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TO: HONORABLE MAYOR AND CITY COUNCIL
FROM: ASSISTANT CITY MANAGER
DATE: JANUARY 7, 2003
SUBJECT: FIRST SYSTEM PERFORMANCE AUDIT OF 2000 CABLE TELEVISION FRANCHISE AGREEMENT WITH COX COMMUNICATIONS
Provide staff and Cox Communications with feedback regarding the first scheduled system performance audit of the 2000 Cable Television Franchise Agreement.
On October 17, 2000, the City Council adopted Resolution No. 2000-71, thereby entering into a non-exclusive, ten year Cable Television Franchise Renewal Agreement with Cox Communications. This was the first renewal of the Franchise Agreement that the City originally entered into with Times Mirror Cable in 1985. During the 15-year term of the original Agreement, the name of the franchise was changed to Dimension Cable and, in 1994, the City approved a transfer of the franchise from Dimension Cable to the current owner, Cox Communications.
The 2000 Franchise Renewal Agreement includes a requirement that three system performance audits be conducted following the second, fourth and sixth anniversary dates of the Agreement. October 17, 2002 marked the second anniversary of the Franchise Renewal Agreement. Pursuant to Section 8.1(b) of the Agreement, the City and Cox Communications are required to meet within 90 days following the second anniversary date of the Agreement to review the performance of the cable television system. Therefore, staff has received data from the cable operator, met with the General Manager to discuss the submitted data and agendized this item for discussion by the City Council prior to January 15, 2003. Pursuant to Section 8.1(c) of the Agreement, within 30 days after the conclusion of the performance audit, the City may issue findings with respect to system compliance. If any noncompliance is identified, the City may direct Cox Communications to correct the noncompliance within a reasonable period of time.
As specified in Section 8.1(b) the Agreement, the performance audit may include consideration of the following:
1. The test results relating to the cable operator’s compliance with technical standards and specifications.
2. The reports required by the Agreement that relate to subscriber complaints received by the City concerning technical problems or service-related issues.
3. The types and quality of services provided by the cable operator, and the extent to which the cable operator’s 750 MHz bandwidth is adequate to accommodate those services without degradation or loss of quality.
4. The results of any subscriber surveys that may be conducted by the cable operator or the City.
5. Reports submitted by the cable operator or any other person that address the cable operator’s compliance with the terms of the Agreement granting the Franchise.
6. Changes in cable television system technology and services, including, but not limited to an evaluation of established, operating state-of-the-art technology in comparable communities within the greater Los Angeles metropolitan area, and the economic and technical feasibility of providing interactive, addressable, and security monitoring services.
7. Changes in state and federal laws and regulations that affect the operation of the cable television system.
In addition to the items listed above, the Cable Television Ad Hoc Subcommittee (Council members Gardiner and McTaggart) requested that the audit include a review of the camera installation at Hesse Park. Mayor Stern also requested that the audit address the reoccurring problem of missed broadcasts of City programs on Channel 3.
Based on the performance criteria included in the Agreement and the additional issues raised by Council members, staff has divided the Discussion section of this report into four topic areas: 1) cable system upgrade; 2) customer service; 3) support of local government programming; and, 4) technical performance of the cable television network. Each of these four areas is discussed below.
1. Cable System Upgrade
When the current Agreement was executed in October 2000, Cox Communications was just completing re-construction of its cable network from a hybrid coaxial cable system to fiber optic technology with a total bandwidth of 750 Megahertz (MHz). Pursuant to the requirement stipulated in Exhibit C of the Franchise Renewal Agreement (Technology Implementation Plan), Cox completed the system upgrade by December 31, 2000. Exhibit C required the new system to include greater system reliability, enhanced picture quality, a fiber optic network capable of supporting new services and future technologies and an expanded channel capacity. The greater reliability and picture quality of the new system will be discussed under the "Technical Performance" section of this report. Regarding the latter two items, the cable operator has improved basic cable television service and introduced three new services to the community: digital cable programming, high-speed data service (Internet access) and, most recently, Home Networking (a home computer networking solution for high-speed data customers which includes equipment, professional installation and 24-hour technical support).
