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HomeMy WebLinkAboutCM Comcast Low Income DiscountsarroF 5� Agenda Item No: 18 �++'' f+ Meeting Date: July 6, 2009 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: CITY MANAGER Prepared by: Ken Nordhoff, City Manager Approval: SUBJECT: CONSIDERATION OF POLICY REGARDING LOW INCOME DISCOUNTS FOR COMCAST SUBSCRIBERS RECOMMENDATION: Provide policy direction to San Rafael MTA representative Vice -Mayor Heller regarding implementation of discounted cable subscription rates for eligible low income residents. BACKGROUND: MTA serves as the governing body which oversees cable franchise services, provided via Comcast, for all customers throughout Marin, except in Novato. At the June 15, 2009 City Council meeting, Vice -Mayor Heller, who serves as the City of San Rafael representative on the Marin Telecommunications Agency (MTA), presented some information during the Council member time on that agenda regarding discount rates for Comcast customers. The City Council directed staff to place this item on a future agenda for discussion and policy direction. MTA plans to take formal action on this matter in the coming months. ANALYSIS: For some time, MTA has deliberated on the ideas of offering lower cable service subscription rates for Comcast customers. Attached to your staff report are: ✓ A memo from Vice Mayor Heller, summarizing the cost impacts to San Rafael via loss of franchise fees if this program were approved by MTA ✓ A staff report from the Executive Director, and separate report from MTA Board member Bragman, outlining the scope of the Comcast discount program, including costs, lost revenues, program eligibility, administrative oversight, etc. These reports were part of the MTA June 10, 2009 agenda ✓ An older MTA report from the prior executive director of MTA on this same subject. FOR CITY CLERK ONLY File No.: Council Meeting: Disposition: SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 San Rafael represents about 29% of the subscribers in the MTA franchise area. Total MTA franchise fees are estimated to be $3.1 million for fiscal year 2009-10. Our share of these General Fund revenues is about $900,000. Franchise fees are unrestricted revenues which pay for essential services, such as police, fire protection, parks maintenance, etc. As a MTA member, we are obligated to pay for our share of the Agency's operations, which will be $121,204 for this fiscal year. FISCAL IMPACT: From the documents attached, the proposed MTA discount pilot program does not identify the source of funding to pay for this new initiative, nor the final cost. Absent other sources, a lowering of cable fees to any class of customers would reduce the overall pool of annual franchise revenues available for distribution. Given the expected low levels of participation (as measured against the total subscribers), franchise fee loss is estimated to be limited to several thousand dollars per year (inclusive of any administrative costs required to run this program). ACTION REQUIRED: Discuss the Comcast low income subscriber program and provide direction to the San Rafael MTA representative, who will be making a determination on the merits of this program at an upcoming MTA meeting. ATTACHMENTS WACity Managers- WorkRe\Council Material\Staff Reports\09\MTA Comcast discounts.doc Monday, June 15, 2009 To: San Rafael City Council From: Barbara Heller Re: Marin Telecommunications Agency Two Items to report on the Marin Telecommunications Agency. First, MTA's FY2009 Franchise Fee and interest Revenues are larger than budgeted for, by $105,544 and the member agencies are receiving these additional revenues. The FY2009 budget will also be enhanced by lower expenses in the Professional Services Account by approximately $79,000. These budget under run amounts will be carried forward and will decrease MTA member Agency payments for the FY 09/10 Operating Budget. Second, The new Comcast Franchise Agreement approved in 2006 did not provide for a low income discount. Comcast did agree to continue with their existing low income discount accounts, however going forward, no additional customers would be given this discount. Board Member, Larry Bragman (Fairfax) has been developing a program for a low income discount for Comcast customers. Such a discount has been discussed several times through the years, staffing and cost have always been a concern of the Agency members. Mr. Bragman has provided the Board with a memo describing a low income discount program, as well as a proposal for a simplified method of processing applications and providing payments to those who would qualify for the program. Both Marin Center for Independent Living and the Marin Housing Authority have indicated that they would be willing to help administer such a program. Proof of eligibility would be granted by the agency, and once a year a voucher such as a Safeway gift card would be mailed to the low income discount recipient. The actual number of eligible participants is unknown. As is the MTA 's total time needed to assist in administering the program, plus any legal costs. It is estimated the entire program might cost MTA about $12,000 per year. San Rafael's share of an estimated cost of $12,000 annually would be approximately $3,600 (29.8%). A 