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«1 Collyer Lane, Basking Ridge, NJ 07920 Phone: 908-204-3001; Fax: 908-204-3015; Website: Bernards Township Cable Franchise ...»

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1 Collyer Lane, Basking Ridge, NJ 07920

Phone: 908-204-3001; Fax: 908-204-3015; Website: www.bernards.org

Bernards Township

Cable Franchise Ascertainment Report

June 9, 2009

Prepared by: The Bernards Township Cable T.V. Task Force

TABLE OF CONTENTS

Page

Executive Summary of Report

1. Introduction

2. Ascertainment Process

2.1. The Cable T.V. Task Force

2.2. Timetable

2.3. Task Force Activities

2.4. Documents Reviewed

3. Cablevision Performance

3.1. Current Franchise Agreement Requirements

3.2. Technical and Procedural Performance

3.3. Complaints

3.4. Programs Currently Offered

3.5. Rates Charged

3.6. Current Competition

3.7. Performance Standards

3.8. Summary

4. Assessment of Township Needs

4.1. Cable TV Survey

4.2. Ascertainment Hearing

4.3. Community Needs

4.4. Township Needs

4.5. Board of Education Needs

4.6. Summary

5. Recommendation

LIST OF EXHIBITS

–  –  –

The Bernards Township Cable T.V. Task Force has prepared a Cable Franchise Ascertainment Report (the “Report”), in connection with its ascertainment review of the franchise renewal request of CSC TKR, Inc., d/b/a Cablevision of Raritan Valley (“Cablevision”).

I. Regulatory Framework.

In New Jersey, franchise agreements, which grant permission to cable operators to operate and maintain a cable television system within a municipality, along with any renewals thereof, are governed by the Federal Cable Communications Act of 1984, as amended by the Federal Cable Television and Consumer Protection Act of 1992, and the Telecommunications Act of 1996 (the “Federal Act”), as well as the New Jersey Cable Television Act of 1972, N.J.S.A. 48:5A-1, et seq.

(the “State Act”). Under the State Act, while the ultimate decision to renew or deny a franchise sits with the New Jersey Board of Public Utilities (the “Board”), a municipality is responsible for investigating the operation of cable operators in service within its borders, and either adopt a “Municipal Consent Ordinance” granting a franchise or renewal with the cable operator; or issue a “Resolution of Denial” if no agreement can be reached.

II. Bernards’ Franchise and Renewal Process.

In Bernards, Cablevision is currently under a franchise agreement to provide cable television service in the Township, which currently expires on July 13, 2010. As the expiration of the franchise agreement approached, the Township elected to follow the formal franchise renewal process under the State Act, and established a Cable T.V. Task Force (the “Task Force”) to perform the required ascertainment review activities. Accordingly, the Task Force conducted a review of the past and current performance of Cablevision, and conducted a Township-wide survey to assess current problems as well as the future cable-related needs of the Township to assure that the needs of the Township are met when the franchise agreement is renewed. In connection with its review, the Task Force prepared the Report, which outlines the details of the review and recommendations for any potential renewal.

III. Cablevision’s Claims and Overall Performance.

On its website, Cablevision claims that “Cablevision continues to advance the company's industry-leading products, programs, entertainment and content offerings to meet the needs of its customers.” (See http://www.cablevision.com/about/index.jsp) Further Cablevision states that “Cablevision offers products and customized packages designed to exceed the demands of our many customers. Going forward, we will continue to define the future, pioneering products and services to enhance customer satisfaction and connectivity.” (See http://www.cablevision.com/cc/index.jsp) However, upon review of the information obtained by the Task Force throughout the ascertainment process, including the complaints received by the Board and the results of the Township survey, in Bernards Township Cablevision has fallen short of its claims.

Upon review of Cablevision’s performance with the terms of the current franchise agreement, the Task Force found that it substantially complied with such terms. However, there are 1243298-1 ii outstanding issues with the terms of the current franchise agreement that need to be addressed prior to entering into any subsequent renewal period. Initially, it is uncertain if Cablevision completed all of the required cable television and internet installations at the municipal facilities. Therefore, the Township should require a detailed accounting of all of the municipal installations by Cablevision.

Moreover, there have been numerous complaints received by the Township, the Board, and the Better Business Bureau (“BBB”) regarding Cablevision’s services. The most prevalent complaint received by the Board are “Poor Quality of Service,” “Billing,” “Outages – Credits,” “Reception Problem,” and “Service Appointments.” These complaints demonstrate the need for Cablevision to provide a better quality of service to its customers in the Township. In addition, the BBB also has received complaints regarding Cablevision’s service, which led it to recently give Cablevision an “F” rating, which is the lowest rating issued by the BBB. These are all important issues which are not acceptable to the Township, and shall be addressed by Cablevision prior to a renewal of its Franchise Agreement.





IV. Township’s Survey of Performance.

In addition, the issues with Cablevision’s service in the Township is evidenced in the survey distributed by the Task Force. The survey was mailed to a selected sample of 1,000 households in the Township, and made available online on the Township’s official website. Approximately 449 responses were received by the Township (231 submitted online, and 228 by mail). Of the 449 responses received, 410 (or 83%) indicated that they were Cablevision customers, which implies a survey reliability of ±3%, with 95% confidence. Pursuant to the survey results, one of the major issues Township residents have with Cablevision’s current service is with the service packages offered. In addition, of the Cablevision customers who responded, 35.4% responded negatively with regard to Cablevision’s service calls, and 25.4% responded negatively with regard to billing issues. These percentages are too high and not acceptable to the Township.1 Cablevision must address these concerns and implement procedures to better its response to service calls and billing issues within the Township.

