Ñ›-œ COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE ON PUBLIC PROPERTY AND PUBLIC WORKS - - - Room 401, City Hall Philadelphia, Pennsylvania Wednesday, December 8, 1999 8:00 p.m. - - - BILL NO. 990842, An Ordinance consenting to the transfer and assignment of the Area II cable television franchise from Wade Communications Partnership, d/b/a Wade Cablevision, a subsidiary of Time Warner, Inc., to Urban cable Works of Philadelphia, L.P., a Delaware limited partnership formed by Wade Communications Partnership as a minority partner and companies controlled by Inner City Broadcasting corporation as majority partner under certain terms and conditions. BILL NO. 990843, an ordinance renewing the Area II cable television franchise held by Wade Communications Partnership, under certain terms and conditions. - - - PRESENT: COUNCILWOMAN AUGUSTA CLARK, Chairman COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DAVID COHEN COUNCILMAN JAMES KENNEY COUNCILWOMAN DONNA MILLER COUNCILMAN MICHAEL NUTTER COUNCILMAN FRANK RIZZO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 (215) 561-2220 2 I N D E X BILL NO. 990842 JOSEPH JAMES, Dept. of Pub. Property ------- 16 BILL NO. 990843 JOSEPH JAMES, Dept. of Pub. Property ------- 4 STEPHANIE FRANKLIN-SUBER, City Solicitor --- 22 OBRA KERNODLE, Urban Cable Works ----------- 37 PERCY SUTTON, Inner City Cable ------------- 38 LOIS WRIGHT, President, Inner City Cable --- 41 SYLVESTER WILLIAMS, Time Warner ------------ 45 JOHN FOGARTY, Time Warner ------------------ 51 PAUL SHERROUSE ----------------------------- 69 JOSEPH POWELL ------------------------------ 72 3 BILL NO. 990843 CHAIRWOMAN CLARK: Ladies and gentlemen, the Council Committee on Public Property and Public Works is now convened, but we're now waiting for testimony to be copied. (Pause.) CHAIRWOMAN CLARK: Good evening. The Council Committee on Public Property and Public Works now convened. The record will show that a quorum is present in the room. Present at the table is Councilwoman Donna Miller, next to her is Councilman Jim Kenney, I am your Chair Councilwoman Augusta Clark, next to me is Councilwoman Jannie Blackwell, and next to her is Councilman Michael Nutter. I have just been told that Mr. Rizzo is on his way down. Mr. Cohen we thank you for your attendance. Before us today are two bills. This is a reconvened Committee. We heard a very long list yesterday and recessed for the purpose of hearing these two bills which concern themselves with the cable franchise in Area II. Will the Clerk read the bills before the Committee.
Bill No. 990843, an ordinance renewing the Area II cable television 4 BILL NO. 990843 franchise held by Wade Communications Partnership, under certain terms and conditions. CHAIRWOMAN CLARK: Thank you. Mr. James, Vincent. Thank you very much. Would you please identify yourselves for the record, spell your last name for the benefit for the stenographer and proceed with your testimony.
My name is Joseph James, J-A-M-E-S, Deputy Commissioner for Department of Public Property. Good evening to the Chair and Members of the Council. , Commission for the Department of Public Property. With me is Vince Costello Director of Communications. I appear before you to provide brief review of the substantive provisions of the cable franchise renewal for Wade Communications Partnership doing business as Wade Cablevision. Based upon the negotiations pursuant to this renewal, it is my recommendation that City Council give its approval for this transaction and renew the cable television franchise for Area II served by Wade Cablevision. Bill No. 990843 was introduced November 5 BILL NO. 990843 18, 1999. Representatives from my department have engaged in continuous discussion with representatives from Wade Cablevision concerning renewal of the franchise as permitted by the bill. Through the franchise renewal process we have sought terms for an agreement that will best serve the needs of the communities in which Wade Cablevision operates as well as the needs of the City. Specifically, these terms include such issues as term of renewal, franchise fee, system upgrade, intuitional network services, public educational and government access, local origination program, MBE/WEB and EEO commitments, customer service standards, and billing. Specific terms. The renewal term. Wade Cablevision renewal of the franchise is for a term of 15 years for Area II commencing on August 12, year 2000 and expiring on August 12, year 2015. The 15-year term will provide the City with an improved cable television infrastructure, potential for new related services and technology and additional franchise fee revenues. The franchise fee determined by the Federal Cable Act may not exceed 5 percent of the 6 BILL NO. 990843 cable operator's gross derived from cable services. Wade agreed to pay through the percent gross 4 revenue from cable loan services. 8 million a year. The City expects this revenue to increase over the length of term giving additional modem services. Wade Cablevision has agreed to upgrade by installing fiberoptic cable which will provide a minimum capacity of 80 downstream analog channels and approximately 320 megahertz of available for digital, video, and data services. Wade Cablevision upgrade system will be capable of two-way operation for the provision of interactive services and will permit access to the internet using high speed cable modems. The institutional network services. The renewal agreement will provide for an institution network to interconnect police and fire department facilities located in Area II franchise. The public safety data connections will use fiber and coaxial cable to provide data exchange capability at a minimum speed of 56 kilobits. Additionally, Wade Cablevision will provide these data exchange connections at no cost to the City. 7 BILL NO. 990843 Wade Cablevision has also agreed to construct, install, and maintain strands of 4 fiberoptic cable for the exclusive City use for 5 governmental purposes on the upper loop of the Area 6 II system. This fiberoptic cable will be connected 7 from the Roxborough area of the City to the cable 8 network interconnect site at Wayne Avenue as Lower 9 Germantown. This link will have the capability for 10 the City to use for the upcoming 800 megahertz 11 public safety radio network. Additionally, Wade 12 Cablevision will provide the City with $100,000 equipment grant for the transmission equipment required to operate the network. Wade Cablevision has agreed to renew commitments to public, educational, and government access or PEG programming. Wade Cablevision has also agreed to specific revision of education government access consistent with previously-approved cable franchises Area I, III, and IV. For public access, Wade Cablevision has agreed to roll forward on the same terms provided in the current franchise agreements.
It's a commitment to fund equipment and capital facilities for public 8 BILL NO. 990843 access and it's a commitment to forward annual operating funds to the public access corporation upon City request. Wade Cablevision capital funding obligation is 675,000 total for Area II. The annual operating fund obligations deductible from franchise fees paid to the City total between 75,000 and 125,000 as directed by Council. Five public access channels currently on loan to Wade Cablevision remain returnable to the City upon demand pending implementation of a public access corporation. Educational access. Three channels will continue to be available for education or program by local college and universities. For the School District two channels will continue to be available for use by the Philadelphia School District for distribution of educational programing. The City will exchange one analog channel presently used by the School District upon Wade Cablevision's provision of a digital closed circuit channel for school district use. Wade Cablevision will ensure implementation of cable in the classroom programing throughout the City's public school within Wade service area. Additionally, Wade Cable Vision will 9 BILL NO. 990843 make a lump sum grant to the Philadelphia School District of $250,000 for use by the District at its discretion to fund video programming and the communication needs of the school. Upon my request as the Commissioner of Public Property and once cable modem service is commercially available in the franchise area, Wade Cablevision will equip each public and private K through school with an Area II with one free 11 cable modem. 12 Wade Cablevision currently has use of one of the two government channels for broadcast, the Pennsylvania Cable Network. The City will continue tip to use one government access channel for City broadcast activities. Wade Cablevision has agreed to make a $250,000 grant to the City for the purchase of replacement, upgrade, and maintenance of equipment in the government access facility. Wade Cablevision has agreed to continue its commitment to cablecast each week a combined minimum of 70 hours of programming originally locally and to continue to operate and maintain production facilities and staffing necessary to 10 BILL NO. 990843 fulfill this commitment. Throughout the renewal term, Wade Cablevision has agreed to comply with minority-owned and women-owned business enterprize participation and employment goals and will meet participation levels established by the City. Wade Cablevision has agreed to contribute $250,000 to the Philadelphia Commercial Development Corporation to underwrite low cost small business loans to certified local minority and women-owned businesses. Wade Cablevision agrees to comply with all applicable federal, state, and local requirements related to minority, female, and other special group employment, training, and promotional opportunities. Wade Cablevision is committed to make available 30 percent of all jobs within Wade Cablevision to minority employees and 20 percent of all jobs within the company allocated to women. Wade Cablevision agrees to adhere to the National Television Association and federal communication commission customer service standards and requirements. 11 BILL NO. 990843 Wade Cablevision specifically adopts the NCTA on-time guarantee which provide for free standard installation by a technician if it he does not arrive within the four-hour appointment window and a $20 credit if a technician does not arrive for service within a four-hour window. In the area of billing, Wade Cablevision agrees to preclude negative option billing, a procedure where the failure to object to a billing term result in a customer being billed for a service or item. I respectfully ask the Committee to amend the bill in accordance with the proposed amendment that has been provided to you to attach as Exhibit A to the bill, Exhibit A that is appended to the proposed amendment.
