HomeMy WebLinkAboutAGENDA REPORT 2007 0620 CC REG ITEM 08F ITEM 9. F.
CITY OF MOokPAR , ;ALOF(.k?ot-,�'
City Council Meeting
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BY:
MOORPARK CITY COUNCIL
AGENDA REPORT
TO: Honorable City Council
FROM: Joseph Montes, City Attorney
DATE: June 14, 2007 (CC Meeting of 6/2012007)
SUBJECT: Consider Hearing on Potential Breach by Time Warner of its
Customer Service Obligations
BACKGROUND
Procedural History
The following is a partial summary of the relevant timeline:
• July 21, 2004. The City has a first reading of Ordinance 303 to regulate cable
franchisees.
• September 1, 2004. The City approves, at second reading, Ordinance 303.
• Effective October 1, 2004. The City entered into a franchise agreement (the
"Franchise Agreement") with Century TCI. Century TCI was owned 75% by
Adelphia Communications Corporation and 25% by entities associated with
Comcast. That Franchise Agreement indicated that compliance with Ordinance
303 was required. Service was provided in Moorpark under the Adelphia name.
• November 2, 2005. Via resolution 2005-2410, Moorpark consented to the transfer
of the Franchise Agreement to Time Warner Cable ("Time Warner") affiliated
entities. Time Warner did not begin providing service in Moorpark until August
2006.
• November 2005. Regional records indicate that for the month of November 2005,
89.8% of phone calls to customer service were answered within 30 seconds.
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June 20, 2007
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• December 2005. Regional records indicate that 93.3% of customer phone calls
were answered within 30 seconds. December 2005 was the last date that at least
90% of the calls were answered within 30 seconds.
• January 2006 through July 2006. During this time frame, regional records reflect
that calls to customer service were answered within 30 seconds between 70.8%
and 84.6% of the time.
• August 2006. Time Warner begins providing service in Moorpark. Time Warner
begins integration with the Adelphia system to its own system during the month of
August.
• September 2006 through November 2006. During this time frame, based upon
regional data, calls were answered within 30 seconds 50.2% of the time.
• December 6, 2006. Due to residents' complaints, the City Council directed staff
to implement provisions of the Franchise Agreement and appointed Mayor Pro
Tern Millhouse and Councilmember Parvin to an ad hoc committee relating to
these issues.
• February 13, 2007. The Bankruptcy Court approves the Adelphia reorganization
plan. Initial Public offering for Time Warner Cable.
• February 21, 2007. City Council adopted Resolution No. 2007-2567, requesting
that Time Warner "take the necessary steps to acquire and install equipment"
which can provide Moorpark-specific call data. The Resolution stated Time
Warner should provide such data on a monthly basis. The City Council directed
staff to prepare a notification letter to Time Warner regarding the imposition of
liquidated damages should Time Warner fail to separately track customer service
calls from the City instead of merely tracking calls on a regional basis.
• February 23, 2007. Hugh Riley, Assistant City Manager, sends a letter to Time
Warner enclosing Resolution 2007-2567 again reiterating the demand for customer
service information specific to Moorpark.
• March 5, 2007. Time Warner writes a letter stating that Time Warner "is able to
provide 'system specific' data for technical and outage repair, but at this time we
are not able to provide Moorpark specific telephone statistics... We will report back
to you once we have determined the feasibility of providing such 'Moorpark
Specific' reports."
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• March 7, 2007. The City Council continued discussion of Time Warner issues to
March 21, 2007.
• March 14, 2007. The Council Ad Hoc Committee met with Time Warner and again
requested Moorpark-specific information.
• March 21, 2007. The City Council directed staff to send Time Warner written
notice of material default for failure to meet the customer service standards for at
least the last three months.
• March 27, 2007. Joseph Montes, City Attorney, via certified mail, sent a letter to
Time Warner indicating that the City made a preliminary determination that Time
Warner has been in material default of its obligations "for at least the last three
months for failure to meet the customer service standards of Moorpark Municipal
Code 5.06.810." The City gave Time Warner 30 days to either correct the material
violations or provide evidence of non-violation. This letter appears as Exhibit 1 to
this staff report.
• April 18, 2007. The City Council directed staff to provide Time Warner with notice
of a public hearing to be held at the June 6, 2007 Meeting.
