To:

OFFICE OF THE CITY MANAGER

ATTN:

Robert C. Bobb

From:

Office of City Clerk

Date:

May 23, 2000

RESOLUTION IN OPPOSITION TO AT&T's PROPOSED CABLE TELEVISION RATE INCREASE

It is requested that the City Council approve a resolution in opposition to AT&T's proposed cable television rate increase.

At the May 2, 2000 City Council meeting, staff was directed to prepare a resolution in opposition to AT&T's proposed cable television rate increase. Staff presented information at the meeting regarding the rate disparity to Oakland cable subscribers compared to other jurisdictions where AT&T is the cable provider. This resolution expresses to AT&T the City Council's opposition to any rate increase until such time as the rebuild is completed and/or additional channels are added to the system for Oakland subscribers.

On March 1, 2000, AT&T notified the City of Oakland of a proposed rate adjustment scheduled for June 10, 2000. The proposed adjustment reflects an increase in subscriber rates of 1.62% for basic service and 6.06% for expanded service, respectively for a total proposed increase of 4.05%. Additionally, AT&T has proposed a new price structure for equipment and installation

The increases proposed by AT&T appear to be within the maximum allowable under the current federal regulatory scheme. However, staff remains concerned that the proposed rate increase would once again disparately impact Oakland subscribers. Oakland will experience a rate increase yet:

• Service continues to be provided on the existing outmoded system (some 30 years old) with no additional improvements provided upon effective date of the rate hike.
• Compared to neighboring cities, Oakland subscribers receive fewer channels of quality programming relative to the cost of service
• No internet access is provided with the rate increase
• Cable service is still not available to all residents.

This is the first proposed rate increase since the "Change of Control Agreement" in February 1999. During the Transfer negotiations, it was recognized that Oakland cable subscribers disproportionately paid higher cable rates and received fewer channels compared to neighboring cities (See Attachment B - TCI Pricing/Programming/Product Information). As a direct result of this fact, AT&T agreed to the following transfer language:

(Sec. 8), "TCI will raise subscriber rates in all jurisdictions in June 1999, except that in Oakland TCI has agreed to a rate freeze on the basic and expanded tiers until June of the year 2000 (or until the rebuild is completed, whichever is first) in order to bring Oakland’s higher subscriber rates in line with other jurisdictions."

On February 2, 1999 a staff report to the Finance and Management Committee - Page 3, Sec 3a once again documents staff concern regarding the rate disparity to Oakland Cable subscribers and states:

"Rate Disparity. ….., The City of Oakland pays higher rates and receives fewer channels than all other TCI franchises in the Bay Area. Staff has requested that TCI provide assurances that the rate disparity be eliminated. TCI has agreed to respond to this concern by January 28, 1999. TCI has maintained that subscriber rates are not subject to review as condition of transfer, but staff considers that TCI has an obligation to the community to address the disparity as a matter of fairness and equity, and to avoid the appearance of engaging in discriminatory policies."

A year later with the proposed rate increase, Oakland subscribers remain subject to paying disproportionate rates for their cable services.

As a result of AT&T’s decision to not raise rates in some jurisdictions and to provide additional channels in other jurisdictions, the Transfer Agreement’s stated intent to bring Oakland in line with other jurisdictions has in staff’s view been undermined.

It is recommended that the City Council adopt the resolution in opposition to AT&T's proposed cable television rate increase.

Respectfully submitted,