Exhibit A is a revised form of franchise renewal agreement that reflects the discussions of parties since the bill was introduced. In addition, I respectfully ask the Committee that the Rules of Council be waved to allow this bill to be reported out of Committee and have its first reading at the next Council session. I am now available to answer any 12 BILL NO. 990843 questions you may have. CHAIRWOMAN CLARK: Mr. James, is the amendment to which you a refer?
Yes. CHAIRWOMAN CLARK: Is it your intention to read it tonight?
No. 9 CHAIRWOMAN CLARK: Thanks, Mr. James. It was will be set forth in the record as if it had been read fully.
Thank you Chair. We would like to include in that amendment a kind of update to the minority business and Women Enterprise goals that reflects some recent discussions that were not in the original draft. They reflect a minimum of 30 percent of capital expenditures shall procured through local business, a minimum of percent of 19 capital expenditures, inclusive of capital 20 expenditures related to the upgrade shall be procured through local minority-owned businesses. CHAIRWOMAN CLARK: Okay. Any questions or comments from Members of the Committee?
Thank you very much. The issue of both minority participation in 13 BILL NO. 990843 contractual issues both for upgrade and other types of issues, does that also include our best efforts to use local contractors and individuals who may have some relationships with our local building trades? Part of my goal and many of the goals of people in this Committee is inclusiveness from a diversity standpoint, but not to the exclusion of -- exclusiveness of Philadelphians. So your characterization of best efforts being used in that regard would be very important to me as a particular member voting on this in addition to your assurances that minorities and women will be adequately represented.
Councilman, I would say that that is a correct statement. We have worked very closely with the management at Wade Cablevision and in particular their plans for doing the upgrade has a certain amount of involvement. If our understanding of their processes for the bid process and they have our involvement on finding local participation, whether it's minority or local trades.
One of other issues 14 BILL NO. 990843 that we worked diligently on along with Councilmembers here, and Councilmember Clark is insisting and encouraging the building trades in Philadelphia to open up its ranks for membership to minority men a women in the City because we think that that's the real way to get our community neighborhoods built back up to where they should be. Thank you very much. CHAIRWOMAN CLARK: Thank you for that comment. Councilwoman Miller.
I just have a follow-up to Councilman Kenney's question about the minority participation and the participation of women. What are the current percentages?
I really don't have the current percentages with me; unfortunately, do not have the details at the table, but we can provide that to you.
Sure. CHAIRWOMAN CLARK: Mr. James, I understand that your department and the consultants 15 BILL NO. 990842 you've retained have concerns about whether urban cable financial projections are realistic and can be achieved. Would you care to comment on that?
I would say that in respect to the transfer bill that we do have some specific concerns and we are at that time be willing to provide some recommendations for Council to consider. CHAIRWOMAN CLARK: Thank you. There appears to be no further questions.
Thank you. CHAIRWOMAN CLARK: The Clerk will read the title of the next bill.
Bill No. 990842, an ordinance consenting to the transfer and assignment of the Area II cable television franchise from Wade Communications Partnership, d/b/a Wade Cablevision, a subsidiary of Time Warner, Inc., to Urban Cable Works of Philadelphia, L.P., a Delaware limited partnership formed by Wade Communications Partnership as a minority partner and companies controlled by Inner City Broadcasting Corporation as majority partner under certain terms and conditions. CHAIRWOMAN CLARK: Thank you. Mr. 16 BILL NO. 990842 James.
Thank you. I'll kind of cut the testimony kind of short, so I won't track it exactly as it's written. But basically, it is the Commissioner's view that the Bill No. 990842 which was introduced on November 18th of 1999, after lengthy discussions with representatives from the Department of Public Property and the City's Solicitor's Office a meeting with Time Warner which will retain operation of the franchise concerning the franchise recommend that City Council give its approval for this transaction. The Time Warner on behalf of Urban Cable Works in Philadelphia, L.P., represents that it will need all the terms and conditions of the franchise renewal agreement for franchise Area II which you will enter into pursuant to the renewal of the franchise Bill No. 990843. The Department also engaged TCS International, Inc., a cable television compliance consultant to review and provide the City with an analysis of the Federal Communications Commission's form 394. The consultant's report supports the approval of the transfer with certain reservations 17 BILL NO. 990842 but has reached the conclusion that Urban Cable Work meets the technical financial and legal requirements to operate the cable franchise for Area II. The report has provided for the Committee, and I'm available to testify in response to any questions you may have concerning the report. In conclusion Urban Cable Works of Philadelphia, L.P., is committed to all terms and conditions of Area II franchise renewal agreement which acceptable to the department. Again, I also ask that the Rules of Council be waived to allow this bill to be reported out of committee and have its first reading at the next Council session. In addition to your question that you raised earlier, there are specific recommendations that we would like to enter into the record. Those recommendations I will read. The City shall require that the new franchisee through its management committee provide oral and written reports and detail on a semi-annual basis for the first three years of ownership and an annual basis for the next five years. It's actual basic and tier penetration, the penetration of new product tiers and services identify any 18 BILL NO. 990842 discrepancies between the actual performance and the 15-year financial and operational projections provided to the City. Provide its detailed analysis of why those discrepancies occurred and if the discrepancies represent shortfalls from the projections its plans for achieving the projections or compensating for any shortfalls so that service, upgrade completion and the subscriber rates will not be adversely affected. Recommendation No. 2, in lieu of a guarantee by the franchisee for performance, the City should consider requiring an enhanced performance security form the franchisee in the form of a performance bound and/or letter of credit in the amount of at least $5 million to reduce to $3 million upon a showing that the franchisee has met or will meet the 15-year penetration and revenue projections provided to the City. CHAIRWOMAN CLARK: Mr. James, the materials that you just read, are they available for distribution to the Committee?
Yes, they're in part of a consultant report dated December 7, 1999, that was sent to all Members of Council. 19 BILL NO. 990842 And then the third and final recommendation is that the franchisee should be required to form community advisory board that will provide needed local knowledge of the franchise area and ensure the franchise sensitivity and responsiveness to the needs and requirements of the citizens of the City and the communities and neighbors which it serve. Such responsiveness is, in my view, essential to the achievement of the subscriber penetrations projected for the franchise. CHAIRWOMAN CLARK: Thank you. Are there questions from Members of the Committee for this witness? Mr. Nutter.
Thank you. Mr. James, the Chair had asked about the recommendations. Are you putting them forward as proposed amendments to this particular bill out of your consultant's report, is that what you're asking?
And other than in the consultant's report, I'm assuming this s the TSC International, Inc. Where would I find those 20 BILL NO. 990842 particular documents or do you have them on a separate sheet of paper. If you have the December 7th letter there will be a . The numbers are on the top left hand corner.