The 2001 and 2002 subscriber data for the use of these three services is presented in the chart below:
Regarding future technologies, two new products scheduled for launch in 2003:
As required in Exhibit C of the Agreement, Cox Communications has also expanded its channel capacity. As shown in the table below, in the last two years, Cox has added 10 new analog channels and 30 new digital channels to its line up. During this same period, Cox has not deleted any channels from the line up, although one digital channel went out of business. A complete list of the available channels is attached to this report for the Council’s information.
With 750 MHz of total bandwidth, the new fiber optic system has a very large channel capacity. The use of the bandwidth and its current and maximum channel capacity is presented in the table below:
2. Customer Service
A. Customer Call Centers
During the past two years, Cox Communications used two call centers to respond to its customers – one at the local office in the Peninsula Center and one in San Diego. Calls received during regular business hours were answered by the Palos Verdes call center, while calls received in the evening and on Sundays when the local office was closed, were transferred to the San Diego call center.
Section 76.309(c) of Title 47 of the Code of Federal Regulations, which is incorporated as an attachment to the Franchise Renewal Agreement, contains standards regarding the cable operator’s customer service obligations. The standards require that customer calls be answered with thirty (30) seconds of the connection being made and that the cable operator achieve this standard ninety (90) percent of the time, under normal operating conditions. The table below contains data on how well the cable operator’s customer service call centers have responded to calls in the year and a half since the Franchise Renewal:
As shown in the chart on the previous page, the cable operator was in compliance with the federal customer service standards in 2001, but fell below the standard during the first half of 2002. The primary reason for this decline was because the @Home high-speed data service went out of business and Cox had to transition all of its high-speed data customers from this subcontractor to a new system (which is owned and operated by the cable company). The resulting volume and complexity of the calls received at both call centers resulted in a noticeable degradation in response times. However, the cable operator has indicated that the performance statistics for the second half of 2002 show that response times are back up to the federal standard and will provide the City with a copy of these statistics when they are available.
With the announced retirement of General Manager Steve Fowler at the end of the year, Cox Communications has recently made some signification organizational changes in its Palos Verdes office. The local customer call center in the Peninsula Center has been dismantled and only walk-in customers will be able to receive service at this location and the company’s office in San Pedro. All telephone requests for service are now being forwarded to the San Diego call center. This is part of a company-wide consolidation, as this call center now handles all of the calls for the San Diego, Orange County and Palos Verdes service areas. At this time, staff is unsure of the impact this change will have on customer service, but will closely monitor the situation.
For the Council’s information, Staff has attached data provided by the cable operator regarding the number and type of service calls that Cox has received from its customers from January 2001 through August 2002. The terms "Data" and "CHSI" refer to cable high-speed Internet service, while "Video" refers to cable television service. Although the majority of service calls will now be dispatched from the San Diego call center as discussed above, Cox will maintain a full complement of repair personnel, trucks and equipment at the Palos Verdes office. The cable operator will continue to provide 24-hour response to service interruptions (both cable television and high-speed data), routine repairs by the next business day and installations within 5 days of request.
B. Additional Customer Service Standards in Franchise Renewal Agreement
In addition to the state and federal customer service requirements that are incorporated as attachments to the Franchise Renewal Agreement, the City has required the cable operator to comply with some additional customer service requirements, which are included in Exhibit D (Customer Protection Standards) of the Agreement:
The cable operator is in compliance with this requirement. In fact, instead of once a year as required by the Agreement, Cox sends out the required notification twice a year to all its subscribers as an insert in the billing statement. A sample of the customer information pamphlet is attached for the Council’s information.
