HomeMy WebLinkAbout1985-03-05; City Council; 7894-1; Report on Cable TV performance evaluationTITLE
REPORT ON CABLE TV PERFORMANCE EVALUATION
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RECOMMENDED ACTION:
Receive and accept the Performance Evaluation Review of Cable Television
Information Center (CTIC).
ITEM EXPLANATION:
The City Code requires a performance evaluation on the Cable TV operators after
the 5th and 10th year of operation.
the Council an
to review the staff performance in representing the City's interests; and to
review and recommend changes to the City Code in view of changes in law and
regulations in the intervening period. CTIC was also requested to do a rate
analysis/review since both Cable Companies had submitted rate requests which
were pending. Both Cable Companies subsequently notified the City that they
were electing to deregulate under California Statutes of 1983 and under the
Federal 1984 Cable Deregulation Act. CTIC was advised of this OR January 10,
1985 by letter from the Director of Utilities and Maintenance and requested
to delete the rate analysis from the project and substitute, therefore, a
review of compliance with the various deregulation statutes when the formal
deregulation requests were submitted by the operators. This will be a very
simple review sLnce all pertinent information was developed as a part of the
performance evaluation.
The final statement of the consultant's summary, "Several items will bear
further scrutiny by both the companies and the City, but by-and-large
Carlsbad is benefiting from what we believe to be quality cable service
from well-managed companies," indicates a high level of performance.
Items for staff attention will be accomplished and returned to Council for
appropriate action.
The purpose of the evaluation is to providc
independent evaluation of the Cable TV operations of the City;
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FISCAL IMPACT:
The total "not to exceed" agreernent with CTIC was $23,625. Billing for
work performed through January, 1985, is $15,543.78.
The major costs of the project are complete and only the compliance review
and letter report remain outstanding.
EXHIBIT:
1. CTIC Performance Evaluation Review
e e r C’
Performance Evaluation Review
of
and
for the
Carlsbad Cablevision
Rancho La Costa Cable TV
City of Carlsbad, California
February 8, 1985
PREPARED BY
CTIC ASSOCIATES
1500 North Beauregard Street
Suite 205
Alexandria, VA 22311
(703) 845-1700
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TABLE OF CONTENTS
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I. INTRODUCTION
General Summary of Findings
11. GENERAL COMPLIANCE I
Suggestions for Modification of City Code I
111. FINANCIAL REVIEWS OF CARLSBAD CABLEVISION (CABLEVISION)
AND RANCHO LA COSTA CABLE TV (LA COSTA) I1
A. Carlsbad Cablevision: 1979-1983 I1
B. Rancho La Costa Cable TV: 1978-1984 I1
IV. SYSTEM REVIEWS: CARLSBAD CABLEVISION (CABLEVISION)
AND RANCHO LA COSTA CABLE TV (LA COSTA) I
A. Cablevision I
B. La Costa I
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I. INTRODUCTION AND SUMMARY OF FINDINGS
CTIC Associates was retained by the City of Carlsbad on
November 2, 1984 to review two requests for rate increases and to
perform a five-year performance review of both cable systems
serving Carlsbad.
During the course of this study both cable companies initiat-
ed actions permissible under California law to seek rate deregula-
tion from the State, These actions continue to be pending while
the companies prepare the required information to determine if
they qualify for State deregulation.
Since the financial viability of a company is also an integral
part of any performance evaluation, the financial data submitted by
both companies has been evaluated and is discussed in Chapter 111.
Section 5.28-050 of the Carlsbad City Code requires that at
the end of the fifth and tenth years of a franchise term, the
grantees' performance will be reviewed by the City. "This perfor-
mance review shall include the grantee's quality of service, the
grantee's extension of service, and shall be directed toward
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effecting alteration of the terms and conditions of the franchise
to effect those technical and economic changes which have occurred
during the franchise period expired to date ."
During the week of December 17, 1984, Harold E. Horn, project
manager from CTIC Associates and William Kohutanycz, Director of
Technical Services for CTIC visited both cable systems and with
City officials, City files were reviewed, Specifically examined
were ordinances, resolutions, Council Minutes, each company's ori-
ginal proposals, final agreements, complaint files, and correspon-
dence files dealing with cable television. Company records were
also reviewed. Financial and operational information was requested
and examined, and system documentation, including maps, service
orders, and complaint logs were examined. A discussion of General
Compliance findings is found in Chapter 11.
Mr. Kohutanycz obtained specific technical information from
each company detailing each system design, operational standards,
FCC Proof of Performance filings, and testing procedures. Picture
quality observations were made at a number of test points through-
out the distribution system of each of the cable operations. The
discussion of technical compliance is found in Chapter IV.
Both companies were most cooperative and were readily respon-
sive to questions of the consulting team and in providing request-
ed information.
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On Thursday, December 20, 1984, from 3:OO p.m. to 5:OO p.m.
and again at 6:30 p.m. to 8:30 p.m. Harold Horn and Roger Greer,
Director, Utilities and Maintenance Department were available in
the City Council Chambers at an advertised public session to hear
and discuss any questions or complaints raised by the public.
Both cable companies also provided company executives to assist in
any discussion that might involve their respective operations.
Only one citizen utilized this opportunity and this was to discuss
a problem he was having in getting service extended within a
rather large lot.
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GENERAL SUMMARY OF FINDINGS -
Generally speaking, both cable companies appear to be we11
managed and present no serious problems. The quality of delivered
services was generally very good for both companies.
Both companies have appeared to comply with the line extension
policy of the City with a few minor exceptions that were allowable.
Both cable systems have been built to accommodate future up-
grades should they become necessary. La Costa has already expanded
its capacity considerably beyond what it originally proposed to
the City.
Both companies have expanded their service offerings to accom-
modate satellite and pay TV programming that were not included in
their original proposals or required by the City.
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Both systems are financially viable operations. Cablevision
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is organized as a classic limited partnership and appears to be
doing very well for its limited partners.
La Costa is a viable operation but is not making a rate of
return that it would probably desire. La Costa has a very favor-
able penetration (85 percent) but only a fairly good density of
housing (78 houses per mile). Cablevision has a better density of
housing (98 HPM) but a less favorable penetration (64 HPM). These
results are not surprising given the nature of each of the areas
served. Both companies have a very similar number of subscribers
per plant mile. (La Costa: 66 subscribers/mile; Cablevision:
62 subscribers/mile.)
Each of the following chapters describes in detail all of the
findings made by the study team. Several items will bear further
scrutiny by both the companies and the City, but by-and-large
Carlsbad is benefitking from what we believe to be quality cable
service from well-managed companies.
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11. GENERAL COMPLIANCE
In the course of the interviews with company officials and
reviewing City records the following matters weere identified that
will need to be given attention by both company and City officials.
Generally speaking most of these items are readily correctable and
not considered to be in major noncompliance.
(1) Section 5.28.090 requires an annual renewal of corporate
surety bonds in amounts established by City Council. In
reviewing the records in the City Clerk's office and records
kept by the Director of Utilities and Maintenance, it ap-
pears that these bonds have not always been filed on an an-
nual basis. This matter should be examined further by City
officials to make sure that the bonds are annually filed with
the City Clerk in the correct amounts. The La Costa bond is
set at $25,000 and the Carlsbad Cablevision bond at $100,000.
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(2) Section 5.28.120 requires the following policies of insurance
to be filed with the City Clerk:
(a) General comprehensive liability insurance in the amount
of $2,000,000;
(b) Bodily injury liability insurance in the amount of
$300,000;
(c) Property damage liability insurance in the amount of
$100,000;
(d) In lieu of insurance required in (b) and (c) the grantee
may provide a combined single limits policy for bodily
injury and property damage of not less than $500,000.00.
The City is also to be named as an additional insured in any
insurance policy.
The Carlsbad Cablevision insurance policies (Certificate of
insurance) have been filed with the proper endorsement naming
the City as an additional insured. However, the General Com-
prehensive Liability coverage of $2,000,000 was not in evi-
dence in the City Clerk’s file.
The La Costa insurance policies were not all in evidence and
the policies on file did not appear to carry the necessary
endorsements required by ordinance. These policies should
also be checked for compliance as to current coverage in the
amounts required.
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(3) Carlsbad Cablevision stated that they have not been providing
written notices prior to providing cable service in compliance
with Code Section 5.28.030(f)(3) and Code Section 5.28.210(i).
The first section requires notification of each subscriber
describing the procedures available to the subscriber for
receiving and acting upon their complaints. The second code
section, requires notification of subscribers regarding the
grantee‘s use of public rights-of-way and that subscriber’s
agree they will make no claim or undertake an action against
the City of Carlsbad if cable service is interrupted or
discontinued @
(4) Neither of the companies have been providing all the finan-
cial information required on an annual basis. Generally La
Costa has been coming close to compliance but Cablevision
has typically not been providing the required information.
Both companies did, however, during the study, provide most
of the information required by the consultant to enable an
analysis of each system’s financial viability.
Code Section 5.28.190 requires each grantee to provide an an-
nual financial report reflecting the Carlsbad systems only.
These statements require:
(a) Balance sheet;
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(b) Income statement ;
(c) Cash Flow statement;
(d) Statement of sources and application of funds;
(e) Detailed supporting schedules of expense income, assets
and other items as may be required;
(f) Statement of current and projected subscribers and pene-
tration.
These statements are to be accompanied by the certification
of an independent CPA as to the appropriateness of accounting
methods used and the allocations made therein relative to the
Carlsbad system. In addition all financial reports requested
by the City for purposes of rate consideration shall be
certified by the Treasurer of the Company.