Recommendations. In the first paragraph except for the words that I read into the record this evening on the first sentence where it says the City should require the new franchisee, we've inserted the words "through its management committee provide oral and written" and then it picks up from there with "reports and detail" as the first recommendation.
Where do you propose in the bill these amendments be made, or are you proposing to amend the agreement between -- ultimately, who's signing the agreement with the City Philadelphia, is that Urban Cable Works of Philadelphia.
I'm sorry. I've been advised that they will go into the agreement. The 21 BILL NO. 990842 franchise agreement will be signed by the Commissioner of Public Property and Urban Cable Works, the principals for Urban Cable Works, the new franchisee.
I understand. Are you asking the Committee to take a particular action on those issues or are you saying that the Commissioner of Public Property is going to insert those items?
Those are our recommendations to Council and this Committee, and we would recommend that that language be inserted into the agreement, made part of the agreement.
Are you proposing a location for these amendments? They have to go somewhere.
Point of information, Madam Chair. I don't seem to understand the testimony. Mr. James, are you saying that you're going to amend the franchise agreement or amend the ordinance? CHAIRWOMAN CLARK: The agreement gets incorporated in the ordinance so you don't repeat the terms. 22 BILL NO. 990842
I'm just trying to figure out the mechanics, as I think Councilman Nutter is trying to figure out the mechanics of it are.
I apologize, Councilman Kenney. For the record, my name is Stephanie Franklin-Suber. I'm City Solicitor for the City of Philadelphia. The recommendation by the Department of Public Property is that City Council condition its consent to the transfer on the satisfaction of the conditions, the recommendations in the report of the consultant.
I understand your response. I believe, Madam Solicitor, I guess the question is how do you propose Council take that particular action? Are you suggesting that at some point in the agreement which is incorporated by reference in the bill that a specific page or in a certain section these three recommendations are incorporated or are you saying that these items by our discussion and possibly a motion being made on they that they automatically become a part of the agreement that is referenced in the bill?
They would be 23 BILL NO. 990842 incorporated into the agreement in the event that Urban Cable is willing to satisfy the conditions. They would be incorporated into the agreement. And so the question becomes during the course of Council's deliberations and discussions this evening whether or not Urban Cable is prepared at this point to satisfy the conditions.
Do they simply satisfy those conditions in their testimony on record? Are the conditions satisfied by Urban Cable through their testimony on the record, or is there a requirement that we amend in writing the actual ordinance; which is still what I think is our question is. If Urban Cable comes to the table and satisfies through oral representation to the record that they're going to satisfy those three agreements, is that in fact what satisfaction is.
Yes. And then those conditions will be incorporated into the agreement. CHAIRWOMAN CLARK: Madam Solicitor, may we suggest that you draft the language that you believe satisfactorily sets forth that position?
Yes. 24 BILL NO. 990842 CHAIRWOMAN CLARK: Does that satisfy you, Mr. Nutter?
Absolutely. CHAIRWOMAN CLARK: Thank you. Anymore questions? I do have a few questions.
Go ahead, Madam Chair. CHAIRWOMAN CLARK: Go ahead, I don't want to interrupt.
Mr. James, in one of the documents in response to a question, and there are numerous tabs that refer to response to the City, No. 3, No. 4, somewhere in that area. There was a question with regard to the inclusion of the franchise fee as a part of the calculation of gross revenues. The response in the materials seem to me that either Time Warner or Urban Cable Works of Philadelphia -- I do not recall which was answering that particular question -- would not include the franchise fee as a part of the gross revenues. But I thought in another section of the bill in a definition section of gross revenues, the franchise fee is included in the definition; is that correct? 25 BILL NO. 990842
Just so I understand the last part of your question, the franchise fee that you're referring to is part of the bill, that's part of the renewal document, the 5 percent gross revenue fee?
Which show in the revenue projections for Urban Cable Works and the performance statement, is that --
I read it in a response to the City to some question. The question was, will you include franchise fees as a part of the calculation of gross revenues. The response in the document was no. What I'm asking you is, aren't franchise fees by the definition of the bill, one of the bills, isn't franchise fee calculated as a part of gross revenues in our own definition in the bill.
Sorry to keep you waiting. In the Form H, Tab No. E, the question does appear in there, will transferee or assignee including gross revenues of franchise fee collected from the subscriber and pay the City 5 percent thereon, and BILL NO. 990842 they did answer the question no. We do feel that the franchise fee is part of gross revenues. There was a recent ruling where the percent franchise 5 fee they have to pay on top of the fee that they collect from the City so that it's more than just a 5 percent of the total subscriber bill, it's 5 percent of the 5 percent. While they did not agree to that, that's correct, that's how we view it and that's how it's in our document that we do include that as part of the gross revenues.
Let's talk about an individual subscriber. We can talk about me. I pay, I believe, about 60-some dollars a month in cable bills. Somewhere in that $60 is a line item that says franchise fee which is based on all the other services minus sale tax and any other taxes that may be a part of that. You're saying that the franchisee has to calculate their 5 percent?
No. I'm saying that in the past what would happen is that your bill would be $60, you would see a line item that says franchise fee 5 percent of the 60, $3 would appear and then you would have your total with any taxes and you pay that, and that's the way it had been for a period of 27 BILL NO. 990842 time. Then there was court ruling not that long ago that says, no, the way that they should be calculating it is you take that $3 or that franchise fee and they then pay 5 percent of that so that the total that they would submit as far as the revenue to the City for the franchise fee as opposed to being $3 would be $3.15 because that franchise fee is part of the total gross revenue, is part of the total bill.
So if the response on this Form H is no, this is a part of a submission in Letter Tab E, October 12, 1999, if the response to that question is no, I go back to my original question; in the definition sections for either this bill or the renewal bill, there's a definition of gross revenues and I thought I read in that definition that franchise fee was included.
It is. Despite what their answer may appear in here, the bill and the agreement we do sign does track the language that you just mentioned. There may be a disagreement on their part as far as how they collect it, but according to the FCC and recent ruling, we do include that as part of the total gross revenue. 28 BILL NO. 990842
Okay. Just trying to understand. Thank you. Madam Chair, I'll wait until later. CHAIRWOMAN CLARK: Should the City do any special monitoring for the new franchisee's financial performance as a way of insuring that the performance will be as predicted and to give the City notice if the franchise gets into financial difficulty? Specifically, what would you recommend?
Once again, Councilwoman, we would recommend original recommendation that for the City to ensure that the franchisee, the new franchisee is successful and that the City protected, the original recommendation would require for semiannual monitoring of their performance, in particular to look at their ability to meet their financial projections. CHAIRWOMAN CLARK: With respect to community involvement, the proposed new franchisee stresses that close involvement with the local community is essential for achieving the subscriber increases it projects to make the franchise viable. How can the franchise achieve this goal? Do you have any recommendations about how to improve local 29 BILL NO. 990842 involvement and input into the operations of the franchise?
It is our recommendation, as similar other franchisees in the City, that they establish a local advisory board, that local advisory board made up of citizens within the franchise area who would be able to provide input and comment on the type of programming and type of services that would be more reflective of the community that they serve. CHAIRWOMAN CLARK: And you've been satisfied that they both can and will do that?
Yes. CHAIRWOMAN CLARK: Mr. James, do the term of the management agreement parallel the term of the franchise agreement?
The applicant for the transfer has agreed to make the management agreement coterminous with the franchise period for a total of 15 years. CHAIRWOMAN CLARK: What would happen if the management agreement were to be terminated for whatever reason prior to the expiration of the franchise agreement? 30 BILL NO. 990842
The City working with the applicant has agreed to a holdover provision in the agreement that provides for the operator, in this particular case Time Warner, to operate the franchise for a period of months while the City 7 finds an acceptable replacement. 8 CHAIRWOMAN CLARK: Eighteen months? 9
Yes. 10 CHAIRWOMAN CLARK: Thank you. 11 Are there further questions by Members 12 of the Committee? 13 Let me just restate for emphasis. The 14 comment that you just made, Mr. James, is that Time 15 Warner has agreed should there be a failure to 16 perform that they will run the franchise for a 17 period of 18 months? 18
That is correct. CHAIRWOMAN CLARK: Thank you. Councilwoman Miller.
