MEMO

Background:

On December 21, 2004, The Ashland City Council approved Resolution 2004-40, which increased CATV and cable modem rates and also rearranged some Channel Tier placements. The channel movements were driven by programmer demands and cost issues and also for technical reasons. The programming line-up that was submitted to the Council as part of the resolution differed from the actual channel lineup that was implemented on January 16, 2005. It showed 5 channel numbers that were different from the actual channel numbers that were implemented.

The channels affected were:

Government Access----shown as 30----implemented as 11
Community Access-----shown as 31 ---implemented as 95
ESD-----------------------shown as 32----implemented as 98
Educational Access-----shown as 33----implemented as 99
Better Life TV-----------shown as 52----implemented as 97

All of these channels were shown located on Tier1 and all are still located on Tier 1, only the channel numbers changed. Free Speech TV was shown as channel 81, but was shown as a Tier 2 channel. Also, the premium channel number and digital plus channel number were shown incorrectly. An issue has been raised as to whether proper notice was given to the City, AFN Customers and RVTV concerning these changes.

Time Line:

Staff recognized the need to change our channel and Tier alignment for both technical and cost reasons. This change was the first and only major realignment of Tiers and channels that AFN has done since its launch date. On December 3, 2004 this ideas was discussed with the AFN Advisory Committee. At that meeting, the idea surfaced to not eliminate Tier 1, but to move some channels down to Tier 2 to satisfy programmer requirements for channel penetrations.

Staff quickly evaluated this proposal and it seemed technically feasible, satisfied programmer requirements, and also was politically far more acceptable than eliminating the Tier 1 level of service.

On December 21, 2004, the Resolution that was passed by the City Council continued the Tier 1 service level and the channel line-up which was in the Council packet, correctly placed all of the channels with the exception of Free Speech TV in the appropriate level of service. However, three (3) RVTV channels, the Better life TV channel, The Digital Plus channels, and the Premium channel numbers were all incorrectly shown on the list included in the Council Communication.

In a AFN Staff meeting on December 20, 2004, AFN's technical staff showed a revised channel numbering system which was the one implemented by AFN on January, 16, 2005. Upon receiving this information, the department immediately informed RVTV's Pete Belcastro, via telephone and followed up with an email on December 20, 2004. This was only 25 days prior to implementation.

AFN's Franchise agreement requires us to "provide City with a minimum 60 days notice, and use its best efforts to provide 120 days notice, prior to the time PEG Access Channel designations are changed."

Staff clearly made a mistake by not presenting the new channel numbering scheme to the City Council on December 21, 2004. This action would have clearly corrected the channel lineup that was included in the Council Packet for this meeting.

Customer Notification

On January 10, 2005 all AFN subscribers were mailed new channel lineups that included the new channel numbers and new rates. Because rates weren't effective until cycle 7 of the February billing cycle, AFN complied with the 30-day notice requirement for rate increases. However, since the Tier realignment and new channel renumbering system took effect on January 16, 2005, the customers did not receive a 30-days notice about the Channel Tier movements and the changes in the channel numbers.

This 30-day notice requirement is not a part of AFN's Franchise Agreement with the City, but is a part of the FCC, September 1998, Customer Service Standards. AFN violated these standards with respect to the changes in Tiers and Channel renumbering.

Conclusion:

In trying to implement an AFN rate increase as quickly as possible, AFN Staff made mistakes which appear to violate our Franchise Agreement with the City and also the FCC Cable TV Customer Service Standards.

Staff should have brought up the corrected channel line-up at the December 21, 2004 Council meeting and AFN should have notified the City at least 60 days in advance of changing the PEG Access Channel numbers. AFN should have also given notice to customers of the channel and Tier changes by December 16, to comply with the FCC's CATV customer service standards.

We have discussed these channel movements with RVTV and while they would have liked the channel numbers to remain the same, they understand the technical reasons for making the change. They haven't demonstrated any discomfort with the 25 day notice we delivered to them about the change. We have received some citizen complaints about movement of Free Speech TV to Tier 3 but that decision could be reversed on April 28th when the AFN Programming Committee decides the final Tier location of this channel. We are not aware of any citizen complaints about the short notice of the channel renumbering changes. Therefore, it doesn't appear that there was any substantial harm to any parties as a result of these mistakes.

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