• April 27, 2007. Time Warner sent a letter indicating that it did not believe that the
standards of Municipal Code 5.06.810 apply, but rather, that the procedures of
Ordinance 133 apply, namely that during normal business hours:
"a minimum of seventy-five percent (75%) of all
callers for service will not be required to wait for more
than sixty (60) seconds before being connected to a
service representative; and further, a minimum of fifty
percent (50%) of all callers will not be required to wait
more than thirty (30) seconds before being connected
to a service representative; in each case as measured
over a period of thirty (30) consecutive days."
In that letter, Time Warner admits that for the month of March 2007, that even this
more lax standard of 75% of calls being answered within 60 seconds was violated.
[72% were answered within 60 seconds"]. Time Warner acknowledged the
customer service difficulties and indicated they were caused by the purchase of the
Adelphia assets. Time Warner indicated that it has taken numerous steps to
resolve the ongoing issues including hiring more customer service representatives,
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and numerous internal organizational and operational changes. This letter
appears as Exhibit 2 to this staff report.
• May 17, 2007. Via letter, the City Attorney informed Time Warner that a public
hearing would occur on June 20, 2007. The City Attorney further explained that
the Franchise Agreement expressly incorporated Ordinance 303, which adopted
the 90% standard which can currently be found in Municipal Code 5.06.810, and
therefore Time Warner incorrectly asserted that the 75% standard applies. This
letter appears as Exhibit 3 to this staff report.
• June 6, 2007. The City continued this public hearing to June 20.
• June 13, 2007. The Council Ad Hoc Committee met with Time Warner Cable.
Legal Standards
The Franchise Agreement expressly indicated that the terms of Ordinance 303 apply to
the franchisee, in this case Time Warner. Therefore, to determine whether there has
been a violation of customer service standards, the City Council must apply the
following portions of Ordinance 303 (which standards also appear in Municipal Code
§5.06.810, and which standards parallel federal law):
"5.06.810 Operational Standards.
(a) Except as otherwise provided in the Franchise
Agreement, Grantee shall meet or exceed the following
Consumer protection and service standards under Normal
Operating Conditions:
(1) Sufficient toll-free telephone line capacity during normal
business hours to assure that telephone answer time by a
customer service representative, including wait time, shall
not exceed thirty (30) seconds; and callers needing to be
transferred shall not be required to wait more than thirty (30)
seconds before being connected to a service representative.
Under Normal Operating Conditions, a caller shall receive a
busy signal less than three percent (3%) of the time.
(b) Under Normal Operating Conditions, the standards of
paragraphs (a)(1) - (a)(2) above shall be met not less than
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ninety percent (90%) of the time measured on a quarterly
basis. For the purposes of this Section, "quarterly" shall
mean any consecutive three (3) calendar month period, and
is not necessarily coincident with a calendar quarter. . . ."
These standards are patterned after the federal standards set forth at 47 C.F.R.
76.309(c)(1)(ii),(iii), which provide:
"(ii) Under normal operating conditions, telephone answer
time by a customer representative, including wait time, shall
not exceed thirty (30) seconds when the connection is made.
If the call needs to be transferred, transfer time shall not
exceed thirty (30) seconds. These standards shall be met
no less than ninety (90) percent of the time under normal
operating conditions, measured on a quarterly basis.
(iii) The operator will not be required to acquire equipment
or perform surveys to measure compliance with the
telephone answering standards above unless an historical
record of complaints indicates a clear failure to comply.' "
Section 5.06.528 of Ordinance 303 and the Municipal Code provide:
"Normal Operating Conditions. "Normal Operating
Conditions" means those service conditions which are within
the control of the Grantee. Those conditions which are not
within the control of the Grantee include, but are not limited
to, natural disasters, civil disturbances, power outages,
telephone network outages, and severe or unusual weather
conditions. Those conditions which are ordinarily within the
control of the cable operator include, but are not limited to,
special promotions, pay-per-view events, rate increases,
regular peak or seasonal demand periods, and scheduled
maintenance or upgrade of the Cable System."
' See 47 CFR 76.309(c)(1)(iii).