If both companies are successful in their current attempt to
qualify for deregulation of their rates under California
State law, the City would no longer have jurisdiction over
rate regulation. Under the new federal law that became
effective December 29, 1984, the City would have been re-
quired to end rate regulation by December 29, 1986.
Assuming that the City's regulatory authority over rates is
preempted by State and/or Federal law the Annual Financial
Reports should still be required (5.28.190) so that the City
can monitor the financial viability of the present operators.
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This information will be essential to have been maintained in
order to comply with the new Federal regulations pertaining
to franchise renewals since considerable documentation is
required at that time in order to evaluate the existing
company’s performance and their ability to meet community
needs and possible upgrading to state-of-the-art technology.
Ia Costa has filed statements for 1982 and 1983 which are
rather complete except for the absence of detailed schedule of
expenses, income, assets and subscriber count. This informa-
tion was, however, provided by the company during the course
of this study. Both the 1982 and 1983 statements were certi-
fied by a CPA and the Treasurer of the Company.
Cablevision had filed income statements for 1979, 1980 and
1981 and expense statements for 1979 and 1980, however, no
balance sheets had been provided, no cash flow statements and
no Sources and Uses statements since 1981, or detailed
income, expenses or assets were filed. No statements were
certified by the Treasurer of the grantee and while the 1979,
1980 reports claim figures are audited no auditors opinion
was included.
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During the course of this study Cablevision did file sufficient
information to permit an analysis of their financial viability.
Apparently Cablevision had been under-paying their franchise
fees since 1980 resulting in an audit by the City's Finance
Department that disclosed that Cablevision owed the City
$36,113.88. The La Costa system, under a similar audit, owed
a small amount - $579.72.
amounts have subsequently been paid by the companies.
It is our understanding these
(5) Very few written complaints have been officially filed with
the City rearding either company. The virtual absence of
anyone in attendance at the two sessions conducted by the
consultant to hear directly from the public regarding any
problems they might be having, suggests that both companies
are operating in such a manner that has greatly minimized
public criticism. In reviewing the complaints on file the
quality of services and signals were seldom mentioned. What
few complaints were on file related to the business side of
the operation. The Cablevision system had generated a few
callers who resented long periods of being kept on "hold,"
and "a surly attitude exhibited by customer contact person-
nel." A few complaints for both systems have resulted from
billing problems, channel programming changes, and FCC im-
posed "blackout" of certain programs.
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The Director of Utilities and Maintenance, who is responsible
for following up on complaints made to the City government by
subscribers, has stated that management personnel of both
firms have been extremely responsive to actions required by
the City,
(6) According to Section 5.28.140, transfer of control of a sys-
tem in Carlsbad cannot occur without the prior consent of the
Council - a transfer of control is defined in the ordinance
as the acquisition or accumulation of more than 20 percent of
the voting shares of the grantee, It is possible that Rancho
La Costa Cable TVmay have been in non-compliance with the ordi-
nance if it did not seek Council approval of its ownership change
in 1982. In 1982, Rancho La Costa, Inc. transferred 100 percent
of its interest in the system to La Costa Hotel and Spa. La
Costa Hotel and Spa is a partnership which is composed of sub-
stantially all former shareholders of Rancho La Costa, IRC.
according to their audited statement. Technically, a transfer
of control occurred even though the ultimate ownership may not
be different. The information we have does not specify if the
distribution of ownership amongst the former shareholders of
Rancho La Costa, Inc. changed so as to effect an ultimate trans-
fer of control. Both the City and La Costa may wish to examine
this matter to determine if an action by Council is necessary
to validate the change that occurred in 1982.
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SUGGESTIONS FOR MODIFICATION OF CITY CODE
(1) Section 5.28.050 (i) of the City Code details a procedure that
would no longer be applicable for renegotiation or renewal of
existing contracts. The new federal Cable Communications
Act of 1984 outlines specific, formal and informal proce-
dures that control future renewals. Since this new law is
preemptive, presumably no change is required, as long as the
City followed the Federal procedures, however, many cities
are re-writing their codes to conform to the new procedures.
If this is desired CTIC can readily supply the appropriate
new language or it can be obtained directly from the Act
itself.
The current provision for renewing for five-year periods is
permissible under the new act (no specific time requirements
are mentioned) however, this time period is unusually short
and may serve as a disincentive to a lender to finance any
major system improvements that may be required in the future.
Seldom have we seen renewal periods less than for 10 to
15-year periods.
(2) When the City originally adopted its regulatory Code it re-
tained the right to increase the franchise fee rate in the
event FCC limitations were eliminated. Because this language
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(5.28.040 (d)) was specifically included in the Code, Carlsbad,
we believe, is now permitted under the new Federal, law, if
it so chooses, to increase the fee to not more than 5 percent
after holding a public hearing and affording due process. .
(FCC jurisdiction on this matter has been eliminated by the
new law.) The City should be aware, however, that the cable
companies are also now permitted to list the franchise fee as
a separate item on the subscriber bill.
(3) Apparently Carlsbad has never adopted the standards required
under Code Section 5.28.160(b)(c). These standards are to
It govern the engineering, construction, installation, service,
and maintenance of all cable television systems in the City,
including but not limited to standards governing carrier
levels, signal-to-noise ratios, hum modulation, distortion
levels, channel interactions and inter-reactions.'' The
absence of specific standards will make it difficult to
enforce any future technical monitoring or improvement that
might be needed as systems begin to be overextended, equipment
develops obsolescence, and system failures result from aging
of facilities.
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(4) As a final suggestion, in our opinion, Section 5.28.175(e)
should not be included in a generic ordinance that regulates
cable systems generally. This section describes specific
rates for specific cable companies and should be part of the
ordinances granting those companies franchises or perhaps
placed in specific ordinances or resolutions that established
rates for these companies.
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111. FINANCIAL REVIEWS OF
CARLSBAD CABLEVISION (CABLEVISION)
AND RANCHO LA COSTA CABLE TV (LA COSTA)
A. CARLSBAD CABLEVISION: 1979-1983
This report describes the financial history and condition of
Carlsbad Cablevision as reflected in the audited financial statements
of the partnership covering the period of April 4, 1979 through
December 31, 1983.
1. CURRENT SYSTEM STATISTICS
As of January 3, 1985, Carlsbad Cablevision consisted of 108.88
miles of plant passing 10,666 homes. Of these homes, 64 percent cur-
rently subscribe to its $10.95 per month basic service charge for a
total of 6,778 basic subscribers. This is about 10% higher than the
national average of $9.95 for basic service*. The operator experiences
a .8 pay service to basic subscriber ratio for its three pay services,
Home Box Office , Cinemax, and The Playboy Channel.
The system experiences an average density of homes per cable mile
of 97.96. System density is one measure of potential profitability.
Typically, an average density of 100 homes per mile or more is con-
sidered good. The Carlsbad Cablevision system experiences reasonably
good system density.
* As reported by Paul Kagan Associates.
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2. HISTORICAL SUMMARY OF FINANCIAL PERFORMANCE
a. Formation of the Partnership
Carlsbad Cablevision is a limited partnership formed on
September 27, 1978 for the purpose of acquiring the cable system.
The partnership has one general partner, an affiliate of Daniels
and Associates, and several limited partners including Daniels
Cablevision, Inc. also an affiliate of the general partner.
The limited partners contributed $724,880 in partnership capi-
tal in addition to an authorization for the Carlsbad franchise
contributed by Daniels Cablevision, Inc. According to the audited
financial statements, the value of the franchise contributed by
Daniels Cablevision, Inc. was assessed at $95,120. In exchange
for the franchise contributed, Daniels Cablevision received an
11.6 percent interest in the limited partnership.
Syndication and organization expenses associated with the
formation of the limited partnership totalled $81,424. Syndica-
tion costs represented a little more than 10 percent of the cash
proceeds of the limited partnership offering.
According to the audited statements the terms of the partner-
ship agreement call for any cash distributions as well as alloca-
tion of profit and loss to be made 99 percent to the limited
partners and 1 percent to the general partner until all partners
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have received distributions equal to their total capital contribu-
tions. In addition, the next $1.75 million of cash distribution
will be made 70 percent to the limited partners and 30 percent to
the general partner. Thereafter, 50 percent of distributions
would be made to the general. partner and 50 percent to the limited
partners.
This type of limited partnership distribution structure has
been very common in the CATV industry.
b. Acquisition of System Assets in 1979
On April 4, 1979 the partnership purchased from Daniel Cable-
vision, ' Inc. the Carlsbad cable system as well as 'la substantial
portion of the equipment and cable necessary to complete construc-
tion of the system." The purchase price of the system appears to
have been $753,426, of which $500,000 was the assumption of long-
term debt and $196,217 in other liabilities.
c. System Management
?he partnership entered into a management agreement with
Daniels and Associates. an affiliate of the general partner and
the previous owner of the system. According to the audited state-
ments, Daniels and Associates receives a 5 1/2 percent management
fee with a minimum of $25,000 in addition to reimbursement of
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direct expenses up to $25,000 annually. Daniels and Associates
has received the following payments for management services :
1979: $18,750
1980 : $36,371
1981: $37,620
1982: $62,817
1983 : $81,830
In addition, the partnership has entered into a joint office
lease agreement with Daniels and Associates.
d. Fiscal 1979 (April-December)
During the first year of operation of the cable system, the
partnership acquired the existing system assets as noted and
invested an additional $700,000 in property plant and equipment.
A total of $1 million in long-term debt was arranged through
Security Pacific Bank of which $500,000 appears attributable to
the system acquisition and another $500,000 associated with
increase in plant assets after acquisition.