2006 memo on this subject, noted that San Rafael had 150 low-income subscribers registered with Comcast at that time. The 20% discount was $3.53 per month per customer. San Rafael has 52,915 (29.8%) subscribers of a total of 181,962. (Novato is not a member of the MTA, County of Marin is 27.31 %.) IS SAN RAFAEL INTERESTED, IN CONCEPT, IN PURSUING THE LOW INCOME DISCOUNT FOR OUR CITIZENS? AGENDA ITEM J MARIN TELECOMMUNICATIONS AGENCY 555 Northgate Drive, Suite 230, San Rafael CA 94903-3680 PHONE: (415) 448-0355 MEMORANDUM DATE: June 10, 2009 TO: MTA Board of Directors / FROM: Barbara Thornton, Executive Officer+' SUBJECT: AGENDA ITEM J: LOW INCOME DISCOUNT Recommended Action: Receive and consider the attached report from Board Member Bragman regarding Low Income Discount and provide direction to staff. Back rg ound: The Low Income Discount is an issue that MTA has continued to consider since the approval of the Comcast Franchise Agreement in June 2006. The new Comcast Franchise Agreement did not provide for a low income discount for MTA Comcast customers going forward. A side letter approved at the time made an allowance for existing low income discount customers to continue with their existing low income discount, however, no further customers would be afforded the low income discount going forward. The low income discount issue has come to the MTA Finance and Policy Committee and the MTA Board a few times for discussions regarding how to address providing a discount to additional qualified customers beyond those that were grandfathered in June 2006. In May 2009 the Finance & Policy Committee discussed a possible low income discount program that Board Member Bragman had been developing. The recommendation of the Committee was that Board Member Bragman develop a memo for the MTA to consider at its June 2009 meeting. Attached is Mr. Bragman's memo describing the low income discount program, as well as a proposal for a simplified method of processing applications and providing payments to those who would qualify for the program. In addition, a MTA staff Report presented to the Board in July 2006 is attached. It details the low income discount program in place prior to the new Comcast Franchise Agreement and elements to consider going forward for a MTA locally administered low income discount program. At that time the cost and staff resources required to administer a MTA offered low income discount program was a concern to the Board. Since that time, staff and Mr. Bragman have researched alternative ideas to resolve those concerns. Mr. Bragman's proposal for Board consideration is attached. The current Comcast Basic 1 service (channels 2-34) is $15.43/month Agendaltem_J_06-10-09-LowlnwmeDiswunt-bt.doo AGENDA ITEM J MARIN TELECOMMUNICATIONS AGENCY 555 Northgate Drive, Suite 230, San Rafael CA 94903-3680 PHONE: (415) 448-0355 MEMORANDUM DATE: June 10, 2009 TO: MTA Board of Directors FROM: Larry Bragman SUBJECT: AGENDA ITEM J: LOW INCOME DISCOUNT For many years up to the date of signing of our current cable franchise agreement with Comcast in 2006, Marin County's cable television franchise agreement provided low income subscribers with a significant discount on their basic cable television service. Under the terms of our previous (1986) franchise agreement with Viacom, low income subscribers were broadly defined to include low income elderly and disabled (SSI or SSDI) customers. These subscribers were granted a 75% discount off their basic cable fees. After the tern of the original franchise expired, it was renewed on a yearly basis thereafter from about 1996 to 2006. During this time frame the discount was reduced by the various companies that succeeded each other in operating the franchise. During the last days leading up to the 2006 franchise agreement with Comcast, the Low Income Discount granted was 20% off of the basic cable fee of $17.65. This amounted to $3.53 per month or $42.36 annually. Unfortunately, as the negotiations wore to a conclusion, Comcast refused to budge on its insistence in abandoning the low income discount as a condition of the current franchise agreement. While MTA accomplished a great deal under the current franchise agreement by way of funding our community media center, the INET and other beneficial terms, we were unable to renew a contractual low income discount. As a compromise, Comcast did agree to continue providing the discount to the 288 eligible subscribers who were then receiving the benefit. New subscribers, or subscribers who became newly eligible under the guidelines, no longer receive a low income discount from Comcast. The historic importance of the Low Income Discount as a policy of the Marin County cable television franchise is reflected in several policy statements made by the MTA Board of Directors over the years. On February 6, 1999, the Board identified eight "major priorities for the forthcoming TCI franchise renewal negotiations." Among those eight priorities was a "Senior Discount (Life Line Rate)". Four and a half years later, in a "Priorities: Comcast Franchise Renewal" memorandum adopted by the Board on November 12, 2003, low income' discounts were again listed as a "franchise negotiation objective." More recently, as MTA's Agendaltem_J_06-10-09-LowlncomeDiscountdoc MTA Board of