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DISCUSSION
One interpretation is that Time Warner was operating under "normal operating
conditions" as soon as it took over operational control of the local franchise in August
2006 because it had since November 2005 to complete its due diligence regarding the
customer service issues that could be reasonably anticipated relating to the upgrades
and maintenance that they were making to their cable system as a result of the
Adelphia acquisition. If the City Council agrees that these actions constituted service
conditions which are in the control of Time Warner, then the City Council may then
determine whether Time Warner has breached its obligations under the Franchise
Agreement.
1. First Possible Finding: Conclude that Time Warner has Materially
Breached the Franchise Agreement For Failure to Comply With Customer
Service Requirements.
The City Council may conclude that the standards set forth above have been
violated, and that this constitutes a material breach of the Franchise Agreement.
Since January 2006, the 90% Standard Has Never Been Met.
Attached to this report as Exhibit 4 is a chart which, among other things, tracks
the percentage of phone calls which are answered by customer service representatives
within 30 seconds. The data show that for every month since January 2006 for which
there are data, the cable company (whether Adelphia or Time Warner) failed to meet
the 90% threshold provided in Ordinance 303 (which also appears at Municipal Code
§ 5.06.810). To date, for 2007, the City only has data for the months of January and
February. While Time Warner has made representations that service performance has
improved, the company does claim that the 90% standard has not been met to date.
The table below summarizes the attached chart (Exhibit 4) showing the telephone
answering performance data for customer phone calls answered within 30 seconds:
Dec 2005 — Feb 2006 82.3%
March 2006 — May 2006 77.2%
June 2006 —Aug 2006 69.0%
Sep 2006 — Nov 2006 50.2%
Dec 2006 — Feb 2007 55.8%
Preliminary records indicate that May 2007 improved to 71.9% of calls answered in
thirty seconds.
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Although Time Warner has not provided Moorpark specific data, staff believes
the City may rely on these data.
It should be noted that these data are not specific to the City of Moorpark, but are
specific only to the general region of which Moorpark is a part. That stated, as
described above, on at least three different occasions between February 2007 and
March 2007, Moorpark has requested that Time Warner provide such information, and
even passed a resolution to that effect. In response, on March 5, 2007, Time Warner
wrote "we are not able to provide Moorpark specific telephone statistics."
2. Second Possible Finding: Instruct Staff to Provide Notice to Time Warner
that the City Will Consider Imposing Liquidated Damages for Failure to
Acquire and Install Equipment for Moorpark Specific Data.
Section 5.06.840 of Ordinance 303 and of the Moorpark Municipal Code requires
Time Warner to provide "sufficient documentation to permit [the City] to verify Grantee's
compliance" with the customer service standards. The only data provided by Time
Warner is regional data. Time Warner has failed to provide data specific to Moorpark,
despite repeated requests for such information, including the passage of Resolution
2007-2567. To date, Time Warner has not provided any data to suggest that the call
service performance in Moorpark is any different from that experienced by the region.
Accordingly, City staff has concluded that Time Warner has failed to meet the
performance standards of Ordinance 303.
Federal law and Sections 5.06.810(c) of Ordinance 303 and the Municipal Code
allow Moorpark to require Time Warner to "acquire equipment or perform surveys to
measure compliance with the telephone answering standards (if] an historical record of
complaints indicates a clear failure to comply." Staff believes that the timeline shown
above demonstrates a "clear failure to comply" with the customer service requirements.
The City Council may find that there is a historical record of complaints which
indicates a clear failure to comply with the customer service standards. The City
Council would authorize staff to send notice that Time Warner Cable must provide this
equipment within 30 days or provide evidence of non-violation, or face a finding that
Time Warner is in material default of the agreement, which may include imposition of
additional liquidated damages.
3 Third Possible Finding: Determine that a Breach of the Franchise
Agreement and/or Violations of the Moorpark Municipal Code Have
Occurred.
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After considering this written staff report, the staff presentation, Time Warner's
comments, any public testimony, and all other relevant information provided at the
public hearing, the City Council may find the following:
• Normal Operating Conditions. Time Warner's actions were part of "normal
operating conditions" as defined in the Franchise Agreement and federal law,
because compliance with these customer service standards were within the
control of Time Warner. If the City Council determines that these actions were
not within the control of Time Warner, then there cannot have been a material
breach.