The cable operator is in compliance with this requirement. While it is the company’s policy to not sell its customers’ information to other companies, Cox offers the privacy flag to its customers and includes information about this service in the new subscriber and twice-yearly information packets described in the previous bullet point.
The Acceptable Use Policy that was posted on the Cox web site in 2001 indicated that subscribers would be notified of changes in the policy by posting the web site, by electronic mail or by regular mail. This left the method of notification to the discretion to the high-speed data provider, which at that time was a sub-contractor (@Home), rather than as stipulated in the Franchise Renewal Agreement. However, since early 2002 when Cox obtained ownership the high-speed data service, this reference has been removed from the web site and the cable operator is now in compliance with this requirement.
All of the pricing tiers advertised in Cox’s printed materials and on its website include the City’s 5% franchise fee as part of the total price quoted for each package.
Previous to the Franchise Renewal, the "limited basic" package was not advertised on any of cable company’s printed price lists. During the last two years, the "limited basic" package has been included on all pricing lists and appears first, above all the other options. Although this information has not been specifically targeted to senior citizen and low-income subscribers, staff feels that because all of Cox’s printed materials have been modified in this manner, the intent of the condition has been satisfied.
This requirement was included in the Agreement because the City Hall telephone number was removed from Cox’s billing statements effective January 2001, although the City is still identified as the franchise holder and our street address appears on the statement. The City (along with the City of Palos Verdes Estates) requested this change in order to reduce the number of misdirected telephone calls the City receives from residents who are trying to contact Cox Communications with requests to schedule a service call or ask a question about their bill. However, Cox has not complied with the City’s requirement to include complaint procedures on the Channel 3 Reader Board over the last two years. Staff only became aware of this issue as a result of the performance audit. Cox indicated that they are unable to comply because they do not control the content on Government Access Channel 3, which includes the Reader Board. To resolve the matter, staff has requested that the cable operator provide the City with the appropriate information and the City will make arrangements through our sub-consultant (BetaData) to post the information on the Channel 3 Reader Board. Similar information will also be posted on the City’s web site.
In 2001, Cox devoted an episode on its "Up Close" program on Channel 12 to the issues of programming and "must carry" stations. No addition public education of this type was undertaken during 2002. Staff will work with the cable operator to provide some type of pubic education on this topic during 2003.
Although federal standards would allow them to do so, Cox Communications does not use a message service or automated response system. Customers always speak to a live attendant, so no messages are ever taken. Staff is not aware of any instances where the service representative was unable to answer the customer’s question and did not call back within 24 hours.
Federal standards required Cox to begin action to correct routine service problems by the next business day after the request has been received. The City’s requirement is more specific, in that the service appointment must be scheduled within three (3) days of the request. Federal standards also allow seven (7) business days for installations, while the City’s requirement is more stringent. Cox has verbally indicated that they are in compliance with the more stringent requirements, but have not kept statistics to document this compliance. However, staff has not received any complaints in this regard within the last two years. Cox will provide additional information at this evening’s meeting about documenting compliance with this standard in the future.
C. Customer Complaints to City
The staff keeps track of all the complaints it receives from residents regarding the cable service and follows up with the cable operator to make sure that the residents receive a response and the issues are resolved. The chart below indicates the type and number of complaints the City has received over the last four years (two years before and two years after the Franchise Renewal and cable system upgrade):
Given the fact that Cox Communications serves nearly 75% of the households in Ranchos Palos Verdes, the City receives a very low number of resident complaints each year. In addition, often customers have multiple complaints associated with a single call, although the City still tallies them separately by topic. For example, a customer who calls about poor reception and a rate increase is recorded as two complaints.