Thank you, Madam Chair. Mr. James, has the recommendations of the consultant been discussed with Urban Cable Works, Time Warner, and any other entity involved? 31 BILL NO. 990842
The recommendations have been discussed with them, and I believe they are prepared to comment on their ability to accept those recommendations.
Okay, so we'll look forward to that. Thank you. CHAIRWOMAN CLARK: Mr. Nutter.
Thank you. Mr. James, back on the guarantee issue which was topic of some discussion at last night's community meeting, I was concerned based on the submission on, I believe, Form K which asked about this issue and the response at the time was no 15 formal guarantee provided. This is regarding Time Warner, Time Warner Cable, TWI Communications or any subsidiary or affiliate thereof. Is there new language that provides for the 18-month provision that you were just discussing? I may have missed it in your response to Councilman Clark. CHAIRWOMAN CLARK: That's a different assurance. Mr. James, I believe he's referring to a different assurance.
This a different assurance. This sort of like a holdover provision in the 32 BILL NO. 990842 agreement, in the franchise agreement that protects the City should there been a default or some sort of defect on the part of the Urban Cable Works to operate franchise, that Time Warner not as a type of financial guarantee, which was much of the discussion last night, but a guarantee that the City won't be left with trying to operate a cable franchise in case there was a default on behalf of Urban Cable Works.
That provision is in the proposed amended lease document that you put forward earlier? Is that where that is? Where is the holdover provision?
Councilman Nutter, we will require that as a separate agreement from Time Warner. There will be an assumption agreement in connection with the transfer which will include the conditions recommended by the consultant, language that will incorporate those conditions into the agreement. And there will be a separate agreement with Time Warner which will incorporate the holdover provision. So you do not have language in front of you today, but everything is subject to the review approval of the City Solicitor. 33 BILL NO. 990842
I understand. Who is Time Warner signing that agreement with, the City of Philadelphia?
How does that relate to the lease between the City and Urban Cable Works of Philadelphia? Where does the stand-alone document between Time Warner and the City of Philadelphia, where does that sit in relationship to any other documents or agreements that are made with regard to the operation and ownership of the system?
It will be incorporated with the assumption agreement. We will have them sign that agreement.
We have not drafted it yet. You have a draft of it, but it does not yet incorporate the conditions that will be discussed this evening. That also will be included in that agreement.
I understand. I don't mean to be difficult, Madam Solicitor. CHAIRWOMAN CLARK: As far as the 34 BILL NO. 990842 franchise agreement?
This assumption agreement that you're talking about, and I understand it may not be drafted yet, but what will it be a part of or is it a separate stand-alone document?
And where does it sit as it relates to -- if you want to find out what the agreement is between the City and the franchisee, that is generally a exhibit or an attachment to the bill. If a person wanted to find this other document, where would it be in relationship to these other documents?
It will be a separate stand-alone document. We will draft it at the conclusion of the hearing. If Time Warner and Urban Cable were not willing to satisfy the conditions -- so it will be a stand-alone document that will be drafted, assuming Time Warner and Urban Cable are willing to satisfy the conditions we're 35 BILL NO. 990842 discussing at this point, it will be separately drafted with those conditions included. It will be language that will be satisfactory to the City Solicitor. We'd be happy to make copies available to Council, but we do not a document that exists at this point that we can share with you that includes the terms and conditions that we're discussing right now. CHAIRWOMAN CLARK: And when taken together will represent one more agreement between the parties?
I understand that when taken together part, Madam Chair. What I don't understand is I will know where to find the bill and the agreement between the City and Urban Cable Works of Philadelphia. What I'm asking is -- CHAIRWOMAN CLARK: Is it Exhibit B? Look on of the bill.
Councilman Nutter, the assumption agreement is attached to the bill. It will be executed when it is in form and substance satisfactory to the City Solicitor. The form that is currently before Council is not satisfactory and 36 BILL NO. 990842 will not be satisfactory until the conditions that we have discussed are incorporated.
And if there is no 5 agreement on those terms, what happens?
It is our understanding that Urban Cable is prepared to address exactly those issue this evening during the course of their testimony.
Thank you. Thank you, Madam Solicitor. CHAIRWOMAN CLARK: Are there any other questions from Members of the Committee? Thank you very much. Are there persons present in the room 16 who wish to be heard to speak in favor of or against Bill No. 990842? Please join us at the table. I would you note that Mr. Rizzo has joined us. Good evening. Let me first of all thank you for your patience. This has been a trial by ordeal just to see who was paying attention and how long you could last, and you are the survivors. Would please introduce yourself to the record, spell your last name for benefit of the stenographer, and 37 BILL NO. 990842 proceed with your testimony calling on such members as you feel makes your case.
Good evening Madam Chairperson, ladies and gentlemen of the committee. My name is Obra Kernodle. I'm an attorney. I will be speaking here in the context of representing Urban Cable Works of Pennsylvania. For the purpose of this record, my name is spelled O-B-R-A K-E-R-N-O-D-L-E. For the purposes of our presentation, you have had references to serial corporate bodies. Would you please identify those bodies and the people that we've assembled here to answer your question. To my left we have Mr. Willie Johnson. He is the president of PhillyCom. PhillyCom is a Pennsylvania corporation which presently comprises those members of the local community. Presently we have here Mr. Larry Jaret, Ms. Joanna Bell, and Dr. Gene Newton. In addition to that, we have Inner City Broadcasting representatives. Who we have here is a Mr. Percy Sutton, Chairman Emeritus of Inner City Broadcast, as well as his Council Lois Wright. To my right we have a Mr. Sylvester Williams representing Time Warner. He is a general manager 38 BILL NO. 990842 of the franchise, and here assisting him is his counsel Mr. John Fogarty, Council for Time Warner. We also have a Mr. Ed Shirley who is financial consultant. I am speaking here with respect to Urban Cable Works of Pennsylvania. Let me say at the outset that we have put together a management committee. I will be representing the management committee as the local person and I can address Councilman Kenney's question. We will make a commitment to explore all best efforts to make sure that the procurement will be focussing on local corporations. With respect to several of the other questions raised, I would like to defer for a moment to Mr. Percy Sutton who is representing Inner City to see if Mr. Sutton would like to have something to say.
Thank you, very much. Madam Chairperson, distinguished members of the Committee, I am Percy Sutton. I am delighted to be here because in 1985 I was here before competing this same system. It is a marvelous thing that time passes, new identifications are made because some of 39 BILL NO. 990842 the persons I am here with today were my opponents then. We have adjusted our differences over the years, we have cooperated in a variety of areas. I am chairperson of a company called Queens Cable System. It is a franchise that I won in New York, and I've been Chairperson in joint venture with Time Warner for years and we will continue with the 9 relationship with Time Warner here in this City of 10 Philadelphia and possibly in other areas of the 11 country. 12 I can answer the question more 13 specifically with regard to the question asked 14 before as to agreements. We have had discussions with solicitor and -- what is gentleman's name that we discussion with as to -- Mr. James, yes, Mr. James. And we are prepared to sign the document that we agreed to this afternoon. I don't know where they will be located in the overall document, but I gather there will be an amendment to it. If there's some specific questions that would be asked of me, I'll be happy to answer, after having said that we will sign the documents necessary. We've had the discussions and we think we're in total agreement, I believe we are in total agreement with 40 BILL NO. 990842 regard to it. Counsel?