• Material Breach. There has been a material breach of the Franchise Agreement
for failure to comply with the customer service requirements of section
5.06.810(a)(1) and (b) of Ordinance 303; and
• Violation of Moorpark Municipal Code. Time Warner violated sections
5.06.810.A.1 and 5.06.810.B, and 5.06.810.0 of the Municipal Code for failure to
comply with the customer service standards and provide sufficient customer
service data.
• Violation of Federal Law. Time Warner violated 47 CFR § 76.309 (c)(1)(ii) for
failure to comply with the customer service standards.
Options After Determinations
1. No Breach or Violation.
Section 2.7(e) of the Franchise Agreement provides:
"In the event the City Council finds that no material violation
exists, the proceedings shall terminate and no penalty or
other sanction shall be imposed. In determining whether a
violation is material, Grantor shall take into consideration the
reliability of the evidence of the violation, the nature of the
violation and the damage (if any), caused by the Grantor
thereby, whether the violation was chronic, and any justifying
or mitigating circumstances and such other matters as the
Grantor may deem appropriate."
If the City concludes that Time Warner's failures were not part of "normal
operating conditions" as defined in the Franchise Agreement and federal law, then there
would be no material breach.
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2. Determine that there was a Material Breach.
If the City determines that there has been a material breach of the 90% standard,
the City Council may consider the following courses of action:
a. Conclude Time Warner Has "Commenced Corrective Action Since March
28 2007 and Diligently Remedied Such Violation Thereafter." As
described above, consistent with 2.7(a) of the Franchise Agreement, on
March 27, 2007, the City sent notice that a preliminary determination has
been made that Time Warner was in material breach of the Franchise
Agreement, and that it "must either correct these material violations within
30 days or provide evidence of non violation in 30 days. Time Warner
received that notice on March 28, 2007. Therefore, Time Warner had until
April 27, 2007 to either correct the violation, or provide evidence of non-
violation. As described above, Time Warner's April 27, 2007 response is
attached as Exhibit 4 to this Staff Report. The City may determine that
Time Warner has "commence[d] corrective action within the time
prescribed [prior to April 27, 2007] and diligently remed[ied] such violation
thereafter." If the City makes this determination, then the City could not
impose liquidated damages.
b. Conclude that Time Warner Has Not Commenced Corrective Action. The
City Council could conclude that Time Warner has not commence[d]
corrective action [prior to April 27] and diligently remedied such violation
thereafter." If the City makes this determination, it can impose liquidated
damages.
3. Impose Liquidated Damages. Consistent with section 2.7(b) of the Franchise
Agreement, the City Manager would request that the City Council consider
imposing liquidated damages, assessable from the Security Fund, of up to Two
Hundred Dollars ($200) per day or per incident for all violations. Section 2.7(c) of
the Franchise Agreement explains that if the City Council elects to assess
liquidated damages, then such election will constitute the City's exclusive remedy
for a period of one hundred twenty days. Thereafter, if Time Warner remains in
non-compliance with the requirements of the Franchise Agreement, the City may
pursue additional remedies (such as revocation of the franchise).
The amount of the liquidated damages would differ, depending upon how the City
wishes to calculate the damages. Here are two permissible methods:
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a. $200 a Day Since September 2006. The City could determine that since
the first day that Time Warner Cable began providing service in Moorpark
on September1, 2006, until the present, (293 days) Time Warner has
violated the 90% standard. At $200 a day, to date, the fine would be
$58,600.00.
b. $200 a day per day since December 28, 2006. Alternatively, the City
could determine that, for every day since December 27, 2006, Time
Warner has violated the 90% standard. Recall that on March 28, 2007,
Time Warner received a letter from the City Attorney dated March 27,
2007 which informed Time Warner that "the City has made a preliminary
determination that Time Warner is in material default for at least the last
three months." December 27, 2006 is three months prior to the date the
notice was received by Time Warner. Because 175 days will have passed
between December 28, 2006 and the hearing on June 20, 2007, the fine
would be 175 days at $200/day or $35,000.
The City could impose liquidated damages in different time frames. For
example, the City Council might find different first and last dates of
violation. It might also opt to impose liquidated damages at a lower rate
(e.g. $100 per day). Last, because the Franchise Agreement indicates
that the violation is "up to two hundred dollars ($200) per day or per
incident", depending upon how the City defines "per incident", the total
liquidated damages could be higher or lower.
