Ch. Moorpark Cablevision $44.95 $59.95 $12.95 $13.60 $16.90 15 Ch. 15 Ch. 33 Ch. Moorpark Entertainment $44.95 $44.95 None None $17.50 Express 33 Ch. Ojai Cablevision $44.95 $59.95 $12.95 $13.60 $16.90 13 Ch. 13 Ch. 28 Ch. Oxnard Jones $29.95 $29.95 $16.00 $14.75 $20.95 28 Ch. 22 Ch. 43 Ch. Port Jones $29.95 $29.95 $16.00 $14.75 $20.95 Hueneme 28 Ch. 22 Ch. 43 Ch. Santa Paula Cablevision $44.95 $59.95 $12.95 $13.60 $16.90 15 Ch. 15 Ch. 28 Ch. Simi Valley Comcast $49.95 $62.95 $10.95 $10.95 $18.50 13 Ch. 13 Ch. 30 Ch. Thousand Cablevision $44.95 $59.95 $12.95 $13.60 $16.90 Oaks 15 Ch. 15 Ch. 28 Ch. Thousand Falcon $49.95 $49.95 $13.95 $12.95 $16.95 Oaks 18 Ch. 14 Ch. 29 Ch. Ventura Century $60.00 $60.00 $15.95 $17.45 $26.90 12 Ch. 12 Ch. 40 Ch. Ventura Avenue $32.00 $32.00 $13.00 $16.00 $23.45 12 Ch. 12 Ch. 36 Ch. Countywide $47.36 $53.20 $13.38 $14.26 $18.79 Average 16 Ch. 16 Ch. 34 Ch.

Expanded Service Community 1993 Bates Point $21.59 40 Ch. Bell Canyon $25.40 61 Ch. Box Canyon $20.20 43 Ch. Camarillo $21.50 (West) 41 Ch. Camarillo $21.50 (East) 31 Ch. Fillmore $21.50 31 Ch. Moorpark $21.50 35 Ch. Moorpark $19.83 35 Ch. Ojai $21.50 30 Ch. Oxnard $23.95 49 Ch. Port $23.95 Hueneme 49 Ch. Santa Paula $21.50 31 Ch. Simi Valley $23.99 33 Ch. Thousand $21.50 Oaks 31 Ch. Thousand $20.28 Oaks 31 Ch. Ventura $28.40 39 Ch. Ventura $27.50 41 Ch. Countywide $22.68 Average 38 Ch.

* Number of channels

Notes:

1. In Bell Canyon, Century charges an additional $52.50 for installation of a second outlet.

2. In Moorpark, Entertainment Express Ltd. began operation in 1984.

3. In Thousand Oaks, Falcon charges $79.95 for replacing satellite service with basic.

4. In Ventura, Avenue Cable includes the premium Disney Channel in its $27.50 satellite rate.

5. Rates quoted by Ventura County Cablevision, Falcon Cable and Hidden Hills Cable do not include franchise and copyright fees that range from 56 cents to more than $2 per month depending on location and total bill. Rate by Century in Ventura does not include a 5% city user fee.