In 1999, the City received a relatively high number of complaints regarding the construction impacts associated with the fiber optic system upgrade (6), lack of specific channels or programming (7) and rate increases (10). In 2000, the City received a higher than normal number of calls regarding poor customer service (6). At that time, Cox was diverting it’s weekend and after hours calls to the San Diego call center and most of the callers were complaining to the City about being put on hold for long periods of time and not receiving satisfactory answers from the customer service representatives. As mentioned earlier in this staff report, Cox has recently discontinued its Palos Verdes call center and is diverting all of its customer service calls to the San Diego call center. It remains to be seen if the City will start receiving complaints regarding this change. It should be noted that most other utilities have moved to centralized customer call centers, including the cable company’s primary competitors - satellite television companies.
With the completion of the construction and the expansion of the programming available to subscribers, the number of complaints tapered off in 2001 and 2002. However, the City still received the most complaints whenever there was a rate increase. As the Council is aware, programming and pricing are both areas that are outside of the City’s legal authority to regulate. Staff explains this to callers on a case-by-case basis and still forwards the complaint to the cable company. At the Council’s direction, an article on this topic was included in the City’s 2002 Fall Newsletter.
D. Customer Service Tracking Study
Beginning with the first quarter of 2000, Cox Communications hired a professional consulting firm (C&R Research) to conduct a quarterly customer service tracking study to measure the satisfaction of its customers. Each quarter, the consulting firm contacts a minimum of 200 customers by telephone that have recently contacted the cable company. The data collected for the current quarter is compared to the previous four quarters. A copy of the survey conducted for the second quarter of 2002 is attached for the Council’s information. The acronym "CSR" used in the study refers to a "customer service representative." The study examines three service areas: 1) phone experience, 2) installation experience, and 3) repair visit experience. In each area, the study for the 2nd Quarter of 2002 reported that the cable company received favorable ratings from 80% to 90% of the customers surveyed.
3. Support of Local Government Programming
A. Camera Angles at Hesse Park
The Franchise Renewal Agreement required Cox Communications to install all new audio and video equipment in Hesse Park to improve the broadcast quality of City meetings, including City Council and Planning Commission hearings. Part of the upgrade, which was completed in 2001, included the installation of three robotic cameras mounted to the ceiling on the Multi-Purpose Room/Council Chambers. The cameras were mounted close to the ceiling so that they would be out of the way and not easily damaged by the variety of other activities, such as private parties and wedding receptions, that take place in this room on a regular basis. However, the Council has not been pleased with the "security camera" angles that resulted from the high placement of this equipment. As mentioned earlier in this report, the Cable Television Ad Hoc Subcommittee requested that this issue be included in this first system performance audit.
Cox’s engineer has explored three alternatives for improving the camera angles at Hesse Park, which are described below. Staff is seeking feedback from the City Council as to whether the camera mounts or located should be changed, and if so, in what type of configuration.
1. Moving the middle camera to the back wall of the room where the clock, is currently located. This would improve the wide-angle shot of the Council meeting, but would not improve the angles from the two cameras mounted closest to the dais.
2. Placing the cameras on telescoping mounts that could be lowered for the meeting and raised back up when the cameras are not in use. Cox’s engineer is still exploring the technical specifications and requirements of this alternative and will be prepared to provide more information to the City at this evening’s meeting.
3. Placing the cameras on permanent mounts that would lower them 16 inches below the ceiling. This alternative would improve the camera angles, but would also make this delicate equipment more susceptible to damage when not in use by the other activities that take place in this room. At this evening’s meeting, markers will be suspended on strings to show the City Council the approximate located on the lowered cameras. A variation of this alternative would be to move the middle camera to the back of the room, as suggested in Alternative 1, so that it would be more protected than hanging down in the middle of the room.