$25,000 Security Fund. If liquidated damages are authorized, the City
Council may instruct staff to take all actions necessary to assess liquidated
damages from the $25,000 Security Fund should Time Warner fail to timely
pay all liquidated damages imposed by the City Council. After the Security
.Fund is depleted, Time Warner Cable would then have to replenish the
Security Fund to maintain a balance of $25,000 in order to remain in
compliance with the City Cable TV Franchise Agreement. However, Time
Warner Cable is eligible to set aside its Franchise Agreement with the City
and continue operating in Moorpark as a State Video Franchisee after
January 1, 2008, provided that another video provider commences operations
in the City. State Video Franchisee AT&T has begun the process of obtaining
Encroachment Permits to construct and install the necessary equipment so it
can provide video service in Moorpark in competition with Time Warner
Cable. Moorpark will have to refund the Security Fund when the City Cable
Franchise is terminated. There is no provision for a Security Fund under a
State Video Franchise.
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4. Provide Notice To Require Equipment. The City Council may authorize staff to
notify Time Warner that if it fails to provide Moorpark-specific tracking equipment
within 30 days or provide evidence of non-violation, it may face a finding that
Time Warner is in material default of the agreement, which would allow the City
to impose additional liquidated damages. It is recommended that if the City
Council follows this option, that the City Council find that there is a historical
record of complaints which indicates a clear failure to comply with the customer
service standards.
5. Continue the Hearing. The City Council could opt to continue the hearing to
allow the City to determine with more certainty the full extent of the customer
service violations, and to determine whether Time Warner has cured such
violations. Although it is unclear, it appears that at the subsequent hearing, even
if Time Warner subsequently fixes the current violations, the City could still opt to
impose liquidated damages based upon the extant violations and failures to
sufficiently remedy the violations. (See 5.06.1510.A).
STAFF RECOMMENDATION
1) Open the public hearing, accept public testimony, and close the public hearing.
2) Direct staff as deemed appropriate.
Attachments: 1) Exhibit 1: City Attorney letter to Time Warner dated 3/27/2007
2) Exhibit 2: Time Warner response letter dated 4/27/2007
3) Exhibit 3: City Attorney letter to Time Warner dated 5/17/2007
4) Exhibit 4: Time Warner Chart—Telephone Log
LA#4849-7266-7905 vi
RECEIVED
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CITY CLERK's�IvISiOr;
CITY OF MOORP.ARK
Writer's Direct Dial:
213-236.2736
Our File No:
01359.0001
jMr1(e3@bws1aw.com
March 27, 2007
VIA CERTIFIED MAIL
Mr. Stephen Pagano Gary Matz, General Counsel
Executive Vice President Time Warner Cable, Inc.
Los Angeles Region 290 Harbor Drive
Time Warner Cable Inc. Stamford, CT 06904-2210
550 North Continental Blvd., Suite 250
El Segundo, CA 90245
Re: Notice of Material Default of Moorpark Cable Franchise Obligations
Gentlemen:
This office serves as the City Attorney for the City of Moorpark ("Moorpark") and
writes on its behalf.
This letter serves as notice that the City has made a preliminary determination
that Time Warner Cable ("Time Warner") is in material default of its obligations under the
Municipal Code and Franchise Agreement for at least the last three months for failure to
meet the customer service standards of Moorpark Municipal Code § 5.06.810.
By law, you must either correct these material violations within 30 days or provide
evidence of nonviolation within 30 days. Notwithstanding that time frame, it is
respectfully requested that you provide any evidence of compliance or correction of
violations to the City on or before April 11. That will allow the City time to review your
comments prior to April 18, the date on which the Moorpark City Council will next
consider any steps taken by Time Warner to cure the material default or any provided
evidence of non-violation.