During the nine months of fiscal 1979, the partnership re-
ports $30,138 in revenues, of which $25,443 are attributed to
subscriber services. This implies an average subscriber base of
under 300 subscribers. Operating expenses including general,
selling and administrative costs and management fee reported
totaled $226,000 which appears high for such a low level of
revenue generated.
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Using 150 percent declining-balance for the used assets ac-
quired and double declining balance for new assets, the partner-
ship reported $37,887 in depreciation. The estimated useful life
being used to determine depreciation expense is nine years for the
headend, 7-8 years for the distribution system, 10 years for build-
ings. These estimated useful lives are relatively short compared
to most systems we have reviewed. Typically, for example, the
useful life of new distribution plant is estimated to be 12-15
years. According to the audited statements, $73,569 of acquisition
costs is being carried as goodwill or going concern value. This
amount represents the difference between the purchase price of the
system and the market value of the tangible assets purchased. The
partnership is amortizing this cost.
In addition, the partnership is amortizing the franchise cost,
the $95,120 value associated with the franchise authorization con-
tributed by Daniels Cablevision, Inc. in exchange for its partner-
ship interest.
and loan costs.
The partnership is also amortizing organizational
Total amortization reported in 1979 was $31,200.
Total interest costs on the Security Pacific Note totaled
$69,210, all of which was capitalized. According to the audited
statement, the terms of the loan called for an interest rate of
the prime rate plus three percentage points until required levels
of cash flow are achieved, after which 2 1/2 percent over prime
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rate would be the prevailing rate.
specify what the required levels of cash flow are.
The audited statements do not
The partnership reports a $271,778 pretax loss in 1979. No
provision is made for taxes because the individual partners report
their distributive share of partnership income or loss on their
personal. tax returns. According to the audited statements the
partnership return of income filed in 1979 reported a $352,775
loss, which is $80,997 more in loss than reported on the audited
statements. The audited statements explain the differential as
the result of alternative accounting policy in the treatment of
depreciation expense and other expense items.
e. Fiscal 1980 (January-December)
The partnership reported a capital expenditure of $420,056
in 1980 for property plant and equipment. Because the operation
continued to generate a cash loss in 1980, additional funds
totalling $420,000 were borrowed from Security Pacific National
Bank.
The system generated $218,119 in revenue in 1980, a substan-
tial improvement over 1979. However, operating costs exceeded
$414,000, leaving an operating loss before interest and deprecia-
tion of $196,312.
statements, some of the reported operating costs are a pro rata
According to the notes accompanying the audited
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allocation of the operating costs of a number of systems Daniels
and Associates manage in San Diego County. The auditor's report
states that these costs ($302,674 in 1980) are allocated based on
Daniels & Associates' personnel ratios in each system.
Depreciation expense reported for 1980 was $236,408 and amor-
tization totalled $41,600.
Total interest expense on the $1.42 million long-term debt
totalled $208,676 of which $60,408 was capitalized. In addition,
the partnership capitalized $145,553 of operating and depreciation
expenses .
A pre-tax loss of $622,588 was reported in 1980. The partner-
ship return of income reported $701,487 in loss, $78,899 more loss
than in the audited statements.
f. Fiscal 1981
The partnership reports $891,056 in expenditure for property
plant and equipment in 1981. In addition, it sold to an affiliate
of the partnership a portion of its headend, earth station, and
origination equipment for $279,989. This resulted in a gain to
the partnership of $37,824. According to the audited statements,
the partnership then purchased for $75,908 a 10 percent interest
in a joint venture with an affiliate of the general partner. The
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joint venture owns and operates a headend system via an amplitude
modulated link.
In 1981, the partnership borrowed an additional $80,000
through its loan agreement with Security Pacific National Bank.
In addition, the partnership borrowed an additional $138,525 from
an unspecified party according to the audited statements at a
12 percent interest rate.
The partnership also entered into a loan agreement with an
officer of an affilate of the general partner. According to the
audited statements, this officer has committed to lend up to $1.050
million to the partnership on a subordinated basis. The principal
and interest at 12 percent are payable upon sale of the Carlsbad
system. According to the audited statements, the partnership bor-
rowed $683,000 under these terms in 1981, and accrued $51,593 in
deferred interest costs.
Revenues from cable service reported for 1981 ($452,485) re-
vealed a 120 percent increase over 1980. In addition, the partner-
ship reports $43,989 in revenue from gain on sale of assets and
other sources. Operating costs continued to exceed revenues by
$89,158.
Reported depreciation expense in 1981 was $405,362. Amortiza-
tion expense was $41,601.
Total interest costs on the three outstanding loans totalled
$374,089, an average of about 20 percent interest on average
indebtedness.
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The partnership reported a $865,687 pre-tax loss in 1981 and
a $418,723 negative cash flow. The partnership return of income
for 1981 showed $753,037 loss, $112,650 less than the audited
statements show.
g. Fiscal 1982 (January-December)
Capital expenditure for property, plant and equipment was
$503,848 in 1982. Because in 1982, the system was still not
generating positive cash flow, additional funds were borrowed.
According to the audited statement, the partnership borrowed an
additional $600,000 from Security Pacific Bank. In addition,
$45,000 was borrowed under the subordinated loan agreement with
the officer of the affiliate of the general partner. In 1982,
$88,307 in deferred accrued interest was added to that loan.
The partnership repaid $34,747 in principal to the $138,526
note taken in 1981.
Revenues increased to $993,921. For the first time operat-
ing income (before depreciation and interest expense) was positive
($286,196).
Depreciation Expense reported for 1982 was $448,772. Amorti-
zation expense reported was $50,471.
Total interest expense on the three outstanding notes total-
led $437,296, averaging 16 percent on average indebtedness.
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The partnership reported a $650,343 net loss in 1982. The
system generated a negative cash flow of $151,100.
h. Fiscal 1983 (January-December)
In 1983 the partnership added $214,051 to property plant and
equipment. It borrowed an additional $170,552 under its subordi-
nated loan agreement, and repayed $33,133 under its 12 percent
note. An additional $120,487 was added to its subordinated loan
agreement with the officer of the affiliate of the general partner.
The system generated $1.332 million in revenues against operat-
ing and administrative expenses of $908,927 generating income before
depreciation, interest and taxes of $423,551.
Depreciation expense reported in 1983 was $420,846. Amorti-
zation expense was $49,668.
Total interest expense reported was $414,432, averaging
13 percent of outstanding debt.
The partnership reports an operating loss of $461,395 in 1983
and, for the first time, a positive cash flow of $9,119.
3. ANALYSIS OF FINANCIAL CONDITION
The financial condition of the Carlsbad Cablevision operation
must be analyzed from the perspective of its ownership structure.
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If this system were owned by a group of stockholders, the fact
that the system has yet to show a positive net income could be an
indication for concern. However, in this case, the limited
partnership structure allows the limited partner investors to
"write off" the losses and investent tax credits against their
personal tax liability. The general partner has invested no
equity capital and while the general partner carries full fi-
nancial liability for the system, the market value of the system
when sold would more than offset any currently outstanding lia-
bility,
To exemplify the relative profitability to the investors, we
offer the following portrait. Since we have no data, for the fol-
lowing theoretical example we assume that the system was sold in
1984 for $800 per subscriber less outstanding liabilities. We
also assumed investors were in the 50 percent tax bracket.
Limited Partners
Inve s tme n t ($820,000)
Loss ITC
1979 tax saving* 174,624 + 74,250 = $ 248,874
1980 tax saving 347,236 + 41,580 = $ 388,816
1981 tax saving 372,753 + 88,215 = $ 460,968
1982 tax saving 321,920 + 49,881 = $ 371,801
1983 tax saving 228,390 + 21,191 = $ 249,581
Estimated Net Value of Ownership $1,000,000
Internal Rate of Return - 40%
*Based on 99 percent of reported loss at 50 percent tax bracket;
ITC = Investment Tax Credit
0 m 1
111-12
As shown, we estimated that the limited partners have earned
a $1.7 million in tax savings between 1979 and 1983. Had the
system been sold in 1984, the limited partners would have achieved
an average annual internal rate of return of 40 percent based on
tax savings.
It is more difficult to assess the level of profitability to
the general partner since affiliates of the general partner are
involved in a variety of the business functions. Affiliates of
the general partner hold a 11.6 percent interest in the limited
partnership in addition to serving a management funtion, leasor of
office space, joint partner in other operations, and lendor.
Overall financial viability of the operation exists. bve-
nues and operating income have rapidly improved over the past five
years. Reported losses appear more a function of accelerated
depreciation and the method of financing used. As of 1983, for
every dollar of equity capital invested since 1979, $4 of debt
capital was used. This high degree of financial leverage results
in proportionately higher interest costs which from a tax shelter
perspective is good but it does have a negative affect on the
appearance of profitability. As noted before, the limited part-
ner; have most likely done very well from a tax shelter position
over the past five years.