If there are any other questions, I would specifically like to address the questions that have been posed to us. Are there any other questions for Mr. Sutton? CHAIRWOMAN CLARK: Mr. Nutter.
Thank you, Madam Chair. First, let me say good evening Mr. Sutton. Welcome back to Philadelphia. Sorry it took so long, but these things have a way of working out. This is either a question for yourself or possibly for Mr. Kernodle. An issue was raised last night with regard to the five-person management committee. As I best understand it from the documents, two representatives from the Time Warner entity will have representation on this group. Two representatives primarily from Inner City broadcasting or it may go by the Queens name and a position to be named later; that was the way things were left last night in our discussion. I am left with the impression this evening that Mr. Kernodle may be the local person filling the -- according to the documents at least, the unfilled seat. Is that, 41 BILL NO. 990842 in fact, correct by way of testimony this evening?
Let me say, sir, that I have great affection for Counsel. I move to my --
Mr. Sutton, I won't hold that an against you. (Laughter.)
Attorney Wright, would you answer that question, please? She's been involved in the negotiations.
Yes, Councilman Nutter, that is correct. Mr. Kernodle would fill the third seat which would be of the three designated Inner City seats, and the other two would be Time Warner seats. CHAIRWOMAN CLARK: Will you identify yourself for the stenographer.
Lois Wright, and I'm here as the President of Inner City Cable Television Systems. CHAIRWOMAN CLARK: And that's W-R-I-G-H-T?
I should tell you that in Queens, New York, where we have operated with Time 42 BILL NO. 990842 Warner, we had an eight-member committee, each person being designated representative to the committee, and we had an excellent working relationship. We have found Time Warner to be the best partners you could possibly have. I should tell you that our franchise in Queens was one of the top two franchises in the entire Time Warner ownership or affiliation. At last renewal -- I address this because you must have a concern when you talk about an advisory committee is how we will relate to the community here. Let me specifically say that it is not intent of those of us coming from outside of the City to be the point people here. Our intent is to see that our point people do the job we have been doing in New York because it has been a cause diligently pursued to have quicks in New York to be the very best, to be the very best because we care about people, to be the very best because we're involved with the community. I have a schedule that carries me for the last 14 years I've had at least 9 per month engagements in our franchise area, speaking, helping people, working with legislators. And our last franchise renewal, we had every major, every public official came to 43 BILL NO. 990842 testify on our behalf. Not one single person in the entire community spoke a cross word with regard to us; nothing but praise. That praise came out of servicing the community. Our headquarters was often used as -- we have community boards. We service four community boards, and often their committee meetings were held in our headquarters. Often the food that was there came from us because we found it both good relationship and good profit to be intimately involved in the community. CHAIRWOMAN CLARK: Thank you.
Madam Chairperson and Members of the Committee, let me try to address the specific questions which posed and previously testified to by the City in the person of Mr. Joseph James. We've had extensive discussions with representatives from the City and we have discussed in detail the language that both the City Solicitor and Mr. James have discussed with respect to the recommendations, the meetings, and the financial submissions. I think they refer to it as three paragraphs. We have reviewed that. We are comfortable with that and we will adopt that. CHAIRWOMAN CLARK: In brief, you accept? 44 BILL NO. 990842
That's correct. CHAIRWOMAN CLARK: Are there questions from Members of the Committee? Mr. Nutter?
Not on that issue, Madam Chair. I probably have four questions. They're all of an operational nature. As best I can figure out on the operational side, I believe Mr. Kernodle can probably turn his cable on with his remote control, but for the direct operational questions I would like to have an opportunity to either talk to Mr. Williams or people who would be directly involved in the operation of the system, the marketing of the system, and the running of the system.
We are here for that purpose, Councilman. CHAIRWOMAN CLARK: Please proceed.
Thank you. Mr. Williams, some of this material was certainly discussed last night in the community meeting, but this is our City Council Public Hearing and we have a record to deal with. The issue was raised last night about, again, the submission as a part of the documents. This is one is attached to cover memo 45 BILL NO. 990842 dated November 15, 1999 that lays out some financial projections and market share in the franchise area. Again, can you state for the record your figures indicate that you have, I believe, 38.3 percent coverage in the franchise area going to upward of 60 percent over the course of the next years. Do 8 you know what the market share in the franchise area 9 was when Time Warner picked the franchise up four 10 years ago? 11
In 1996, that's when the 14 system was transferred to Time Warner. 15
No, I don't know the specific number. CHAIRWOMAN CLARK: The record should show that the witness testifying is Sylvester Williams.
37.2 percent is what we show as the penetration level for '96.
I apologize, I'm sorry. What was that? 46 BILL NO. 990842
And your submission is in September of 1999 you're at 38.3?
Again, the question revolves around how to expect to get the kind of growth that you're talking about over the next few years, given where things have been and what plans do you have in place to achieve those kinds of projections?
The strength of the projections are really based upon the upgrade of the system which we're undergoing at the current time which will allow us to provide additional broad band services, including digital, high speed internet services, a digital music program which has at the current time 40 channels. These are services that are not available right now, which through very aggressive marketing door-to-door campaigns and other ways that we push these products out, we expect to be able to successfully grow the system. 47 BILL NO. 990842
Is your testimony that short of these new products and services, the rate would pretty much continue at the level that it is or that people have not been subscribing because they didn't have enough channels or they didn't have access to the internet? I mean, what's been going on for the past couple years that has it at the rate that it does especially in comparison to the other -- about a year ago we could say franchises in Philadelphia, now there's one. But their rates, and everybody stated about the same time, their rates are somewhat significantly higher than where the system is today. What is going to change so dramatically by way of either product offerings or marketing that gets you to where you want to go?
I think one of the biggest differences in the system is, when the system was built out in the late eighties, it was built out at 550 megahertz which is 80 analog channels. So roughly over the last 15 years, the system has been operated at that level. You can make an argument that certainly not having expansion of services and offering the same programs with rate increases for programers going up at very 48 BILL NO. 990842 exponential percentages over the last years that, you know, we're put in a position we're to compete with other providers of broad band services that we have to upgrade the system and offer more products in order for us to gain customers, and that's the real driving force behind growing the business. I mean, it's very difficult to grow your business if you're offering the same service year and in and year out. And certainly, if you look at systems that have launched new services such as digital, and certainly at home that Comcast has that they've experienced very aggressive growth rates in their business. And within Time Warner, we've also seen the similar type of growth in systems that have launched digital and road runner and markets that were pretty much tapped out for a period of time.
I understand. The other system that serve the City, are you aware of whether or not they have digital service or have done the upgrade to their system?
I do know that Comcast has upgraded their plan and is offering digital in some areas, and I think Greater Media is in the process of upgrading. 49 BILL NO. 990842
In one of your submissions there was a question with regard to commitment to keep your present office and facilities and, I believe, staffing levels and there were a couple other requests. The response was no. 10 Can you further expound on that?
I'm not sure I understand the submission about no. We had stated last night that the office that we currently occupy is located in an enterprize zone. We certainly are very comfortable there and think that that's a very important part of being a part of the community by being a company that can definitely provide technical services to the enterprise zone, so that's a good location for us. With respect to staffing, we have roughly 160 employees right now. A good many of them come from West Philadelphia, and that's a very important component of being a community organization because the employees represent the community and the interest that they have by the 50 BILL NO. 990842 churches that they attend and schools their children attend and the community organizations that they are affiliated all help us to be a better part of the community, so we definitely encourage and will continue to recruit actively employees from the West Philadelphia market while we are doing business over the next years. 9 CHAIRWOMAN CLARK: Are your employment 10 projections flat, or do you see some hockey stick 11 effect? 12
I'm sorry? 13 CHAIRWOMAN CLARK: Are your employment 14 projections flat in the future, or do you see some 15 little upward turn, some hockey stick effect?
