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TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: ASSISTANT CITY MANAGER
DATE: OCTOBER 19, 2004
SUBJECT: COX COMMUNICATIONS HEARING REGARDING THE MARCH 2004 NOTICE OF NON-COMPLIANCE
Receive testimony on the status of Cox Communications’ Notice of Non-Compliance and continue discussion of any remaining noncompliance issues to the Second Systems Performance Audit, which will be agendized for Council consideration before January 15, 2005.
On October 17, 2000, the City entered into a Cable Television Franchise Agreement with Cox Communications ("Franchise Agreement"). Section 8.1(b) of the Franchise Agreement allows the City to conduct a System Performance Audit within ninety (90) days after the second, fourth and sixth anniversary dates of the Agreement, or at any other time at the City’s request.
On January 7, 2003, the City conducted the first System Performance Audit. During the audit, the City Council determined that the cable operator had failed to comply with certain obligations of the Franchise Agreement. On February 4, 2003, the Council adopted Resolution No. 2003-06 memorializing that finding and setting out a timetable for curing the noncompliance (see attached).
A year later, little progress had been made in addressing the noncompliance issues. Therefore, on March 26, 2004, the City Manager sent Cox Communications a Notice of Non-Compliance and giving formal notice of a hearing on the defaults in Cox’s performance, pursuant to the Enforcement Procedures of Section 11 of the Agreement. On May 5, 2004, the City Council conducted a public hearing regarding the Notice of Compliance. At the public hearing, Cox Communications submitted materials to staff to support its claim that it had remedied all the areas on non-compliance. The Council continued the public hearing until July 6, 2004. Due to heavy agendas, the public hearing was been subsequently continued twice to this evening’s meeting by mutual agreement between the City and Cox Communications.
When the City Manager issued the Notice of Non-Compliance in March 2004, the following five issues remained to be resolved from the first System Performance Audit:
The current status of these five items is described below:
Item Nos. 1 & 2
Section 76.309(c) of Title 47 of the Code of Federal Regulations contains standards regarding the cable operator’s customer service obligations. These federal standards are incorporated into the Franchise Agreement as one of the exhibits. The standards require that customer calls be answered within 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. Staff has compiled the Customer Call Performance data submitted by Cox at the May 5th public hearing into the chart below. The Service Level % is the percentage of incoming calls that were answered within 30 seconds.
As shown in the table, Cox met the federal standard during the 2nd half of 2002, thereby remedying the drop experienced during the first half of the year, which the cable operator attributed to unusually large call volumes associated with the implementation of it’s high speed internet service. However, the Service Level dropped significantly below the 90% standard during all of 2003. In fact, the cable operator only exceeded the 90% standard during two months of the year (March and December 2003). The lowest level of performance occurred in September 2003 with a Service Level of 53.1%. Cox has not provided any explanation as to why the service level was so far below the federal standard during 2003. On the positive side, the Service Level during each of the first four months in 2004 exceeded the 90% minimum threshold.
Item Nos. 3 & 4
During the May 5, 2004 public hearing, staff indicated as part of its oral report to City Council that Cox Communications had recently resolved Item Nos. 3 and 4 by posting the required information regarding "must carry" stations and complaint procedures on the Channel 3 Reader Board. Staff has recently confirmed that this information is still being posted at the head of the scrolling text for the City of Rancho Palos Verdes. So long as this continues, staff considers these two franchise requirements to be satisfied.
Item No. 5
In addition to the state and federal customer service requirements that are incorporated into as attachments to the Franchise Agreement, the City has required the cable operator to comply with some additional customer service requirements, which are specified in Exhibit D, Section 2(c) of the Agreement. The requirement referenced in Item No. 5 reads as follows:
Ensure that when a request for service is received, appointments will be made within 24 hours for a service outage, within three business days for service related problems of existing customers and within five business days for installations. These standards must be met no less than 90% of the time under normal operating conditions measured on a quarterly basis.
During the first Performance Audit, former Cox General Manager Steve Fowler verbally reported that they are in compliance the City’s requirements, but also indicated that Cox had not kept statistics to document this compliance. At the May 5th public hearing, Cox’s Manager of Government Affairs Arthur Yoon provided staff with a printout of all cable television service calls the company received during 2003 and the first four months of 2004. Unfortunately, there are several reasons why staff is unable to draw any meaningful conclusions about the cable operator’s compliance with the franchise requirement from the data provided:
Staff’s examination of the data submitted at the first public hearing held on the Notice of Non-Compliance indicated that the cable operator had remedied three of the five items identified in March 2004 Notice of Non-Compliance. The cable operator has:
However, staff found that the following two issues remain outstanding:
October 17, 2004 will mark the fourth anniversary of the Franchise Agreement. The City will have ninety (90) days from this date in which to conduct the second System Performance Audit (January 15, 2005). Given the fact that it is time for the second audit, staff recommends that the remaining two non-compliance issues be addressed as part of the second audit. In addition to the other information required for the audit, the cable operator should provide the City with:
Assistant City Manager