I I I Revenue
Operating Expense I I ] Operating Income I
1979 1980 1981 1982 1983 1
30,138 218,119 497,009 993,921 1,332,478
71,596 202,835 312,520 1 425,586 552,270 1 I I (41,458) 15,284 1 184,489 568,335 780,208 ,I
I I
\General Selling and 1 I 1
!
ministrative
experience 135,571 175,255 191,503
18,750 36,341 37,620 ' Management Fee
t
I Other Expense 6,912 I - - I lM I I i
62,817 81,830 I 219,322 274,827
I -1 1
-
Depreciation,
Interest and
Taxes (202,691) (196,312)' (44,634) 286,196 423,551
I I 69,087 ' 278,008
Interest - 148,268
Depreciation and
Amortization I 1
I 446,964 499,243 470,514 I
374,089 437,296 414,432
Pre-Tax Income (Loss) (271,778) (622,588) (865,687) I (650,343) (461,395) i I (262,691) (344,580) (418,723) (151,100) I ICash Flow
1 I I
9,119 I I
I
1979 1980 I 1981 1982 1983
Current 452,778 133,178 167,377
Property Plant ] and Equipment
1 Accumulated
1,173,258 1,701,094 2,229,281 I
1
Depreciation (37,887) (381,475) (691,190)
Net Property Plant
and Equipment 1,135,371 1,319,619 1,538,091
Franchise Cost 95,120 95,120 95,120 I I 1
89,542 95,110 I
2,655,18 2,869,112
(1,085,193),(1,505,919)
1,569,988 1,363,193
i 95,120 95,120
Financing, Goodwill,
Other 188,878
Amortization ( 31,200)
TOTAL ASSETS 1,840,947
188,728 229,028 I 229,428 ' 229,428
( 72,800) (114,402) (164,873) (214,541)
1,663,845 /1,915,214 ' 1,819,205 1,568,310
1 1982 $ 503,848
1979 1 \
1980 1981 1982 1983
1,000,000 1,420,000 I Note 1:
Note 2:
Note 3 (including 1
Deferred I
Interest )
1,500,000 12,100,000 2,100,000
138,525 103,778 70,665
1
734,593 I 867,900 1,158,939 ] I 1
Note 1: I Note payable to Security National Bank.
1
Note 2: I
I
~
after quarterly interest and principal. However,
loan appears to have been renegotiated before 1981.
Principal payments now deferred until 1984. I
I 12 percent note with final installment due December 31,l
1985. f 1
1 I
I 1 Note 1
I-Note 2
1979 1980 1981 1982 1983 1 1 1 I I 1,000,000 420,000 80,000 1,100,000 -1 1 - , 138,525 - I
Note Deferred --i---i- 1 Note 3 i-
Repayment:
683,000 45,000 170,552 f I
I 51,593 88,307 120,487 1
I I
I Note 1
I
500 , 000 - 1 Note 2 1 34 , 747 33,113 I I Interest
Expense 69,210* 208,676* 374,089 437,296 I I 414,432 1 I
-.. m
t t
111-18
B. RANCHO LA COSTA CABLE TV: 1978-1984
This report describes the financial history and condition of
Rancho La Costa Cable TV as reflected in the audited financial
statements and supplementary financial data of the firm covering
the period of Fiscal 1979 through September 30, 1984.
1. CURRENT SYSTEM STATISTICS
As of February 1, 1985, the Rancho La Costa TV system consists
of 70 plant miles passing 5,500 homes. Of these homes, 4,653 sub-
scribe to its $10.50 per month basic service. This yields a market
penetration rate of 85 percent. This is a very high rate of market
penetration compared with an industry average of 56 percent. The
basic service charge of $10.50 is slightly higher (5 1/2 percent)
than the average national basic rate of $9.95*.
The system experiences an average density of homes per cable
mile of 78.6. System density is one measure of potential profita-
bility. Typically, an average density of 100 homes or more per
mile is considered good; below 60 homes per mile is considered
poor. The Rancho La Costa system experiences fair system density.
*As reported by Paul Kagan Associates
L. * e
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111-19
2. HISTORICAL SUMMARY OF FINANCIAL PERFORMANCE
a. Ownership
In 1978, the system was a wholly-owned subsidiary of Rancho
La Costa, Inc. and was known as La Costa Community Antenna System,
Inc. The company appears to have been formed with 500 shares of
$10 par common stock. On February 25, 1982, Rancho La Costa, Inc,
transferred its 100 percent interest in the system to La Costa Hotel
and Spa. La Costa Hotel and Spa is a partnership composed of sub-
stantially all former shareholders of Rancho La Costa, Inc.
b. Fiscal 1978 - Year Ending December 31
In 1978, the firm invested $138,326 in equipment for the cable
system. This investment was primarily funded from a $77,329 cash flow
and $65,188 in advances from Rancho La Costa, Inc.
As of the end of 1978, total advances from the parent company
totalled $291,077 which was carried as a liability on the financial
statements and appears as the only source of long-term debt. No
interest expense was reported associated with the advances. This is
a slightly unusual treatment based on our experience, Typically,
most parent companies do charge interest cost on some or all of
advances which are expected to be repaid in the course of business.
). 0 e
111-20
The firm reported $244,949 in revenues in 1978. Operating
and administrative expenses totalled $167,620. This yields an
operating ratio (operating expense to revenues) of 68 percent
"he firm is depreciating its assets over 10 years in a
straight line basis. In 1978, $24,144 in depreciation expense was
reported.
The firm reports no income tax in 1978 on $53,185 earnings.
Subsequent financial statements indicated that the parent company has
incurred substantial losses and as such incurred no tax liability on
these earnings.
c, Fiscal 1979
Reported capital expenditure for 1979 totalled $327,038. Of
this amount, $280,693 was to increase fixed assets. The remaining
amount was construction-in-progress. Funding for this expenditure
reportedly came primarily from operating cash flow ($130,557);
additional advances from the parent company ($107,049) and an increase
in short-term borrowing or payables ($79,444). The additional parent
company advances increased the balance of parent company liability to
$398,126.
Total revenues increased 36 percent in 1979 to $332,187, Of
this amount, $278,761 were monthly subscriber fees; $29,122 were
installation fees; and $24,303 were contract fees. The firm indicates
that it received $14,300 for providing service to its parent company's
- '. I) 0
111-2 1
resort operations, Operating expenses increased to $201,633 or
by 20 percent, resulting in an improved operating ratio of 61
percent. Income before interest and depreciation was $130,554,
Operating expense associated with salary and benefits totalled
$107,975 in 1979, an increase of approximately 9 percent over
1978. This adjustment appears to be associated with salary and
benefit increases rather than personnel additions.
Non-personnel related expense increased 8 percent in 1979,
due primarily to increases in legal fees, subscriber expenses,
billing and utilities.
Due to increases in assets, depreciation expense increased
to $39,073 in 1979.
kt earnings were reported at $91,481 with no tax indicated
due to parent company losses. Total cash flow generated $130,554.
d. Fiscal 1980
The firm reported capital expenditures totalling $381,409 in
1980. This expenditure was financed primarily from operational
cash flow ($169,124); additional advances from the parent company
($114,268); and a note payable of $160,000. The financial state-
ments indicate that this note payable was a three-year note col-
lateralized by system assets with interest costs of two percent
over prime. In 1980, the firm reduced the note's principal
balance by $42,000.
I. e
111-22
The balance of parent company advances increased to $512,394
in 1980.
System revenues increased to $537,321 in 1980. One principle
source of this increase was the addition of HBO (pay television in
1980). HBO generated $138,607 in revenue in 1980. In addition,
monthly basic fees increased 24 percent. Converter rental fees of
$15,821 were collected, most likely associated with rental charges
to HBO subscribers. The operator also received $29,100 in revenues
from providing cable service to its parent company's resort operation.
Overall, revenues improved by 62 percent in 1980.
Operating and administrative expenses increased to $358,640
in 1980, an increase of 78 percent over 1979. Of this amount,
$64,131 was paid to HBO. Payroll related expenses increasedby 21
percent in 1980. It appears that the firm added one or two
personnel in 1980. In addition, it appears that it increased its
fleet of leased vehicles. Significant increases were also reported
in legal fees, subscriber fees, non-HBO programming cost, billing
expense office supplies and utilities.
Income before interest and depreciation in 1980 was reported
to be $178,681, an increase of 37 percent over 1979.
Net income was lower in 1980 than 1979 due to added interest
costs and increased depreciation expense. Total interest expense
paid was $18,876, which averaged 14 percent of the average balance
of the notes payable.
-._ I) a
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111-23
Reported net income for 1980 was $60,898 with cash flow total-
ling $159,805.
e. Fiscal 1981
The firm reported a $94,315 capital expenditure in 1981. It
also apparently loaned an officer $24,000 and repaid $56,000 of
its note payable. Primary sources of funds included $146,782 from
operations and an additional $40,186 advance from its parent corn-
PanY *
The balance of parent company advances increased to $552,580
in 1981. The note payable balance decreased to $62,000.
Revenues increased to $683,029 in 1981. Of this amount
$210,798 was attributable to HBO. Monthly basic fees increased
13 percent. Contract fee income increased to $20,337 and conver-
ter rental fee revenue increased to $28,375. Revenue received
from providing cable service to the parent company's resort opera-
tion totalled $32,462 in 1981. Total revenues improved 27 percent
in 1981.
Total operating and administrative costs significantly increas-
ed in 1981 to $524,248; up 46 percent from 1980. Again it appears
that the operator added staffing which resulted in a 28 percent
increase in personnel costs. In addition, the firm reports three
new categories of expense in 1981: accounting expense ($12,000);
contract maintenance ($2,336) and fees and licenses ($2,398). The
.’. e a
L
111-24
cost of providing HBO, which is based on approximately 50 percent
of HBO revenues, increased by $38,856. The operating ratio increas-
ed to .77 in 1981.
before interest and depreciation declined in 1981 to $158,781 from
$178,681 in 1980.
This is a somewhat unfavorable ratio. Yncome
Reported interest expense in 1981 was $19,490. This averages
22 percent of the average balance of the note payable and appears
consistent with high interest rates in the 1980-1981 period.
Depreciation expense increased to $113,495 in 1981.
