Approve Notice of Public Hearing covering: (1) Establish Cable Broadcast Basic Tier, (2) Eliminate Analog Premium Channels and Establish Converter Rental Fee (3) Eliminate Cable Modem Rental Option, (4) Eliminate Cable Modem Monthly Installment Plan Option, (5) Propose Increase in FCC Network Access Charge for Local Telephone Service, (6) Establish Voice Mail Service Optional Pricing and (7) Establish Residential and Small Local Telephone and Long Distance Service Bundles:

Staff recommends that the Board approve the Notice of Public Hearing listed on Page C-6/1.

(1)   Establish Cable Broadcast Basic Tier

The Public Notice proposes to establish a Cable Broadcast Basic tier effective September 1, 2007 at a cost of $19 per month. Staff developed the Broadcast Basic tier with input from the Advisory Committee and with members of the Board. If approved, the Broadcast Basic tier would be defined as all channels between 2 and 27, excluding premium channels. Broadcast Basic would include all Lexington and Louisville broadcast stations, Cable 10, leased access channels, classified channels, WeatherScan and QVC. CSPAN, CSPAN2 and the OnCable Guide channel may be added to this tier later this year with no rate increase anticipated.

By adding this tier, consumers will be offered more choice.  FPB should also lessen its copyright fee payment to the Federal Government due to exclusions on payment calculations on gross revenue.

A device would be installed at the customer location blocking everything above channel 27.  This will result in a one-time installation charge of $30. The customer may pay for and receive premium channels, broadcast HD programming and DVR service. If customers choose to subscribe to the broadcast tier they will not have access to digital cable or the HD tier due to content restrictions imposed by programmers. Customers choosing this tier are still eligible for the cable modem bundle pricing discounts.

(2)   Eliminate Analog Premium Channels and Establish Converter Rental Fee

The Public Notice proposes to eliminate analog premium channels Encore, WAM, Cinemax, The Movie Channel, Showtime and Starz. HBO will continue to be offered as an analog premium channel. All of these channels will still be available as digital channels. Staff proposes to provide the first converter at no cost to the customer and establish a converter fee of $4 per converter for each additional converter requested by the customer.

By eliminating the analog premium channels, except HBO, customers will have access to additional multi-plex premium channels, access to pay-per-view and to the interactive guide at no additional cost for the first converter. A converter will be necessary for each TV the customer wants to be able to access the premium channel at the residence.

By eliminating the analog channels, bandwidth will become available so that additional digital/high definition channels and a Video-on-Demand service can be added in the future.  Staff will also be able to; add or delete premium channels upon request without truck rolls, control signal leakage due to faulty, outdated equipment and eliminate or prevent unauthorized access to premium channels.

Currently, 619 customers will be affected by the proposed elimination of analog premium channels.  During the past two years, nearly 900 converters have been returned to FPB by customers upgrading to the advanced HD and DVR converters. Staff anticipates the existing inventory, with some additional boxes budgeted if needed, will be sufficient to complete this transition.

Pending Board approval, Staff seeks immediate permission to implement this policy for any  new customers with the intention of completing the transfer of existing customers to converters this fall.

(3)   Eliminate Cable Modem Rental Option and (4) Eliminate Cable Modem Monthly Installment Plan Option

The Public Notice proposes to eliminate the cable modem rental and monthly installment plan options.  These options were established in mid - 2000, when cable modems were priced at $200 each and retail availability was limited.  Discount retailers currently are offering the modems at $60 so few customers choose either option at this time. Eliminating these options will reduce FPB cost to maintain modem inventory. Time in tracking and replacing damaged or non-working modems and determining modem warranties would also be eliminated. Staff proposes that neither option be offered beyond July 1, 2007 to new customers. Staff recommends the elimination of the charges, $7 per month for the rental and $4 per month for the installment plan, to existing customers with these options on February 1, 2008.  

The outright purchase of the modem from FPB will still be available as specified in the tariff.

(5) Propose Increase in FCC Network Access Charge for Local Telephone Service

 The Public Notice proposes to increase the FCC Network Access Charge for residential service from $4 per month to $5 per month, the small business rate from $5 to $6.50 and the large business rate from $6 to $6.50. All telephone rates were established with a current and maximum rate at the time the tariff was established by the Board in 2002. None of the proposed increases in the FCC Network Access charge exceed the maximum rate currently in the tariff.  The FCC Access Charge is intended to recover that portion of the cost of a local telephone line allocated for interstate long distance service and for which our obligation to the Universal Service Fund is determined. The proposed rates remain less than comparable charges billed by BellSouth.

(6) Establish Voice Mail Service Optional Price

The Public Notice proposes to establish new voice mail features, such as voice mail    messages appearing as emails, sub-mailboxes, voice mails sent to cell-phones, etc., will be available to FPB local telephone customers who choose to subscribe to the service.  These features will be made available as an option to our residence and business customers after Board approval of this recommendation. 

(7) Establish Residential and Small Business Local Telephone and Long Distance Service Bundles

The Public Notice proposes to establish a bundled local and long distance telephone service offering to accommodate those customers requesting discounted long distance plans. Customers who commit to using a particular level of long distance usage each month will receive discounts off the standard price.  These bundled offerings will be available as an option to our residence and business customers when the necessary modifications to our billing system have been accomplished.