As we go into new businesses such as digital and road runner, we will be looking at hiring new people to fulfill the needs to operate those businesses, so we do expect that over time we will continue to bring on people as the business expands. And certainly as we add more customers, we'll have to service those customers in light of not having the benefit of new technology will allow us to be more efficient. Then we will have to rely on labor to make the case of providing 51 BILL NO. 990842 the level of service that the customer should expect from us every day.
I'm sorry, Mr. Williams, maybe you didn't understand my question. The question in the submission to the City was, "Will transferee assignee agree that it will not without City's approval change the location of the local office, reduce the services currently offered at that office, the number of staff currently serving at that office, or the current office hours?" The response was no. That's the question that I was asking.
My name John Fogarty, F-O-G-A-R-T-Y, an attorney with Time Warner. I think, Councilman, the way the question was phrased was would we agree, we interpreted that to be as a matter of contractual obligation to maintain the office that we have in its current location, and that is not something we would generally agree to. I think what Mr. Williams is saying is that we have certainly at this time absolutely no plans to move, 52 BILL NO. 990842 but over a 15-year period, if needs dictated, that might be something that happen. But I certainly think we would always maintain our office in the franchise area. As far as staffing goes, again, staffing needs are driven by the needs of the business. Our every anticipation is that there will be, as Mr. Williams indicated, a gradual increase in the number of employees as we, hopefully, add subscribers and introduce new services. But it's not a matter that we would think is approach as matter of contractual agreement, and I think that's how we interpreted the question.
I appreciate your response. There was no explanation to go with that. I think you're familiar with the submission, and in most instances where a no answer was supplied, there was addition response made to the question. That particular question it was just a flat out no and you moved on. I have one last operational question. You were asked, "Will answering services or automatic answering machines used at any time?" Your response was yes. You did expound on this 53 BILL NO. 990842 answer that "the system uses an answering service from 6:30 p.m. Monday through Friday and after 4 o'clock p.m. on Saturday. The answer services faxes a record of calls through the system which will be responded to the incomes business day." Do you expect to upgrade your level of service and respond such that if a person who in many instances has not been at home in the course of the day to realize maybe there's something wrong with the service at they home. They get in 7, 8 o'clock at night, they call, apparently now they talk to an answering service and with very little opportunity to have their issue responded to that evening; is that the way the system current operates?
Yes. If the customer calls in after the call center closes, which is 6:30 right now, then they would be forward to an answering service. Barring being involved in an outage area, then the answering service would take the customer information down and fax it over to us, and first in the morning, the technical support desk would contact the customer and work through the problem that they had, but that is something that we are looking to see if there are more efficient ways 54 BILL NO. 990842 to serve customers. In the evening we do have people on call in the evening, but primarily they're working on outages.
So for that particular customer, they're just basically out of service for that night with the exception of extraordinary response the other evening to a call that I made, generally if you get home at 8 o'clock, you call, you talk to answering service, but you're not going to have cable service that night; is that basically what happens.
Unless you're in an outage for that evening, that's correct.
But you're looking to do something about that or looking to extend the services into the evening, or are they going to be able to talk to real live person or maybe a technician or something to help them through their situation?
As our business changes, one of the things that we are looking at is trying to expand the hours for service i9n the field as well as service on the telephones. So that is something that we are currently trying to evaluate 55 BILL NO. 990842 how we can provide that level of service to customers.
The reason I raise that question, and I'll close with this, is because people do talk around the City and people in other franchise areas have at least shared with me their experience that they can in the evening at least talk to a technician, not a call-takers. I don't know where the call-takers are. They could be here in Philadelphia, they could be California for all we know, but they're not going to help you that night. So I'm trying just trying to share with you that if you live somewhere else in the City, that service, that kind of service is available to you. And if we're going to compete or if you're at least going to have comparable services as compared to what other people have in other parts of the City, this kind of response is apparently very important to people.
I would agree with that, and that is something that we are definitely looking at right now to see if there is a way we that we can expand both the call center hours and the technical support in the field later into the evening. 56 BILL NO. 990842
Thank you. CHAIRWOMAN CLARK: Mr. Sutton wants to be heard as to this.
Earlier, sir, you asked a question with regard to our projections, how would we met them. The answer was additional services. May I add to that that if you're make us love us, we're going to give us so much attention in your district that you're going to solicit subscribers for us. We have seen that happen.
We may be able to work something out, Mr. Sutton. It's kind of a tough existence here. I mean, is there like a commission? (Laughter.)
Just playing, Mr. Sutton. Please encourage people to use the system. CHAIRWOMAN CLARK: Mr. Rizzo.
Thank you. In reference to your process that you use in the evening hours answering service, I don't know a whole lot about cable television, but I know that everyone that's hooked up to cable television has the ability, and I recall when I first got cable 57 BILL NO. 990842 that they had a device called an A/B switch which allowed me to, in the event of interruption of service, throw the switch and at least have an opportunity know what's going in the world to be able to watch the local broadcast 3, 6, 10, 29, 17. But I've noticed that the cable companies no longer give their customers the ability in the event of an interruption of service, the ability to watch the broadcast channels. Why is that?
Councilman, if there's an interruption in the service line, they would not be able to receive any signal through the cable to that TV. Basically if the service is out because of an outage or a service problem, we wouldn't be able to service them through that line anyway until we fixed the problem.
No, that's not my question. My question is that if the story that Councilman Nutter described, a person comes home, their cable is not working. When my cable was first installed, if that scenario was the case, I could simply flip a switch, get off the cable and go back to over the air television where at least I'd have minimum; I'd have Channel 3, Channel 6, Channel 10, 58 BILL NO. 990842 Channel 12, the over-the-air channels. But for some reason, the cable companies recently -- when I say recently, have not installed the little switch that's required. And Commissioner James is shaking his head. To give that customer at o'clock at 7 night and the kids and the ability to get off of cable and to be able to view the over-the-air channels. Now, what I've told people to do is just unscrew the cable.
Yes, and go to regular service. CHAIRWOMAN CLARK: Go back to what you did before you got it.
Councilman, the rabbit ears that come with your TV, do not throw them away. You never know when you might have to pull them out and reconnect them.
But my question is, how come we don't do that anymore in the event emergency or a storm, a snow storm, people would still have an opportunity to know what's going on in the world.
And I think it's always an option, especially in a market like Philadelphia 59 BILL NO. 990842 that customers will always have the off-air broadcasting channels, not cable, just like you said, they can unscrew the cable and still get those local signals.
But how many people in this room know when their cable out that there is an alternative. Your franchise should tell the people that there's an alternative in the event of a cable interruption.
And we do still put A/B switches for people, but they request it. That's certainly something that we could inform them about at the time that we do the install.
Thank you. CHAIRWOMAN CLARK: Thank you. Councilwoman Miller.
Thank you, Madam Chair. Mr. Williams, most of my area that I represent is serviced by Comcast, but also a significant number of residents in my Councilmanic District are subscribers to Wade. And I called several people in different locations geographically just to get some feedback from them on their service level and their opinion. Most of all, they all said 60 BILL NO. 990842 that they were satisfied, of course, with the sharpness of the picture, et cetera. A few people did, and everyone commented on customer service needs, and they're saying that they have to stay on the phone and hold much too long and also the courtesy or lack of the customer service staff. And also a few people talked the channels that are being offered by Comcast that they can't quite get on Wade. In this new structure who would I be able to refer people to in terms of the structure that you're proposing to have here in Philadelphia? I'm familiar with dealing most with Comcast. I can pick up the phone and directly call their senior management team right here in Philadelphia. Can you kind of describe to me what the structure will be? You're saying Obra will be the local representative to the management team. What else? What's going to happen? You're going to housed in Keystone zone area or empowerment zone area; where is that?