B. Missed Broadcasts of City Programs on Channel 3
Over the last two years, there have been recurring problems with Cox Communications failing to play the City’s programs at the scheduled time on Channel 3. The City Manager has written to the cable operator a total of three times regarding this problem: August 27, 2001, March 28, 2002 and November 26, 2002 (see attached letters). The two earlier incidents involved missed re-broadcasts of City Council and Planning Commission meetings. The two most recent incidents that prompted the November 26th letter occurred on Tuesday, November 5, 2002 (the premiere of the pilot episode of "RPV City Talk" just prior to the live broadcast of the Council meeting) and Saturday, November 9, 2002 (the first re-play of the City’s Community Leaders’ Breakfast with Donald Trump, which had been broadcast live on Channel 12 earlier that day). These latest incidents were especially embarrassing to the City because both City Council members and staff had made public announcements encouraging our residents to watch these broadcasts.
Each time this problem has occurred, Cox has attributed it to a computer failure.
However, despite the installation of new and reportedly "state-of-the-art" playback equipment at the Cox Studio and reassurances from the cable operator that the problem has been corrected, we are still experiencing missed broadcasts. This issue is of particular importance because the City has recently expanded its presence on cable television and has plans to do even more community outreach through this medium in the coming years. Therefore, the ability of Cox Communications to broadcast our local programming according to the specified schedule is critical to the City’s efforts.
As mentioned earlier in this report, Mayor Stern requested that this issue be addressed as part of this first system performance audit. Staff informed the General Manager of this fact in the November 15th letter and has been asked to respond to this issue at tonight’s meeting.
C. Accommodating of "Local Origination Programming" on Channel 12
As part of the 2000 Franchise Renewal Agreement, the City agreed to eliminate the Public Access Channel 33 because most of the programming that was aired on this channel was "bicycled in" from outside the Peninsula and was not found to have particular relevance or value to the local community. Instead, Channel 33 was converted into a channel program guide, a feature that was lacking from the previous channel line up. However, the City felt that there was some programming on Channel 33 had local value and needed to be accommodated elsewhere on the local cable network. Therefore, the City included a phrase in Exhibit E of the Franchise Agreement that states: "Grantee will accommodate local origination programming and the community bulletin board service on the KCOX local channel."
Staff discovered in early 2002 that Cox had not been providing the community bulletin board service on Channel 12 as stipulated in the Franchise Renewal Agreement. This default has been corrected and Cox now produces a half-hour "KCOX 12 Community Calendar" program that airs each day from 11:30 AM to 12:00 noon. The program includes a split-screen format, with a host describing current community events on the left side of the screen, while written information and graphics appears on the right.
With the launch of "RPV City Talk" earlier this year, staff also learned that Cox has not been airing any programs on Channel 12 that are produced by Peninsula residents at its public access studio in San Pedro. Although the public access studio in San Pedro is technically reserved for Los Angeles residents, Cox has allowed two or three Peninsula residents who previously produced public access programming at the old Palos Verdes access studio to use this facility. However, their programs only air on the public access channel in San Pedro and are not shown on Channel 12. When asked about this issue, Cox responded that it has veto power over any programming the City asks to put on Channel 12. In addition, the cable operator indicated that the commercial programming it has always produced for Channel 12 fulfills their requirement to "accommodate local origination programming." This was not what the 2000 Cable Ad Hoc Subcommittee (and staff) were led to believe when it agreed to recommend elimination of the old Public Access Channel 33. Staff feels that is it important to note that the terms "local origination programming" and "community bulletin board service" are referred to in the same sentence in the Franchise Renewal Agreement. Staff maintains that this was done purposefully, because both types of programming were previously provided on Channel 33 and both were supposed to be transferred, in some form, to Channel 12. Therefore, staff felt that it would be appropriate to raise this issue as part of the first system performance audit. Staff is seeking direction from the City Council regarding this issue.