Net income reported in 1981 was $25,796 continuing a pattern of
decline since 1979.
f. Fiscal 1982
As noted earlier, system ownership was reorganized in 1982 from
a corporation owned by Rancho La Costa, Inc. to a partnership owned
by former shareholders of Rancho La Costa, Inc. All previously re-
ported parent company advances treated as liabilities were subsequent-
ly transferred to a paid-in capital (equity) account which held a
$528,970 balance as of the end of 1982. Approximately $44,000 was
repaid to the parent company in 1982.
The firm reports a $146,816 expenditure for plant and equipment,
funded entirely from operating cash flow. In addition, the firm
appears to have loaned an officer an additional $18,500 and repaid
$56,000 of its note payable.
'. * e
\
I1 1-25
Revenues increased 30 percent in 1982 to $892,103. Monthly
basic service fees increased by 44 percent to $562,550 and pay cable
fees increased to $278,960. Provision of cable service to the La
Costa Hotel and Spa generated $39,800.
Operating and administrative expenses increased 25 percent in
1982. Wage related expense rose 13 percent. A significant portion
of operating expense increase was attributed to revenue-related
expense items such as copyright, franchise fees, the access foun-
dation payment and pay cable expenses which increase with the
substantial increase in revenues.
The firm earned $233,221 in operating income; an increase of
47 percent from 1982. The operating ratio improved slightly to .74.
Reported depreciation expense for 1982 was $135,184. Interest
expense for 1982 was reported at $10,253.
1982 net income was $80,584.
g. Fiscal 1983
In 1983, the firm reported a $411,835 capital expenditure for
equipment. In addition to the $266,790 provided from operations, the
expenditure was financed from a $38,857 borrowing from the parent
company. In addition, the firm drew down $44,000 on a $280,000 line
of credit it had established at one plus prime.
According to the audited statements, the firm sold some assets
for $9,207 and incurred a $47,083 loss on the sale. No indication
0 0 - '*
'.
111-26
was made of the nature of the assets. In addition, the firm pur-
chased for one dollar a lot to be used for the construction of a CATV
antenna. This was apparently a part of an agreement between Rancho
La Costa, Inc. and La Costa Land Company.
Revenues continued to improve in 1983 to $1,008,870, an increase
of 13 percent, Basic revenues increased by about 15 percent and pay
television income increased by 11 percent. Revenues from providing
cable service to the La Costa resort operation totalled $41,850.
Operating and administrative expenses increased by 12 percent
in 1983. Gross wages increased by 40 percent to $220,407 however,
$58,306 was capitalized. Income before interest and depreciation
increased to $273,000, a 17 percent increase over 1982. The oper-
ating ratio improved slightly to .73.
The reported loss on the disposal of assets ($47,083) caused net
income to decline in 1983 to $57,222.
2. OVERALL FINANCIAL PERFORMANCE
The Rancho La Costa system is a small cable television opera-
tion with a fair density of homes per cable mile. However, it
experiences a very attractive market penetration rate of 85 percent.
Over the past seven years, it appears to have significantly
expanded its operations and has invested almost $1.5 million in
plant and equipment.
e e -'.
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111-27
The owners have earned an average rate of return of about 7 per-
cent on net assets. While this is less than an optimal level of
return for the investor, the system appears financially strong with
revenue growth significantly exceeding operating expense increases
over the past seven years.
I I 1978 1979 1980 1
Revenue 244,949 332,187 537,321
Operating Expense I 132,604 159,084 252,813
1 Operating Income 112,345 ' 173,103 284,508
I
General and
Administration 35,061 1 42,549 105,827
Income Before
Interest and
Depreciation 77,329 130,554 178,681
Depreciation 24,144 39,073 98,907 -4--+ I
- 1981 1982 1983
683,029 892,103 1,008,8
360,261 480,952 523,7
322,768 411,151 485,O'
163,987 177,930 212,O'
273 , O( 158,781 ' 233,221
113,495 135,184 158,6(
- In t eres t -
I
1 Other - -
Pre-Tax Income 53,185 91,481 ,
Tax 1 - - -
Net Income 53,185 91,481
f Cash Flow 77,329 130,554 t
18,876 19,490 10,253 299
47,0(
64,31 I
7,200 791
60,898 25,796 80,584 57,2.
139,291 215,768 215,81
- - -
60,898 25,796) 87,784 1
- -
I
I 159,805 1
1 1978 1979 I
Current 12,145 6,570
1 1980 1981 1982 1983
32,500 849 53 204,719 196,7'
Fixed Land 8,675
Building 143,306
Property 363,446
TOTAL 515,430
(Accumulated
Depreciation) (143,525)
Net Fixed Assets 371,905
Franchise Cost (Net) 20,869
TOTAL ASSETS 404,919 I
8,678 8,678 8,678 8,678 836
143,306 143,306 143,306 143,306 143,3t
690,484 11,071,893 1,269,671 1,321,933 1,599,76
842,468 1,223,877 11,321,655 11,464,917 1,755,9[
(182,598), (281,505) (398,020) (529,649), (623,75
659,803 942,372 923,635 935,268 1,132,lf
24,562 29,118 23,584 19,759 15,9:
691,002 1,003,990 1,032,172 1,059,746 1,344,86
I
1982 $ 146,816
1983 $ 411,835
1978 1979 1980 1981 1982 1983
Note Payable I
Parent Company 291,077
Contract Payable ,
1
118,000 62,000 6,000 50,000 1 I
18’793 1 398,126 512,394 552,580 -
21,546 I I I I
e 0 LL
.-
1
IV. SYSTEM REVIEWS
CARLSBAD CABLEVISION ( CABLEVISION)
AND
RANCHO LA COSTA CABLE TV (LA COSTA)
A. CABLEVISION
1. COMPLIANCE REVIEW FOR CABLEVISION
Cablevision’s system and operations were examined to determine
whether it was in general compliance with the terms of its franchise.
System requirements were established after reviewing the three major
documents that define the franchise - Chapter 5.28 of the Carlsbad
Municipal Code, Ordinance /I6058 and Cablevision’s original proposal.
a. Service Area/Line Extensions
In Ordinance a6058 and the proposal the Carlsbad community was
split into two independent service areas with one served by Cablevision
and the other to be served by La Costa.
At the time of CTIC ‘s visit Cablevision stated that its system
was available throughout its entire franchise area however there were a
* 0 .-
1' L -..
IV-2
few limited cases where although the system was available potential
subscribers could not be immediately installed. These were either
trailer parks where a right of entry had not yet been granted by the
owner or one or more apartment buildings where either a right of entry
had not yet been granted or contract negotiations had not been com-
pleted.
be serviceable when these issues are agreed upon.
In any event the residents in these situations were said to
In total Cablevision is using approximately 109 miles of cable
plant to pass 10,660 dwelling units in its service area. Of these, it
has acquired 6,778 basic subscribers, a 63.5 percent penetration.
Cablevision serves Carlsbad from a single headend located at Squire's
Dam which relays signals to a hub on Kelly's Mountain via AML micro-
wave. Cablevision also uses this headend and microwave system to pro-
vide service to other communities in the CarlsbadjNorth County area.
total of seven separate microwave paths are used, including the one to
Kelly's Mountain (from which all of its Carlsbad subscribers are served)
and one to La Costa's headend, which is used for a regional/ access
interconnect.
A
b. Channel Capacity
Code Section 5.28.030 and the RFP documents set a minimum capacity
of 20 downstream channels for any cable system serving Carlsbad. In
0 0 *\
IV-3 --
its proposal Cablevision stated that it would go beyond this minimum and
construct a system that would be capable of delivering up to 36 channels
(300 MHz) with 30 initially operating.
Cablevision has constructed a 300 MHz system using Sylvania/
Texscan equipment. That portion of the existing plant built prior to
1983 (approximately 85 percent) was built and spaced for 300 MHz opera-
tion. The newer sections of the system have been built and spaced to
allow for future expansion of capability using new amplifier modules to
400 or 450 MHz. The older plant could probably be expanded ultimately
to 400 MHz operation without major reconstruction by using new high
gain amplifier modules in existing housings. Cablevision has met its
franchise obligations as written, thus any further expansion is at its
option, and is not a requirement per se.
C. System to be Two-way Capable
Code Section 5.28.030 and the proposal call for the system to be
two-way capable. Although two-way activation was not a requirement, in
its proposal Cablevision stated that it possibly would activate limited
portions of its upstream capacity for such things as a link with City
HalS .
Cablevision has met its requirements with the construction of a
two-way capable system. At this time it has not activated any portions
of this capacity.
e 0 L.
1 IV-4
d. Dedicated Channels - Access
Code Section 5.28.030 and the proposal specify that at least three
access channels would be provided - one government access channel, one
public access and educational access.
Cablevision's current chanel lineup shows two channels designated
for public access (Channels 13 and 30), one dedicated to the San Diego
County Schools (Channel 23), and one channel shared by Palomar College
(Channel 3), however, no channel is designated for local government
usage.
e. Studio/Access Equipment
Code Section 5.28.030(a)(8) required the cable company to main-
tain a studio and production capability when a level of 3500 sub-
scribers was reached. It also allowed for a company to petition
regarding this requirement if there were two or more franchises in
the City (with either or both having subscribers at the 3500 level)
so there need not be an unnecessary duplication of facilities. The
Code does not specify the makeup of the studio but one is contained
in Cablevision's proposal. The studio was to consist of:
one color camera with appropriate accessories
two record/playback videotape units
one lighting kit/package
three microphones with appropriate accessories
I) I) b\.
I' -.
IV-5
At present there is one studio "serving" Carlsbad which is locat-
ed at Cablevision's offices and operated and maintained by Cablevision.