Directors Agenda Item J: Low Income Discount Page 2 negotiating team neared the long awaited completion of the 2006 franchise agreement with Comcast, the Board of Directors vigorously sought renewal of a Low Income Discount. Since 2006, our Board has revisited the low income discount on a number of occasions. In a July 12, 2006 staff report, Low Income Discount program was discussed at some length. The report found that the there were then 288 subscribers receiving the discount. The cost of the program to the entire franchise was approximately $12,199.68 per year. (The cost may be less now because of the shrinking size of services and cost of the basic tier). In analyzing what the MTA could to continue the program, the staff found that agency management of the program was problematic because of the cost of processing and mailing a monthly check to subscribers. (I have attached a copy of this report for the Board's review and consideration). Comcast later informed our staff that it would not assist in the administration of the Low Income Discount by doing the intake or discounting the monthly bills of newly eligible subscribers. Thus, MTA has been left to its own resources if it is to continue its historic commitment to the Low Income Discount. That there continues to be a significant community of subscribers that would benefit from a Low Income Discount is evident from many different indicators. Many of the subscribers who have historically received the low income discount are disabled or elderly and have very few outside sources of entertainment and information. This is a growing demographic group in Marin County. In addition, the current economic downturn is leading many subscribers to drop their cable subscription in favor of internet viewing. More recently, Comcast dropped its bulk rate agreement with the County of Marin for public housing facilities Over the course of the last six months, I have met with various community members in order to investigate the possibility of creating a new "user friendly" model for the Low Income Discount. Both the Marin Center for Independent Living and the Marin Housing Authority have both indicated that they would be willing to help administer a streamlined MTA low income discount program. The MTA program would have similar eligibility guidelines: disabled subscribers and low income subscribers. Proof of eligibility would be simplified to require that subscribers present a current Comcast bill and documentation of their disability (yearly statement from Social Security) of low income (residency in Marin Housing and best practices documentation such as a PG&E lifeline bill for others) In order to avoid the necessity of mailing out checks on a monthly or even yearly basis, both of these community providers agreed to distribute yearly vouchers (such as Safeway gift cards) in lieu of a monthly discount payment. The community providers would email the name and address of the new subscribers to MTA which would maintain a master list of recipients in order to avoid inadvertent or intentional duplication. Both MCIL and Marin Housing have agreed to participate on a pilot basis to determine whether the program was practical for them to operate. Marin Housing would incorporate the program as part of their yearly renewal process. MCIL has agreed to participate at no fee in order to serve its membership pending a determination of the volume of applications and the time necessary to process them administratively. I would also hope that MTA itself consider Agendaltem_ —06-10-09-LowlncomeDiscountdoc MTA Board of Directors Agenda Item J: Low Income Discount Page 3 providing an outlet for subscribers at its new offices at 555 Northgate Drive during specified hours. If there is Board approval of this proposal, I would continue to work with staff and our community partners to create simplified rules of eligibility documentation and administration. We would also begin outreach to local merchants to determine which ones would be willing to help issue vouchers. Safeway, Whole Foods, Good Earth come to mind but others may want to join in. I am hoping that the Board will approve the proposed pilot program to renew and fulfill MTA's historic commitment to the Low Income Discount. Respectfully submitted, Larry Bragman Agendaltem_J_06-10-09-LowlncomeDiscountdoc MARIN TELECOMMUNICATIONS AGENCY 27 Commercial Blvd., Suite C, Novato, CA 94949 Phone: (415) 883-9100 FAX: (415) 883-9155 MEMORANDUM DATE: July 12, 2006 TO: MTA Board of Directors FROM: Martin J. Nichols, Executive Officer SUBJECT: AGENDA ITEM J: LOCALLY ADMINISTERED CABLE TV LOW-INCOME DISCOUNT Recommended Action: Receive report on a locally administered cable TV low-income discount and authorize staff to determine if Comcast will administer the program and request the General Counsel to review and report on potential legal issues associated with implementing an agency administered program. Background: Under the terms of our Comcast franchise, the low-income discount will continue for only these individuals currently eligible and enrolled. Your Board requested a staff report on a potential locally run program for new low-income subscribers. From Comcast, we have received the following information: A. Total subscribers that qualify — 288 low-income discount