Our primary office right now is 1700 49th street, which is 49th and Parkside. And with respect to the contact person, the 61 BILL NO. 990842 management team, including myself will be housed in that location which is where we are right now. And we would be the principal contact for anyone in the system that had a question about their service or billing or anything like that. I've been in the system since January 4tj of 1999 and I came here from one of Time Warner's systems in Upstate New York where we are the Beta test for road runner and the first system that launched, the high speed internet service for the company in that market. When I first got here, we did have meetings with several people from the Department of Public Property with respect to customer service standards and complaints that the City had been receiving from many cable subscribers about service issues. One of the things that we did immediately was put a plan together over the last eight months that included training, professionalism, back to basics, how to deal with basic customer service questions. We hired a firm to instruct and teach the customer service reps how to be more professional, how do we measure that, and those types of tools that are very important to provide in customer service. We had staffing issues 62 BILL NO. 990842 which we have been able to successfully staff the department now which will alleviate people being on hold for a long period of time. The other thing is just customer education about our service. One of the things that we did before I got there, the system was experiencing a rather high level of service calls to the customers, and we set up a technical support desk which basically takes all of the inbound calls for technical problems that customers have and they can spend a good amount of time on the phone trying to resolve the problem. That was not available for January, and that was part of the plan that we put together to alleviate the people having to hold on the phone for a long period of time and not being able to give them a higher level of service. So those are the things that we have done based upon that issue that the City did bring to my attention the second week that I come to this system, and I think we've worked very closely with the City of Philadelphia addressing that issue. I know specifically that the complaints have come down tremendous since January from customers. Our calls are answered within 30 seconds. In January it was right around 50 percent, 63 BILL NO. 990842 and for the last two months it's been at 88 percent. So we are -- CHAIRWOMAN CLARK: Excuse me. 50 percent of what?
88 percent of all of the calls that we take are answered within 30 seconds.
Very good. Two other quick questions. What do you believe the impact of satellite service is? I mean, Direct TV, you can't even turn the TV on now without hearing an advertisement about purchasing a Direct TV satellite disk. What will that have on your plan to boost your customer, boost a number of your customers?
With respect to direct broadcast satellite, the recent Congress legislation that was passed which allows DBS companies now to offer local broadcast channels, some will argue will have a significant impact on our business. However, the prices that I've seen that the Echo Stars and other companies are going offer is going to be an extremely expensive proposition for customers. The installation price to just receive local broadcast signals is going to be between $299 and $399 just for the installation, and recurring monthly fee is 64 BILL NO. 990842 going to be between $4.99 and $8.99 just to receive those basic channels, and that's per TV. Basically, we charge a life line rate at the current time of $10.31, and that can be as many outlets as the customer wants because the outlet we cannot charge a rate for per outlet to customers. The Congress changed that ruling for us back in 1994. So although we are very sensitive to DBS and penetration effect that it can have on my market, that's one the reasons why we are expanding the channel capacity through the upgrade, looking to offer digital channels, looking to offer -- CHAIRWOMAN CLARK: Are you just about through, Mr. Williams? I don't mean to be rude, but this has been a very long day.
I apologize. CHAIRWOMAN CLARK: I know you didn't cause it, sir, I just don't want you to add to it. I want you to leave here with me loving you. (Laughter.)
Thank you, Mr. Williams. CHAIRWOMAN CLARK: Do you have another question? I don't mean to step on you. If you have another one, please do. 65 BILL NO. 990842
I just wanted to talk about my constituents as well as Councilman Nutter's that I read in the paper last night are concerned rape increases, and there's a proposal to do a 5 percent rate increase starting with the new contract. What is the present level of a rate increase, the annual?
And we do want to keep the cost down. But, again, things affect our prices, mostly programming. The programming cost s are very significant for us. Unfortunately, they increased those rates and we don't have a lot to say over those prices.
Madam Chair, can I say one thing on rates? One of the things that I've learned over the course of franchises being re-authorized and such in sales and some of the discussions about rates, one of the things that people won't recognize and won't admit is the theft of the services in the cable industry is terrible. 66 BILL NO. 990842 We are all paying for every person that we know or every relative that we know who has that little chip and gets all those channels for free, it's like the same guy who rides around without auto insurance, everybody else is paying for that person to ride around without auto insurance. So one of the things I think would help to keep the rates down is your continued efforts in shutting down those operations that put the chips in, blowing up the chips when people have them in their box and when the Tyson fight's on everybody's got it on and send that silver bullet and blow up those boxes, and also keep on educating consumer that the theft of service in that area just makes everybody else pay more money, and it's a crime to boot. So I would encourage you to step up if you haven't already the efforts in getting those chips out of those boxes because it's a terrible situation.
Councilman, I would agree with that, and we do have an audit department on staff which is made up of 12 auditors who basically go door to door throughout the system looking for people who are illegal connected and receiving services unauthorized, so that's a very big part of 67 BILL NO. 990842 our concern as well. CHAIRWOMAN CLARK: Thank you very much. I have some testimony that I've been asked to have put in the record as though it was set full testimony, and that includes the testimony of Richard O'Malley of 5101 Overbrook Avenue and his testimony is one page concerning the proposed transfer of Wade. And then there's several pages of testimony on Bill 990842 and843 from Inja Coates and we will put that in the record as if it had been given orally here today. And the third and last piece of testimony is from Harmonious Volunteer Center, Inc., from Irvin B. Shannon, Executive Director, concerning public access on Ordinance 1963 and 1983. I understand Mr. Cody Anderson has provided me with copies of his testimony on Bill 18 990842 and 990843, and we will put it in the record as though it had been given fully. Mr. Anderson's testimony can be characterized as being in favor of the matter that is before us. (Testimony attached to the record.) CHAIRWOMAN CLARK: Have you put your case forth?
There's only one matter 68 BILL NO. 990842 that I believe, Madam Chairperson, that we've not addressed. There was a question posed to Time Warner with respect to the management agreement. I believe that the solicitor referred to an assumption agreement, and I would just ask either John or Sylvester to state for the record whether or not they will accept that management agreement so referred to.
Yes, we have had discussions with representatives of the City and we have reached an agreement that if at any time there was a reason that the management agreement between Time Warner and the prospective franchisee were going to terminate, we would give the City notice of that matter. And if there were not other arrangements made that were not acceptable to the City, Time Warner would continue to manage the franchise for a period of 18 months. So as described by the City staff, that is correct and agreeable to Time Warner. CHAIRWOMAN CLARK: Thank you.
I would think, Madam Chairperson, that that would conclude our testimony, would also lend to this Committee the fact we have 69 BILL NO. 990842 agreed in fact those specific qualifications and conditions previously referenced by the City representatives. CHAIRWOMAN CLARK: Thank you. Thank you very much for your patience and explaining a very complicated and complex transaction. You man stand down, and I thank you very much. I understand that your interest is public access. Please, do you mind sharing a table? Good evening, sir. I thank you patience.
Good afternoon. Thank you for your patience, all of you, for holding out throughout the day. CHAIRWOMAN CLARK: Would you just give your last name for the stenographer and spell it.
It's Paul Sherrouse, S-H-E-R-R-O-U-S-E. Actually, I've been asked to read testimony for Irvin Shannon which you had mentioned earlier. CHAIRWOMAN CLARK: Well, we put his in the record fully.