The equipment in this studio is much more sophisticated and comprehen-
sive than the minimal description contained in the proposal. La Costa
pays Cablevision a set monthly amount for its share of the support of
the studio and 1 percent of basic revenues is placed into a fund to
support access.
f. Interconnection with Schools and Other Public Buildings
Code Section 5.28.030 requires the operator to provide connection
with public schools and community colleges, and buildings owned and
controlled by the City which are used for public purposes.
Cablevision feels that it has given the required connection to all
locations which have requested them. Its records show connections at:
Carlsbad High School
La Palma High School
Pine Street High School
Jefferson Elementary School
Mag no1 ia El emen t a r y School
Carlsbad City Library and two connections noted
as "Fire Fighter"
v 0 bs.
' 2
-7
IV-6
g. FM Audio Service
Ordinance 6058 calls for the company to provide at least 15 FM
radio signals received off-air. The proposal states that up to 30
individually processed audio signals will be provided.
At this time Cablevision is providing 21 individually processed
radio signals including three satellite channels - MTV, the Movie
Chanel, and Home Box OFfice .
h. Interconnection with Other Systems
Code Section 5.28.030 (d)(l)-4) sets up requirements for the com-
pany to interconnect with other cable systems. If there is more than
one company servicing the City, when subscriber counts reach 3,500 a
single channel, one-way, headend to headend interconnect is to be
implemented. The grantee is also required to interconnect, at the
direction of Council, with other nearby systems for origination and
access purposes. Relief of these requirements may be given due to
technical or economic difficulties or by the inability to conclude
negotiations with other systems.
At this time Cablevision has effected a headend to headend inter-
connect with La Costa via its AML microwave system. This is a one-way
interconnect from Cablevision to La Costa however it is not a single
channel, but rather "gives" La Costa all of Cablevision's programmed
0 ** -
I ..
IV-7
channels. In this way the interconnect can "deliver" the local com-
munity channel plus satellite channels used with local commercial inser-
tion and the Palomar College programming. We do not know whether the
Council has directed Cablevision to interconnect with any systems be-
yond the limits of Carlsbad, but would note that due to its system
design (single master headend with AML microwave linked hubs) Cablevisio,
has in effect interconnected Carlsbad with the other communities it
serves from its headend.
In a somewhat related area we should note how Cablevision has linkec
its Carlsbad system with its headend for local programming. Presently a
single channel F11 microwave system links Cablevision's offices/studio
with the system headend. Character generators for the automated channel,
are located at the headend with input signals being carried via telephonc
lines, In addition to this system Cablevision has constructed a land
line coaxial cable interconnect that will link its offices and the heade
This will be a 300 MHz mid-split system using C-Cor equipment. This wil
be used for the studio input and for any other needs that may arise in tl
future. The existing microwave system will be maintained as a backup,
i. Local Office
Code Section 5.38.030 and the proposal call for the operator to mail
tain a local office and meet certain standards for availability to the pi
9 e +'.
.' -"
IV-8 --
Cablevision has exceeded the "normal business hours" requirement
for its office hours by having extended hours till 7:OO p.m. on weekdays
It attempts to respond to all service calls within two hours with 24
hours being the worst-case response unless the subscriber requests a
different schedule, including holidays and weekends.
j. Other Features to Note
SATELLITE SIGNAL RECEPTION
No requirements were made regarding satellite signal reception how-
ever Cablevision's proposal did state that it was probable that earth
stations would be installed in the future.
Along these lines Cablevision has installed two Scientific Atlanta
5.0 meter antennas with fixed frequency and frequency agile receivers at
its headend. One of these antennas is configured with a dual feed so
programming may be received from a total of three satellites. In addi-
tion Cablevision has an extra antenna installed at its offices. This
antenna is not used for subscriber programming (it could be considered a
"showpiece" and is used to evaluate new programming) but could be used
as a backup for one of the antennas at the headend, using the local
interconnect to send programming back to the headend for distribution.
9 0 -.
'c *
-..
IV-9 .-
2. SYSTEM PERFORMANCE =VIEW
CTIC's field performance evaluation was preceded by an in-house
review of Cablevision's most recent FCC proof-of-performance record and
the company's service call summaries. The proof showed that all appli-
cable FCC requirements were being met or exceeded, and the summaries
showed no unusual number or types of service calls for a system of this
type and age based upon our examinations of other similar systems. To
independently check these two records, an on-site evaluation was con-
ducted .
The first step in CTIC's field evaluation was the examination of re-
ceived signal quality at the system headend. This step is a vital part
of any examination as there can be no expectation of acceptable delivered
signal quality (to subscribers) unless acceptable quality signals are
first received by/at the headend. The cable distribution system cannot
improve the quality of a "poorly received" signal.
Observations at the headend showed that most signals were received
with good quality, however, there are a few exceptions which should be
noted. Channel 6, XETV and Channel 23 San Diego County Schools appeared
to have a slightly noisier or weaker picture than other system channels
which seemed to be source related as it varied with the program being
carried. Channel 16, CNN, also showed a slightly noisier picture but an
exact cause was not determined. We should note that the noise noted on
these channels was at the threshold of visibility and would likely not
9 a IIr
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IV-10
be found objectionable or possibly visible to most subscribers.
vision should continue to monitor this situation to determine whether
there are any corrective actions which could be taken on a local level.
Cable-
The next step in the evaluation was to check the received signal
quality at the microwave hub serving Carlsbad residents. This step was
important for the same reason as the initial check at the headend.
These observations showed the same performance as at the headend plus
Channel 34, Lifetime showed at slight amount of noise at the threshold 0;
visibility and Channel 11, KTTV showed some interference which appeared
to be cross mod, with the horizontal and verticle sync intervals showing
on the Channel 11 picture. This type of performance was seen throughout
the field test points and like the "weaker" channels noted at the head-
end the degradation of the channel was just at the threshold of visibil-
ity at close (18" - 24") observation.
not caused any subscribers to complain Cablevision should investigate
this more fully and take whatever corrective actions are warranted. Thes
channels varied somewhat in quality from little deterioration of pic-
ture quality to the point where degradation was visible but would likely
not be found to be objectionable.
While this performance has probabl
The final step in our performance evaluation was to determine the
quality of signals that were being delivered to subscribers' homes. As
it is infeasible in a limited time frame to conduct a statistically valid
sampling of signal quality in actual residences in Carlsbad (given the
numbers involved and the difficulties often encountered in coordinating
access to private homes) delivered signal quality was evaluated by
0 e
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IV-11
proxy with examinations conducted at the end of the longest amplifier
cascades in the service area. As the actual amount of degradation a
signal will suffer is largely determined by the number of amplifiers the
signals must pass through to reach a given subscriber, the extreme
points in the distribution system are reasonably representative of
worst-case system performance. In addition to the system extremities,
examinations were also conducted at a number of other test points in the
distribution system to represent average system performance.
The test points chosen were:
Testpoint # Approximate Location
1. Daisy Lane & Iris Court
2. Carlsbad & Juniper
3. Ocean & Garfield
4. Buena Vista Circle
5. Nob Hill Drive
6. Avenide dehita & Via Astuto
7. Hillsboro Court & Chatom
8. Woodstock & Lancaster
9. Calalpa & Mimosa
10. Tamarack & Adler
11. Roosevelt & Chestnut
12. Chestnut & Washington
With the exception of the channels previously noted observations at
the field test points showed generally good quality signals on all other
channels except at Test points #ti, #8 and #9. At these points a very
c 0
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IV-12
minor beat (horizontal/diagonal lines) was seen on one or more of the
upper channels (i.e., 30 and up). This beating could likely come from
one or more pieces of active equipment (trunk, bridger or line extender
amplifier) in a given cascade being out of alignment or malfunctioning.
The beats seen were not at a level that would be obvious to subscribers
however Cablevision should re-check these points and take corrective ac-
tion.
Overall our examination showed that the cable system is capable of
delivering good quality signals to the ends of the longest amplifier
cascades. The few problems noted appeared to be isolated occurrences
(not affecting major system components or large numbers of subscribers)
and were not overly severe at the time of our visit. With proper atten-
tion these problems should be eliminated and quality "restored .'I Our
examination showed that on the whole the Cablevision cable system ap-
pears to be well constructed and maintained given the overall age of the
system and should be able to deliver good quality signals to all sub-
scribers. While the system should be able to meet high standards, we
should note that given the large number of individual components in the
system (headend, cable, amplifiers, taps, drops...) it is quite likely
that a single component could fail unexpectedly or be damaged, affecting
one or more subscribers' service. We point this out, not to excuse
Cablevision during these instances, but rather to stress that in these
cases, timely maintenance and service are necessary to restore the
quality of service.
0 0 -.
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IV- 13
8. LA COSTA
1. COMPLIANCE REVIEW FOR LA COSTA
As noted in the earler discussion CTIC examined the operator's
system in Carlsbad in light of compliance requirements established
by a review of the franchise's governing documents: Chapter 5.28
of the Municipal Code, Ordinance /I6058 and La Costa's 1977 proposal
to the City.
a. Service Area/Line Extension
As outlined in Ordinance 6058 and the La Costa proposal, La
Costa is franchised to provide service in the southeast section of
Carlsbad, in the La Costa area which was operating at the time of
the franchise grant, and in other contiguous areas where service
could logically be provided. La Costa proposed to provide ser-
vice to all subdivisions in this area but stated that it would
not provide service to isolated single houses, unless costs were
paid by the subscriber,
At the time of CTIC's visit La Costa was apparently meeting
these requirements and further had extended its system to new
developments so that service would be available upon occupancy,
m e
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.-
* IV- 14
In serving this area La Costa uses approximately 75 plant miles and
passes 5,500 homes. It has acquired 4,653 subscribers for a penetra-
tion of 84.6 percent. A single headend, located at Zodiac Street
is used to receive and process all signals. This headend is
scheduled to be moved in the Spring or Summer of 1985 approximately
1 1/2 miles to the site of the new reservoir in the vicinity of
Alga Road and El, Fuerte, Preliminary work has been started on this
project including the installation of some new cable which will be
needed with the slight design change. La Costa is also going to
use the relocation of the headend as an opportunity to upgrade its
satellite receivers and replace off-air antennas. The new location
and antennas are expected to minimize the effect of electrical
interference which has affected some of the low band VHF signals
from Los Angeles during the Summer months.
b. Channel Capacity
Code Section 5.28.030 and the RFP documents set a minimum chan-
nel capacity of 20 downstream channels for any cable system serving
Carlsbad. La Costa's proposal reflected this limit and stated that
it expected to be able to upgrade its system from its then 12-channel
capacity to 20-channel capacity in mid-1978.