Another important issue which has become apparent in the Township recently, is the number of channels offered by Cablevision being reduced as a result of the mandatory change to all digital programming. Apparently, Cablevision has been reducing the number of channels available in their packages by insisting that such channels can only be provided through a digital cable box, and blaming the new regulations of the FCC for this change. Initially, this is not a correct assertion. If the customer has a digital ready television, then it can receive the digital cable programming that is required under the FCC regulations. The FCC regulations do not affect the channels offered in each of the cable packages offered. Rather, it is left to Cablevision’s discretion as to whether or not to broadcast certain channels in such a manner as to require a digital cable box to view them.

Cablevision has utilized this opportunity to shuffle its own programming to require a digital cable box in order to receive certain channels, thereby being able to charge the customer for the rental of such boxes simply in order to receive the channels offered in the cable package. Specifically, Cablevision sent a notice to its customers throughout the Township which stated “As of 4/30/09, although the following channels will remain in the existing package, they will only be available on A summary of all of the results of the survey can be found in Section 4.1 and Exhibit 6 of the Report.

1243298-1 iii televisions with a digital cable box and the iO Navigation package or with a CableCARD: ABC Family, AMC, BET, CNN Headline News, C-SPAN, Fuse, History, Lifetime, MSNBC, MTV, MTV2, Spike TV, TV Land, VH1, and We.” Nevertheless, Cablevision continues to assert this allegation to it customers in an effort to convince them to rent the digital cable box in order to view these channels. This practice is definitely not acceptable to the Township, and shall be addressed by Cablevision prior to a renewal of its Franchise Agreement.

More importantly, in the summer of 2008, the Township, along with all Cablevision customers in the Township, received a notice from Cablevision advising that “As of 9/16/08, the following channels will only be available with a digital cable box: Local Programming/Public Access/Government Access (Ch.14); Public Access/Municipal Access (Ch.15).” Similar to the practice Cablevision has taken with those channels identified in the paragraph above, Cablevision is now requiring a digital cable box for Township residents to view the PEG channels. Township residents are not able to view the PEG channels, and be responsible citizens, without a digital cable box. As the PEG channels are required to be provided by Cablevision under the current Franchise Agreement, the Task Force finds this digital cable box requirement to be a direct violation of the Agreement, and appears to be a fraudulent and deceptive business practice.

This requirement further effects the Township’s senior citizens, as currently the senior citizen discount is not applied if and when they upgrade their service. For example, if a senior citizen wishes to upgrade their service and obtain a digital cable box to view the PEG channel and be a responsible citizen, their discount no longer applies. Senior citizens should not be penalized for upgrading their service to view its government.

V. Township Needs.

In addition to evaluating Cablevision’s current performance within the Township, the Task Force ascertained the Township’s needs moving forward. The Township’s needs were found to include: upgrades to the broadcasting equipment and services for its local PEG channel programming; additional training for the use and operation of the broadcasting equipment for the PEG channels; faster high-speed internet access (with a minimum 20/20 speed), with no networking limitations; static WAN IP addresses for such internet access within their own VLAN/SUBNET;

upgrade to fiber optic institutional network between municipal buildings; increased discount to the Township’s senior citizens, with such discount to be expanded beyond basic service; a one-time grant of funds to the Township for use in connection with its cable, internet and PEG operations; and additional reporting requirements by Cablevision regarding a detailed summary of its operation and services provided throughout the Township.

In addition to the Township’s needs, the Task Force ascertained the needs of the Board of Education. Accordingly, the Board of Education expressed a need for its own PEG channel to broadcast student-created programming. Therefore, Cablevision should immediately provide an additional PEG channel to be dedicated to the sole use of the Board of Education, without the any necessity for the Township to give up its existing access. In addition, the Board of Education expressed the need for faster high-speed internet access (with a minimum 20/20 speed), with no networking limitations, and static WAN IP addresses for such internet access within their own VLAN/SUBNET. Further, the fiber optic institutional network between municipal buildings, should 1243298-1 iv be expanded to include the public schools and other locations directed by the Board of Education.2

VI. Conclusion.

The Task Force finds that while Cablevision has substantially complied with the requirements of the existing franchise agreement, there are a number of issues with Cablevision’s performance in the Township that must be addressed in any subsequent renewal period, such as the rates charged for services, available programming and service quality. Additionally, in order to assure continued compliance, Cablevision’s performance against the requirements of any new franchise agreement should continued to be monitored on a regular (annual) basis. Such monitoring will serve as an early warning signal to any significant performance decline by Cablevision long before the next franchise renewal. In addition, such regular monitoring will create a more significant database of performance data to be used in any subsequent franchise renewal process. Further, such monitoring should require that Cablevision appear before the Township Committee at least annually to provide a detailed report on its status and progress within the Township. In addition, due to changing necessities of the Township, and the rapid advances in technology, any renewal should be for as short a period as is practical.

–  –  –

The purpose of a franchise agreement is to grant permission to a cable operator to construct, connect, operate and maintain a cable television system within a municipality for a specific period.



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