|
I Gwen Harvey -The 1235 story... I was asked to summarize my findings _ _ Page 1
<br />t__._ __-___ _.. _ _
<br />~ './
<br />From: "Robert F. Sepe" <rsepe@narccom>
<br />To: Charlie Horne <charlie horne@ncmail,net>, Lowell Siler <Isiler@co.durham,nc,us>,
<br />Chuck Kitchen <ckitchen@co.durham.naus>, Joe Durham <joe durham@co.wake.nc.us>, Tommy
<br />Marrow <tmarrow@oxfordnc.org>, Tanya Weary <tanyas@oxfordnc.org>, Corinthia Barber
<br /><cbarber@co.orange.naus>, Gwen Harvey <gharvey@co.orange nc.us>, Alice Freeman
<br /><afreeman@wilsonnc org>, Grant Goings <ggoings@wilsonnc.org>, Mike Wilson
<br /><mike.wilson@apexna,org>, Steven Stewart <sstewart@townofcarrboro org>, Richard White
<br /><nvhite@townofcarrboro.org>, Steve Biggs <stevebiggs@townofclaytonnc.org>, Andy Hedrick
<br /><ahedrick@fuquay-varina.org>, Mary Lou Todd <mltodd@ci.garner.naus>, Eric Peterson
<br /><eric peterson@hillsboroughnc.org>, Carl Dean <Carl.dean@hollyspringsne.us>, Gary McConkey
<br /><gary.mcconkey@ci knightdale.nc us>, John Whitson <jwhitson@ci.morrisville.nc,us>, Bo Singleton
<br /><rps@ci morrisville naus>, David Hughes <dhughes@nc,rr.com>, Pete Connet <ptconnet@aol com>,
<br />Mark Williams <mark.williams@ci wake-forest.nc.us>, Tim Burgess <tburgess@townofwendell.com>,
<br />Richard Hardin <rhardin@ci.zebulon.naus>, Renee Boyette <rboyette@tjcog.org>, David Permar
<br /><dhpermar@hatchlittlebunn com>, Lisa Markland <Imarkland@ci.zebulon.nc.us>, John Bjurman
<br /><john.bjurman@durhamnc gov>, Ted Voorhees <Theodore.Voorhees@durhamnc.gov>, Kevin
<br />Whiteheart <kwhiteheart@ci.lumberton.nc.us>, "jody.moore" <jody.moore@ncmail net>, Marilyn Collins
<br /><marilyn Collins@ncmail net>
<br />Date: 5/25/2005 5:49:06 PM
<br />Subject: The 1235 story.. I was asked to summarize my findings
<br />I was asked to summarize my findings for the National Association of
<br />Telecommunication officers and Advisors. This is what I wrote..
<br />May 20, 2005
<br />About 18 months ago, I suspected there were previously undetected
<br />accounting irregularities in the way cable operators filed the FCC form
<br />1245.
<br />My issues were... and still are ,.. that the form 1235 is NOT a one time
<br />filing and must be updated periodically.
<br />The cost-of-service rules prohibit the subsidization of unregulated
<br />services by the regulated rate payers. With this in mind, I evaluated
<br />the 'allocated portion' of the total upgrade cost to the regulated
<br />service tier when the form was first filed against the current
<br />allocation. Surprise, surprise. Back in 1999-2000 the allocation was
<br />based on 750 MHz systems, So, if 20 BST channels at 6 MHz each occupy
<br />t 20 MHz of total spectrum or 16% of the system bandwidth, then 16% of
<br />the total cost is attributable and directly recoverable from the
<br />regulated BST service, Fast forward to today„ that same upgraded
<br />system is currently operating at 860 MHz or 1000 MHz which means that
<br />13% or 12% of the upgrade cost is recoverable from the regulated service
<br />customer. From a price regulation perspective, the 1235 network upgrade
<br />recovery fee should be adjusted to reflect the new reality or the
<br />difference constitutes a subsidy. To ignore this reality is in direct
<br />contravention with the cost-of-service rules.
<br />Next, I began to probe the underlying financial assumptions behind the
<br />form 1235 network upgrade recovery fee calculation with various cable
<br />operators and you would have though I turned over a bee hive.
<br />I pressed Time Warner for a public accounting of the Social Contract
<br />upgrade revenues and the form 1235 network upgrade recovery revenues..
<br />
|