At the time of our visit La Costa had expanded its system
beyond these stated limits and was operating a 300 MHz system
capable of carrying about 36 downstream channels, This system has
"' ' 9 0
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IV- 15
been rebuilt from the initial system using C-COR electronics. In
this rebuild all trunk and distribution actives (amplifiers) and
passives (directional couplers, splitters) were replaced. Cable
and subscriber taps were replaced as necessary.
actives in use are only capable of 300 MHz operations, when they
were installed they were physically spaced as though the system
would operate to 400 MHz. Therefore a further upgrade to 400 MHz
would be possible, however, the same type of considerations must be
given - i.e., suitability of existing cable, taps and passives.
Although the
c. System to Be Two-way Capable
Code Section 5.28.030 and the proposal call for the system to be
two-way capable. La Costa's proposal noted that a substantial economic
base was required before a system could consider two-way activa-
tion and stated that as soon as it was technically and economical-
ly feasible it would provide two-way services.
La Costa has constructed a system which is capable of two-way
communication. At this time this capacity has not been activated.
e 0 ..
f,
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-- IV- 16
d. Dedicated Channels - Access
Code Section 5.28.030 specified that at least 3 access channels
were to be provided: 1 government channel, 1 public channel and 1
educational channel. These channels were not reflected in La
Costa‘s proposal.
At this time La Costa has one channel which is used for public
access (Channel 30, Carlsbad Community Programming) one channel that
carries educational programming (Channel 3 is shared between KABC
Los Angeles and Palomar College) however no channels are shown dedi-
cated for government access. We would note that La Costa’s channel
line up does show one channel as a subscriber information channel
(f33) and that 5 other channels are reserved for future programming.
e. Studio/Access Equipment
Code Section 5.28.030 (a)(8) required the cable company to main-
tain a studio and production capability when a subscriber level of 3500
was reached. The code also allowed flexibility in this requirement in
the event that more than one cable company was providing service
within the City. The cable company would be allowed to petition
the City for relief based upon some alternate method of meeting
access needs, the intent being a desire not to require unnecessary
duplication of facilities. La Costa’s proposal noted that a mobile
0 a ..
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I_
IV-17
unit would be made available when its system had 3,500 subscribers.
The "makeup" of this unit was not detailed.
At the present time La Costa and Cablevision have reached an
agreement* so there is one studio, located at Cablevision's office,
which is available to all Carlsbad residents. It is our understand-
ing that La Costa pays Cablevision an annual amount to cover its
share of studio related expenses and that both companies contribute
1 percent of revenues into a pool to support access grants.
f. Interconnection with Schools and Other Public Buildings
Code Section 5.28.030 requires the operator to provide connec-
tion with public schools and community colleges and buildings owned
and controlled by the City used for public purposes.
According to La Costa the only two such public buildings in its
service area, the fire house on El Camino Road and Arena1 Road and
the library in Von's Plaza, are receiving service. La Costa also
will provide service to the new school being constructed in its
service area upon completion.
*CTIC has not been able to find a copy of the actual studio facili-
ties agreement which would have enabled an actual compliance check
to be made. The Council Agenda of 1/5/82 does describe some of the
details of a plan that was being proposed for system interconnection
and also referenced the studio agreement.
e 0 ..
'1
c.
."
IV-18
g. FM Audio Service
Ordinance 6058 calls for the company to provide at least 15
FM Radio signals received off-air. La Costa's proposal states
that 14 FM stations will be carried.
At this time La Costa is providing FM services via the broad-
band method. In this method the company puts up a single antenna
at the headend and receives the entire local FM environment. The
company cannot pick and choose which stations it will relay to
subscribers or equalize differing signal levels, but all stations
received at the headend are made available to subscribers.
h. Interconnection with Other Systems
Code Section 5.28.030 (d)(l)-4) set up requirements for the
company to interconnect with other cable systems. If there is more
than one cable company within the City, when subscriber levels reach
3500 a single channel, one-way, headend to headend interconnect is
to be implemented. The grantee is also required to interconnect,
at the direction of the council, with other nearby systems for
origination and access purposes. Relief of these requirements may
be given upon petition showing technical or economic difficulties
or by the inability to conclude negotiations with other systems. In
its proposal La Costa agreed to these terms but stated that it felt
e 0 ** .
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IV-19
that interconnection was not economically feasible at the time of
its proposal submission.
At this time an interconnection between the La Costa headend
and the Cablevision headend has been affected by equipping the
La Costa headend so that it can receive an AML microwave feed from
Cablevision's existing microwave distribution system. This is
a one-way link (from Cablevision to La Costa) however it is not
limited to a single channel, but instead carries all of Cable-
vision's channels. In addition to using this system to receive
programming from the studio facilities (Channel 30 - Carlsbad
Community Programming) La Costa also received Channel 3 (for
Palomar College) and certain satellite services~ which are used
with local commercial insertion. At the time of our visit La
Costa was also using this link to receive Channel 10 - KETV from
San Diego, until its antenna could be replaced.
Although there is a functioning interconnect between the
Cablevision headend and the La Costa headend, it is not clear
whether all requirements of the code are being met. Code Sec-
tion 5.28.030 (d)(l) speaks in the singular as "the system" and
"grantee". The requirements are for grantee to establish a single
channel, headend to headend interconnect with any other system
within the City, when a subscriber level of 3,500 is reached,
While speaking in the singular, the plural case is implied as
the discussion concerns multiple franchises within the City. As
7 m *' .
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IV-20
there are two grantees, and two systems, it is not clear whether
this code section actually requires two channels, one from Cable-
vision to La Costa and one from La Costa to Cablevision. As was
discussed earlier there is an existing multiple channel intercon-
nect from Cablevision to La Costa. La Costa personnel indicated
that it might be technically possible to engineer a return link
with Cablevision either headend to headend or via an actual inter-
connect of distribution systems in the field.
i. Local Office
Code Section 5.28.030 calls for the operator to maintain a
local office and meet certain standards for availability to the
public. The La Costa proposal states that its office will be
manned during regular office hours and that an answering service
would be used at all other times.
La Costa's office is open from 8:OO a.m.-5:00 p.m. Monday
through Friday. An answering service is used at all other times.
There is one technician on standby for emergency service 24 hours
a day. La Costa's policy is to respond to all service calls gen-
erally the same day as received, or as scheduled for the subscrib-
ers' convenience. After-hour calls regarding outages or snow on
all channels are responded to immediately. For after hours calls,
the standby technician will attempt to contact the subscriber
7 0 a'.
'*
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-- IV-2 1
until midnight, and later if the problem appears serious. An
attempt will be made to schedule a service call for the daylight
hours, however the technician will respond after hours as needed.
j. Other Features to Note
SATELLITE SIGNAL RECEPTION
No requirements were made concerning satellite signal recep-
tion although La Costa's proposal did state that it expected to
offer its subscriber's pay television on or about July 1, 1978 (no
reception method was noted).
At this time La Costa has two satellite antennas in use, an
older Hughes 5.0 meter used to pick up most satellite programming
from RCA's F 111 R satellite, and a smaller Harris Delta Gain
antenna used to receive programming from Hughes Galaxy I satellite.
When the headend is moved, La Costa plans to update these facili-
ties with a new Harris 6.1 meter antenna for F I11 R and using the
Hughes antenna for Galaxy. It is likely that the existing delta
gain antenna or another similar unit will be used on a temporary
basis during the move to receive the Disney channel from Galaxy I
as this antenna can be easily moved. During the move the satellite
receivers will also be updated with the replacement of the remaining
older Hughes receivers with new Microdyne frequency agile receivers
which will increase the flexibility of the reception facilities. A
number of the original receivers have already been replaced.
, 1 ? e eL ,
.)
IV-22
2. SYSTEM PERFORMANCE REVIEW
Prior to an actual field evaluation of system performance
CTIC first reviewed La Costa test data for its 1984 Proof of
Performance and recent subscriber complaints. The tests, conduct-
ed on October 3 and 4, 1984 showed performance within FCC require-
ments however, as comments on the results point out, signal levels
on a number of system channels (not the Class I signals--broadcast
signal--which are covered under FCC standards) needed adjustment
and apparently there had been a processor malfunction involving
Channel 5 (KTLA from Los Angeles) which caused its signal level to
drop. The test forms noted that corrective action should be taken,
and the review of recent complaints did not show any concentration
of calls which could have been caused by such performance. To
check on the current condition of system performance, CTIC then
conducted independent field examinations a
The first step in this field examination consisted of obser-
vations of received signal quality at La Costa's headend. As has
been noted in an earlier section of this report, an examination of
received signal quality is a vital part of the overall field exami-
nation as there can be no expectation of good quality signals at
the subscribers' location, if signals are not first received at an
acceptable quality level. The distribution system itself cannot
improve upon the quality of any given signal.