Very truly yours,
BURKE, WILLIAMS & SORENSEN, LLP
1
Joseph M. Montes
LA#4813-4560-9985 v1
Mr. Stephen Pagano
Gary Matz, General Counsel
March 27, 2007
Page 2
cc: Debi Picciolo, President, North Division, Time Warner Cable
Patricia Fregoso-Cox, Vice President, North Division, Time Warner Cable
Honorable City Council
Steven Kueny, City Manager
John Brand, Senior Management Analyst
Scott Porter, Assistant City Attorney
LA#4843-4560-9985 v1
Exhibit "2"
TH E POWER Or YOU
April 27, 2007
Mfr. Joseph NI. Niontes
Burke, Williams K Sorensen, LLP
444 South Flower Street. Suite 2 400
Los \ngeles. CA 00071-295
Re: Cite of Moorpark
Dear ,Mr. klontes:
This letter is a response to your letter of Nelarch 27. 2007. advising that the City of
Moorpark has made a preliminary determination that Time Warner Cable is in material
(ICEtuft of Moorpark Municipal Code §5.06.910. Although your letter aloes not specify the
substance of the alleged default, based on discussions with representatives of the City and
as advised to you ill my letter of April 11. 2007. it appears the City's concerns are
specific to the telephone answer time.
In order to assess Miether Time Warner is in violation of the Code and Franchise
With respect to telephone answer tinge, it is, of course, necessary to identify the standard
\yhich the Code and franchise establish. In \-our letter dated March 27. 2007 you
reference \loorpark MLll cipal Code §5.06.810. We do not believe that is the applicable
standard. That section of the Code was adopted by the City in a June 2005 Ordinance,
subsequent to the October 1. 2004 effective date of our Moorpark franchise. The June
200-5 Ordinance itself provides at §-5.06.100 that (as �yc believe the law requires) it does
not apply to franchises to force prior to the enactillent of the Ordinance and that the prior
Ordinance applies to such franchises. .
The phone answer standard in the prior Ordinance is set at §5.06.602(B) and
requires that Time Wanner Cable provide as follows:
Sufficient toll-free telephone line capacity such that, during normal business
hours and excluding major service outages. a t11inln1Ul11 of Sevellt�--flee percent (75%)
of all callers for service iyill not be required to wait more than sixth (60) seconds before
being_ connected to a service representative; and further, a minitllum of fifty percent
(50%) of all callers will not be required to wait more than thirty (10) seconds belbre
1
being connected to a service representative; in each case as measured over a period of
thirty(30)consecutive days.
In reviewing the call answering statistics, please be aware that they include calls
from many other franchise areas that are served by the same call centers. These statistics
also include calls regarding services other than the cable video service which is regulated
under the franchise.
With this proviso, we can report that during normal business hours in the month
of March,2007 roughly 69%of the calls were answered within 30 seconds and 72%were
answered within 60 seconds.
As outlined below, we are taking steps to improve phone response time and
anticipate that future statistics will reflect these efforts.
We fully recognize that we have had significant challenges in answering our
phones in as timely a manner as both we and our customers expect. Be assured, we will
not be satisfied to simply meet the standard set in the franchise, but are determined to
exceed them.
To place this entire situation in context, it should be borne in mind that the Time
Warner Cable acquisition of both Adelphia and Comcast systems in Southern California
and their integration into Time Warner Cable's LA Region is a merger of technical
platforms, operational processes and company cultures which is of a truly unprecedented
scope in the cable industry. The transaction, which closed on August 1, 2006, is widely
considered to be the most complex cable transaction in the history of the industry. As
you are aware, the Moorpark system was previously operated by Adelphia, a company
that had been in bankruptcy for several years prior to the transfer of the system to Time
Warner Cable. Due to the uncertainties and limitations inherent in operating a system in
such circumstances, there was an inevitable deferral of certain decisions and
improvements during the period in which Adelphia operated the system as a bankrupt
company. The fact that this transfer was from a bankrupt entity has created even greater
challenges than normal in an ownership transition. As such, consequent operating
conditions as we have transitioned from an Adelphia to a Time Warner Cable operation
have been far from normal
The initial integration phase of the Adelphia and Comcast systems into the Time Warner
Cable operation has not begun as smoothly as we had planned. Outlined below are a few
of the contributing factors.
CHALLENGES
Standardization of Products and Services - When Time Warner Cable took
ownership of the Adelphia and Comcast systems in Southern California, our goal
was to make available to our new customers the same advanced services that had
previously been available to Time Warner Cable subscribers in our former, much
smaller service area. This included standardizing our channel lineups and
2
a
introducing digital cable,high-definition television, digital video recorders,video on
demand,high-speed online and digital telephone service.