But I'd like to just read it; it's one page. And I would also like ask Council to pay and the parties of this to pay 70 BILL NO. 990842 particular attention to testimony by Inja Coates that's been submitted. I think there are some very important points being addressed. The main reason representing this here is that we feel it does relate to the contract and it's important for the parties that are involved in this to keep this in mind throughout all the negotiations agreements. "Thank you for your fair and equitable representation concerning the best interest of the Citizens of Philadelphia community. Thank you for this forum in order to bring forth a solution to the issue of cable franchises in our City. It is evident that each member of Council who's worked long and hard in order to establish Ordinance 1963 along with Bill No. 53A and numerous related pills and resolutions, including the partnership arrangement that have been made. "As an ordinary Philadelphia resident, a taxpayer and voter, and I'm concerned with the question of quality of life issues we face daily. We definitely have problems, therefore are concerned with why the Mayor and mayors of past 15 or 16 years have not signed this ordinance that establishes a 71 BILL NO. 990842 non-profit corporation which would implement and oversee public access in the community. As the director of a non-profit community, I am concerned about the citizens of Philadelphia being denied access to their resources of the inner-comminuty and intra-neighborhood communications. When citizens of Philadelphia who are consumers of this cable marketplace are bearing the full cost in subscriber fees and competing cable companies are slicing up the market share, it seems to me that the return of their investment should result in a high quality service and performance record when the City of Philadelphia reimburse its allocated expenses, use the taxpayer dollars to the tune of 600,00 a year or 9 million over 15 years to allow these companies to operation, I must ask where is the accountability to the citizens. "The franchise agreement for all of it is fine for it will provide an immense opportunity for our community. It is not fine in that your elected officials made a deal with private industry for the benefit of constituents you serve who are not getting thier fair of what has been proposed. "I call upon the current Mayor and 72 BILL NO. 990842 Mayor-elect on the benefit of all the residents and people of my organization, Affinity Partners, represent to enact the full provisions of public access, and I call upon the Members of City Council to ensure that this is done immediately on behalf of your constituents of the citizens of Philadelphia. "Thank you for the opportunity to appear before you." CHAIRWOMAN CLARK: Good evening, sir. Thank you for your patience. I want give us your name and spell your last name for stenographer.
My name is Joseph Powell, P-O-W-E-L-L, I'm a concerned citizen. I'm also a member of the PCAC, and there were a lot of them earlier. They left at 7 o'clock, and I believe they made an arrangements to -- that the record would be kept open so their input could be mailed in written form. But the Philadelphia Community Access Coalition is a grassroots coalition of individuals and organizations throughout working together through outreach organizing and advocacy for the establishment of public access community television in Philadelphia. I was struck by one of the earlier 73 BILL NO. 990842 meetings on Venice Island. If we had public access years ago, what a beautiful way of presenting that information to City Council from the community's perspective. One thing I'd like to make it understood, my interest as a concerned citizen is I really believe in the Constitution and government for the people. In fact, I was hoping a couple of those back panels some day we might be able to get the Constitution up there, "We the people." Quite often, neighborhoods around the City have difficulty getting input. Also, so you'll know, I'm registered as a bipartisan voter and I consider myself a concerned citizen at large, if you would, because a lot of the issues are City-wide issues and I think we should do our best to help provide the proper input on that. The public access to City Council is needed now, too, before the people get public access TV. We heard the thought that it takes a village. Without the input form the citizens around the neighborhood, the neighborhoods are hurting bad often. And last night I provided Wade officials with a copy of my letter. I have some here if you 74 BILL NO. 990842 don't have enough. I guess one will go in the record. Anyway, that particular item -- CHAIRWOMAN CLARK: Mr. Powell, it's been a very, very long day. I wonder if you could summarize your testimony now. MR POWELL: The point in this letter is consumers, subscribers full choice in selecting .
Let me interrupt you, Mr. Powell. First, good evening. It's nice seeing you two nights in a row. You were at a meeting last night. You don't want to be charged when there's a black out?
We can't solve that problem either. I suggest to you this evening, we know what your testimony is from last night. It was recorded on videotape. Talk to Joe James in the back or Commissioner of Public Property Mr. Perez. If you wish to leave something with the Committee, we will incorporate it into the record. We can't solve your problem here about this particular issue.
Do you have one last question for us, Mr. Powell. 75 BILL NO. 990842
Almost. On the public access portion of the franchise fees which the City has spent from the General Fund, I believe, for the past years, one thing for fiscal year '99 that 6 the public access portion of franchise fees should 7 be reserved for public access use only so it won't 8 get spent this fiscal year. 9
Thank you very much, 10 Mr. Powell. We appreciate your testimony. 11 CHAIRWOMAN CLARK: That is a fair 12 testimony and we will assure you that there is no 13 other use. 14
And the few points I 15 haven't been able raise, I'll put them in writing as part of this and I'll assembly it all as one piece.
Thank you. That would be great. CHAIRWOMAN CLARK: Thank you, sir. Again, I thank you for your patients. We did not mean to step on your right to be heard. It's a long day.
Well, this happens often wit input from communities. The problems is the meetings run long, and then when the community gets 76 BILL NO. 990842 up to provide input, they're rushed, cut short or we have to take a vote in a hurry, we can't explain these important issues. I think more time should be allowed for the community input. And if you give us public access TV, we'll give it to you TV. It will solve a lot of problems with the Zoning Board of Adjustment, City Planning, a lot of other things, but it's very important we get it. CHAIRWOMAN CLARK: I appreciate that. I appreciate your interest and your enthusiasm. We mean you know disrespect. It is just very late and we've been here a long time as have you.
Madam Chair, I move that we move out of our public hearing into our public meeting. (Duly seconded.) CHAIRWOMAN CLARK: All if favor? Opposes? It has been properly moved and seconded. - - - 77 COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC MEETING COMMITTEE ON PUBLIC PROPERTY AND PUBLIC WORKS - - - Wednesday, December 8, 1999 - - - Public Meeting conducted by the Committee on Public Property and Public Works, held in Room 401, City Hall, Philadelphia, Pennsylvania, on the above date, to consider action on the following: BILLS 990842, 990843 - - - PRESENT: COUNCILWOMAN AUGUSTA CLARK, Chairman COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DAVID COHEN COUNCILMAN JAMES KENNEY COUNCILWOMAN DONNA MILLER COUNCILMAN MICHAEL NUTTER COUNCILMAN FRANK RIZZO - - - 78 PUBLIC MEETING CHAIRWOMAN CLARK: We now are in public meeting. I'll entertain a motion from Mr. Nutter on Bill 990843 to amend it. This is the bill that has to be amended and put in this big fat Exhibit No. A.
Madam Chair, I move that bill 990843 be amended to include the new Exhibit A as given to us by the Public Property Commissioner tonight. (Duly seconded.) CHAIRWOMAN CLARK: All in favor? Opposes? Then Bill No. 990843 has been amended. The Chair calls on Mr. Nutter for a motion.
Madam Chair, I move that Bill 990843 as amended be reported out of this Committee with a favorable recommendation and a further recommendation that the Rules of Council be suspended so as to permit first reading at our next session. (Duly seconded.) CHAIRWOMAN CLARK: All in favor? Opposes? Then Bill No. 990843, as amended, has 79 PUBLIC MEETING been reported out of this Committee with a favorable recommendation with a further recommendation that the Rules of Council be suspended so as to permit first consideration at the next stated meeting of Council. All in favor, aye. Opposes? So ordered. Mr. Kenney, Bill No. 990842.
Madam Chair, I move that Bill No. 990842 be reported out of this Committee with a favorable recommendation and request made for Rules suspension to allow for first reading at our next Council session. (Duly seconded.) CHAIRWOMAN CLARK: All in favor? Opposes, nay? Then Bill No. 990842 has been reported out of this Committee with a favorable recommendation and with the recommendation that the Rules of Council be suspended so as to permit first reading at our next stated Council. Would the record please show that the assumption agreement will be finalized, and when it 80 PUBLIC MEETING is finalized, it will be incorporated.
I make a motion this meeting be adjourned. CHAIRWOMAN CLARK: All those in favor? Thank you so ordered. (Council adjourned at 9:50 p.m.) - - - 81 C E R T I F I C A T I O N I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of December 8, 1999, were reported fully and accurately by me, and that this is a correct transcript of the same. RE: COMMITTEE ON PUBLIC PROPERTY AND PUBLIC WORKS ___________________________ Lisa C. Bradley, RPR and Notary Public