P e .I.
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IV-23
Observations at the headend showed that most signals were ac-
ceptably received/processed, however, there are two exceptions
which we note, First of all Nickelodean (Channel 16) showed a
small amount of what looked like electrical impulse interference.
Also KCET from Los Angeles (Channel 22) showed a slight beat
(horizontal/ diagonal bars). No immediate cause for this behavior
could be identified and as the remainder of this section will note,
this performance was not constant, but varied over time. Overall
the level of interference was not seen at an objectionable level
(for exceptions see following discussion concerning field test
point #2) however, La Costa should identify the causes of this
interference and take corrective action.
The final step in our performance evaluation was to determine
the quality of signals that were being delivered to subscribers'
homes. As it is infeasible in a limited time frame to conduct a
statistically valid sampling of signal quality in actual residences .
in Carlsbad (given the numbers involved and the difficulties often
encountered in coordinating access to private homes) delivered
signal quality was evaluated by proxy with examinations conducted
at the end of the longest amplifier cascades in the service area.
As the actual amount of degradation a signal will suffer is
largely determined by the number of amplifiers the signals must
pass through to reach a given subscriber, the extreme points in
the distribution system are reasonably representative of worst-
case system performance. In addition to the system extremities,
? 0 me.
* .* .
-- IV- 2 4
examinations were also conducted at a number of other test points
in the distribution system to represent average system performance.
The test points chosen were:
Testpoint # Approximate Location
1. End of Unicornio
2. End of La Golondrina Court
3. End of Altiva Place
4. Avenida Topanga & Via Ostra
5. Swallow Lane
6. Arena1 Lane
7. Calle San Felipe & Calle Madrid
8. Cadencia 6 Borla
9. Aldea & Cadencia
10. Sal ien t e Way
The beats seen on Channel 22 were seen again at Testpoint fl
but were not seen at any other points until the last examination
at #lo. As this beat was seen at the headend and at two widely
separated distribution points (but not at any others) it appears
as though it is entering the system at the headend and is not a
problem with the distribution system. As it is intermittent in
appearance it will not be a simple task to isolate, however, La
Costa should continually check on this situation. At the time of
our visit the beats were at the threshold of visibility and would
4 .I e *
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IV-25
likely not cause subscribers to complain. Nonetheless La Costa
should monitor this channel to insure that the interference does
not worsen.
At Testpoint #2 interference on Channel 16 (Nickelodeon) was
again noted however this was much more intense than that previously
seen at the headend. At this testpoint the interference seen was
a white "flashing" that affected the entire screen and an accom-
panying audio modulation which occurred regularly with a period of
from 5-10 seconds. Radio contact with the headend revealed that
this flashing was seen at this point but a check of the Cablevision
microwave feed did not show it on the Cablevision system. The
interference seen was easily visible and would have proven objec-
tionable to viewers (similar interference, with a much lesser
intensity was also seen on Channel 19 at this testpoint). This
interference appeared to be headend-related but did not last long
enough (i.e., at any other testpoints) to confirm this or to iden-
tify the cause. La Costa should closely monitor this situation to
determine what corrective actions are needed.
Picture quality at all other testpoints was good except for
very minor beats seen at Testpoints #7, 119 and #lo. Beats were seen
at the threshold of visibility at these points on two channels at
each point; either Nickelodean and MTV (Testpoint f7) or CNN and PlTV
(Testpoints #9 and #lo). These beats appeared to be a distribution
system "problem," possibly from the overloading of some system com-
ponent in the affected cascades. The problem would likely not cause
P e bb
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m IV-26
subscribers to complain but La Costa should address it if it has
not already done so.
Finally, we should note that throughout our observations it
appeared as though the pay channels using the Oak system of
scrambling and descrambling were slightly noisier (although none
the less acceptable) then those secured with the Eagle system.
Checking the Oak converter back at the cable office indicated that
it was indeed the converter and not a weakness of the distribution
system. It is unlikely that a subscriber would become aware of
this difference unless he were working two identical TV sets, each
one fed by a different converter. La Costa plans call for the
eventual replacement of all old Oak units.
Our examination of the La Costa system showed that the cable
system is capable of delivering good quality signals to the ends of
the longest amplifier cascades. The few problems noted appeared to
be either intermittent headendjprocessing problems (Channels 16 and
22) or minor adjustment requirements at a few test points and were
not overly severe at the time of our visit. With proper attention
the field problems should be eliminated and quality "restored ."
The headend problems may be somewhat more difficult to identify
given their sporadic nature. Our examination showed that on the
whole the La Costa system appears to be well constructed and
maintained given the overall age of the system and should be able
to deliver good quality signals to all subscribers. While the
Ir a v * -r
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L IV-27
system should be able to meet high standards, we should note that
given the large number of individual components in the system
(headend, cable, amplifiers, taps, drops.. .) it is quite likely
that a single component could fail unexpectedly or be damaged,
affecting one or more subscribers' service. La Costa's demand
maintenance policies should serve to minimize the impact of these
occurrences.
e 0
Mr. Frank Aleshire February 25, 1985 City Manager
City of Carlsbad 1200 Elm Street
Carlsbad, California 92008
RE: Exemption From Local Regulation or Control of Rates and Charges
Dear Mr. Aleshire:
1. On February 18, 1985, La Costa Community Antenna
.System, Inc, (herein "La Costa") pursuant to the provisions
of 53066.1 (a) (e) (B) of the California Government Code filed
its initial notice for an exemption from local regulation by
the City of Carlsbad of rates, charges and rate structures of
its cable system. A true and correct copy of La Costa's letter,
dated February 18, 1985 is attached hereto as Exhibit A and
incorporated herein as though fully alleged.
2. Pursuant to the provisions of 53066.1 (a), La
Costa herewith submits its certified statement under penalty of
per jury :
(1) The name under which the cable television system
is doing business: La Costa Community Antenna System, Inc. dba
Rancho La Costa Cable TV.
(2) The mailing address and telephone number of the system:
7628 El Camino Real, Carlsbad, Calif. 92008-9990. Phone (619)
436-3401.
I 0 0
Mr. Frank Aleshire
Page Two February 25, 1985
(3) The video channel capacity of the system: thirty-
six (36) channels.
(4) The subscriber penetration ratio of the system com-
puted within sixty days prior to the issuance of the notice to
the franchisor: seventy-six (76%) per cent.
(5) The method by which the system receives television
signals from a satellite-to-earth receiving station: La Costa
employs an earth station which picks up the satellite services.
-- (6) An identification of the significantly viewed television
stations within the county in which the system operates:
Call Sign Bdcast Channel No. Type of System Location
KCST 39 Network San Diego
KNBC 4 Network Los Angeles
XETV 6 Independent .Tijuana, Mexico
KFME3-TV 8 Network San Diego
KGTV 10 Network San Dieyo
KPBS 15 Educational San Diego
KCOP 13 Independent Los Angeles
KCET 28 Educational Los Angeles
XEWT 12 Independent Tijuana, Mexico
KUSI 51 Independent San Diego
KTTY 69 Independent San Diego
(7) The facts demonstrating timely compliance with the
community service channel requirement set forth in subdivision
(f) :
t e 0
Mr. Frank Aleshire
Page Three
February 25, 1985
a) In subparagraphs (f) (1) (C) , La Costa has available
three channels for community service programming; channel 30 is
currently in use and two additional channels are in reserve and
available for such use.
.. . ..
b) La Costa has complied with paragraph (f) (2). See
Resolution No. 6841, approving an agreement with La Costa
for community based CATV programming and Agreement.
incorporates-herein as though fully alleged Resolution No. 6841
and Agreement, attached hereto as Exhibit B.
La Costa
c) La Costa has provided arid will continue to provide,
if requested, to individuals, groups and entities using community
service channels, technical advice by local program staff and ..
reasonable access to local studio and earth station receiving
facilities.
d) La Costa has notified and will continue to notify
secondary schools and community colleges located within the
franchise area which furnish training in the uses of community
service channels of the availability of the system's community
service channels.
e) La Costa has available and will continue its availabj
lity for use without charqe tape playback facilities for entrance
into the system.
D 0 0
I
Mr. Frank Aleshire
Page Four
February 25, 1985
..
f) With this election to exempt from local regulation
rates and charges, La Costa will furnish the name, address and
telephone number of the system, the name of the system manager
and the status and utilization of the community service channels,
to the Foundation For Community Service Cable Television.
3. That the notice required to be published in a newspaper
of general circulation within La Costa's franchise area was pub-
lished in the La Costan on February 21, 1985, the Carlsbad Journal
on February 20, 1985 and the Blade Tribune on February 20, 1985
pursuant to the provisions of section 53066.1 (1)(a)(4) and that
more than two years have elapsed following the completion and
activation of more than eighty (80%) per cent of the plant miles
required to be constructed by La Costa pursuant to:the original
terms of its franchise.
Respectfully submitted,
La Costa Community Antenna Systc
Inc., dba Rancho La Costa Cable
By; Vice President and eneral Mi
?A
Fred Morey
* . * *-\ 6 *
1
Declaration of Fred Morey
State of California )
1 San Diego County 1
I, Fred Morey, vice president and general manager of
La Costa Community Antenna System, Inc. dba Rancho La Costa
Cable TV hereby declare under penalty of perjury that the facts
alleged in the foregoing letter are true and correct to the
best of my knowledge and belief.
--
Executed at Carlsbad, California this 25th day of
February 1985.
?J %
Fred Morey