4. Technical Performance
As discussed in the "Cable System Upgrade" section of this report, Exhibit C of the Franchise Renewal Agreement (Technical Implementation Plan) required Cox Communications to complete the upgrade to its existing cable network system in order to provide the community with a reliable, state-of-the-art cable system. Once completed in late 2000, the upgrade to the existing hybrid coaxial cable and fiber optic infrastructure provided a minimum bandwidth of 750 Megahertz (MHz). This amount of bandwidth allowed the new system to provide two-way interactive capability for high-speed Internet access and other high-speed/high bandwidth cable services (such as digital cable and HDTV), as well as provided capacity for the cable operator to add non-cable services in the future (such as telephony). This section of the report examines how well the new cable network system is performing on a technical level and will examine signal leakage, back-up power supply and the emergency alert system. Cox provided staff with technical studies on which the following discussion is based. Due to length, staff has not attached copies to this staff report. However, if any Council member would like copies of these studies, staff will make them available.
A. Signal Leakage
Since January 1993, the FCC has required mandatory testing cable network systems to ensure that a minimum standard is maintained for television signal quality and efficient field distribution to its customers. The FCC requires cable operators to conduct the required "proof-of-performance" testing every six months. Because Cox broadcasts its programming over aeronautical frequencies, the FCC and the FAA have mandated Cumulative Leakage Index (CLI) testing, in addition to video testing. CLI is radio frequency leakage into our local airways and is caused by defective of damaged cable and connectors both inside and outside the home or illegal connections to the system. The regulatory agencies require CLI to be measured in only one way, but Cox measures it in the different ways:
For the last two consecutive years, Cox has achieved an FCC Award of Excellence with a score of 100%. A perfect score means that no CLI was found to exist in the cable network system.
Cox no longer picks up VHF signals via antenna, but recently completed fiber connections from its local VHF station studios to the Master Telecommunications Center or "head end" located in the Peninsula Center. The digital connections have improved the quality of the transmission and reliability of the system because they are no longer susceptible to "ghosting" or atmospheric conditions.
B. Back-Up Power Supply
Exhibit C required the cable system to include a back-up power supply and continuous monitoring of the cable system in order to provide the most reliable system for the community. Therefore, the system’s power supplies, fiber nodes and high-speed data routers are continuously monitored (24 hours a day, seven days a week) from the Cox Network Operations Center in Orange County and the company’s national headquarters in Atlanta, Georgia. Each fiber node is equipped with its own stand-up power supply that can operate for four hours and the Master Telecommunications Center (MTC) is equipped with a diesel generator in the event of an extended power outage. In addition, Cox has equipped its MTC with an Uninterrupted Power Supply (UPS) to protect against power surges. These modifications to the cable system have resulted in Cox achieving a 99.94% reliability index, which indicates the "up time" of the cable system per year (includes both video and high-speed data services).
C. Emergency Alert System
Cox has installed an upgraded Emergency Alert System (EAS) that exceeds FCC minimum requirements. The system is capable of sending local emergency messages to its cable television subscribers via "text crawls" at the top of the screen or by overriding audio and/or video. The new EAS was activated twice during the last year due to emergencies associated with the California Water Service and the mass service outage experienced by Verizon Telephone. Both of these EAS activations were done at the request of local law enforcement, fire and utility companies and provided valuable information to residents and instructions pertaining to these emergency events. This system is available to the City in the event of the local emergency.
Staff has initiated the first system performance audit for the 2000 Cable Television Franchise Renewal Agreement with Cox Communications. Staff found that the cable operator has complied with the required cable network system upgrade, which has improved the quality and reliability of the system and has also expanded the types of services available to the community, such as digital cable and high-speed data. Staff found that the cable operator is in general compliance with the customer service standards specified in the Agreement and feels that the number of complaints received by the City is low compared to the number of residents that subscribe to cable service. With regards to the level of support the cable operator has provided to the City for local government programming, staff is seeking input from the City Council regarding the camera locations at Hesse Park, the reoccurring issue of missed broadcasts of City programming on Channel 3 and the need to accommodate local origination programming on Channel 12. Finally, staff found that the new cable network system is performing well on a technical level and is exceeding FCC performance standards.
There is no fiscal impact to the City associated with the system performance audit.