customers B. Comcast qualifications for low-income discount: 1) Must have an active cable service 2) Must be the head of a household and 18 years or older (must provide a copy of a driver's license or state ID) and receive benefits from one of the following: • SSI -supplemental Social Security Income • SSDI-Social Security Disability Income 3) Customer must provide a copy of the Benefit Verification Letter from the Social Security Administration. If customer qualified, Comcast sends the information to its Credit and Collections Department located in Livermore. Memo BOD Agenda Item_J 07-121.ocallyAdministrdCableTVLowlncomeDscnt.doc MTA Board of Directors Agenda Item J: Locally Administered Cable TV Low -Income Discount July 12, 2006 Page 2 C. Amount of discount The 20 percent discount only applies to the current basic rate of $17.65. The 20 percent discount services for qualifying subscribers is $3.53 per month. D. Low-income subscribers by jurisdiction City of San Rafael 150 County of Marin 40 Town of Corte Madera 6 City of Larkspur 20 Town of Ross 2 City/Town of Belvedere/Tiburon 11 Town of Fairfax 15 Town of San Anselmo 28 City of Mill Valley 9 City of Sausalito 7 E. Annual cost of low-income discount for new subscribers by MTA jurisdiction Since Comcast is willing to continue the discount for these currently enrolled, I assume that a locally financed discount would only apply to new low-income subscribers. For purposes of this analysis, I have assumed a 10 percent turnover each year. Comcast could not provide actual turnover data. Agency Annual New Low-income Subscribers Annual Cost @ 3.53/mo/subscriber City of San Rafael 15 $ 635 County of Marin 4 169 Town of Corte Madera 1 42 City of Larkspur 2 84 Town of Ross 1 42 City of Belvedere 1 42 Town of Tiburon 1 42 Town of Fairfax 2 84 Town of San Anselmo 3 126 City of Mill Valley 1 42 City of Sausalito 1 42 TOTAL ANNUAL COST 30 $1,350 Memo BOD Agenda Item_J 07-12 LocallyAdministrdCableTVLowlncomeDscnt.doc MTA Board of Directors Agenda Item J: Locally Administered Cable TV Low -Income Discount July 12, 2006 Page 3 F. Other Services for low-income discount subscribers Per Comcast, more than 230 (about 79 percent) of the 288 low-income subscribers who receive the discount on the basic tier also pay for higher levels of service. Jurisdiction or Ci Basic Only @ $17.65/mo Standard Cable $48.25/mo Above Standard (Digital, Cable Modem, etc.)* Total City of San Rafael 21 72 46 139 County of Marin 7 t0 23 40 Town of Corte Madera 0 3 3 6 City of Larkspur 5 8 9 22 Town of Ross 1 1 0 2 Ci /Town of Belvedere/Tiburon 1 5 4 10 Town of Fairfax 2 9 4 15 Town of San Anselmo 6 10 11 27 City of Mill Valley 3 4 3 10 City of Sausalito 3 2 4 9 TOTAL 49 124 107 280 *Current Digital Tiers Digital Silver $29.95 estimate per month, extra in addition to Standard cable Digital Gold $43.95 estimate per month, extra in addition to Standard cable Administering a MTA/member low-income discount program The easiest option would be for Comcast to continue the program and send us a bill for new low- income subscribers. I would expect them to add an administration charge if they are willing to administer the program for us. A locally run program could be administered by a member agency or the MTA as follows: 1) The managing agency could reimburse new low-income subscribers for 20 percent (or whatever amount the Board or agency determines) of the basic rate. This would likely require the sending of monthly checks and continuing to verify that the individual still is a subscriber. Low-income subscribers would need to send the agency verification that they had paid the bill and request reimbursement; or Memo BOD Agenda Item_J 07-12 LocallyAdministrdCableTVLowIncomeDsent.doc MTA Board of Directors Agenda Item J: Locally Administered Cable TV Low -Income Discount July 12, 2006 Page 4 2) The agency could subscribe for the individuals and bill them for the reduced amount. This would involve setting up a budget to pay subscribers and then a collection process to invoice, collect, and deposit low-income payments. In both cases, we would need to set eligibility criteria, establish a process to take applications, and determine if each new individual qualifies. This will involve administrative costs. This may also involve establishing an appeals process if someone wants to challenge a determination that they do not meet the established criteria (potentially a Board item). Our General Counsel should review if the MTA would be establishing an entitlement program and what legal obligations such a program would impose on the MTA. The cost to administer our locally run program would exceed the cost of the discount. Such a program would create following new costs: a. Eligibility and claims staff to: • Determine and verify eligibility for new clients • Verify eligibility each month • Authorize payments • Follow-up on missed documentation and/or discount checks b. Possible appeals process c. Postage d. Accounting charges e. Program outreach efforts Informal discussion with Comcast indicates that, at a vice-president level, there is no interest in administering this program for the MTA. Contact by the Chair of the MTA should be made to upper levels of Comcast management. Memo BOD Agenda Item _707-12 LocallyAdministrdCableTVLowlncomeDscnt.doc