In retrospect, we moved too rapidly. Our goal was to bring these new services to
our new customers as quickly as possible. Despite rigorous due diligence prior to
the acquisition, we discovered, as we rolled out these new products and services
which included dozens of digital and high-definition channels, that we had
underestimated our inherited cable plant's ability to handle the pace of that
change. The cable infrastructure we had acquired from Adelphia was neither
robust nor reliable enough to support these services. Failure of that plant and the
services provided over it created considerable customer dissatisfaction and
resulted in unusually high call volumes and call durations beyond those we had
predicted.
E-mail Migration - Due to the nature of the transaction, we were required to
migrate a large number of customers from the Adelphia and Comcast mail server
to the Time Warner Cable Road Runner service. This migration disrupted the
customer experience and generated far greater than normal volume of calls to our
call centers.
Customer Service Performance - We were prohibited by the terms of the
transaction from contacting or training our soon-to-be new employees prior to the
completion of the transaction. As a result, customer service and product training
for existing Adelphia and Comcast employees could not take place until after
Time Warner Cable began operating the system.
Additionally,this staffing challenge coupled with dramatically high call volumes and call
times stretched our call center capabilities beyond their limits, resulting in customers
experiencing unanswered calls, unacceptable hold times, and admittedly unacceptable
service. This service has not met our own high standards and has not been consistent with
the high level of service for which Time Warner Cable has been recognized by our
customers and the industry-at-large.
STEPS TAKEN TO SOLVE THE PROBLEMS
Slowing the Pace of Change- We have taken aggressive steps to slow the pace of
customer-facing change and are focused on the core of our businesses operation-
physical plant integration, call center performance and first-call resolution of
customer requests.
We have dedicated significant resources to conduct a thorough rework of the plant
throughout Southern California. We have dedicated a team of engineering,
construction and field technicians to ensure that our infrastructure and cable drops
to households are of the quality necessary to support our services. We have
increased the number of field technicians by 10% to meet the increased demand
for our services.
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Organizationally, we are breaking our operation into smaller, neighborhood work
areas that will bring field service employees closer to the communities they serve.'
As we have seen in other Time Warner Cable divisions, this community-based
structure will enhance our responsiveness to our customers from both a service
and an installation perspective,thus resulting in higher customer satisfaction.
In the field, we are moving from a contractor-based service model previously
employed in the newly acquired systems to Time Warner Cable employee-based
field technician model to further ensure quality control.
E-mail Migration - The Comcast e-mail migration is behind us and will not be a
recurring problem.
Customer Service Improvements- Since the transition,we have been aggressively
hiring and training call center representatives to address our customers'needs.
When we took over operation of the consolidated system, there were
approximately 1,350 call center agents working in six local call centers to address
our subscribers'needs. There were no layoffs or downsizing. At end of 2006, we
grew our customer service ranks to more than 1,650 customer service agents and
today, we have approximately 2,000 call center professionals trained and on the
job to serve our subscribers. In addition to hiring more field technicians and
customer service agents, Time Warner Cable has added staffing in our lobbies,
thereby bringing significant employment opportunities to the Greater Los Angeles
Area.
These new employees receive Time Warner Cable's full compliment of 160 hours
of classroom training as well as 80 hours of supervised on-the-job training to
ensure the highest quality of customer service. Our ongoing education and
training of our existing call center agents continues.
Of course, it takes most new employees some initial time in the job even after
training to become acclimated. We believe our newer employees are now
adapting and their efforts are reflected in the improvements in phone answering
over the past few months.
New Management Team - As you may be aware, we have recently put in place a
new senior management team in Los Angeles with a combined 50 years of
experience in operating a cable system in an urban environment.
Our newly appointed Executive Vice President, Barry Rosenblum has overseen
the New York City system and successfully executed the integration of multiple
systems there. Mr. Rosenblum's responsibilities will be our two major urban
systems in Southern California and New York, exclusively, with the majority of
4
his time spent in Los Angeles. He will serve as a direct interface with our
corporate offices.
On the -round. our new operating executive. Regional President Stephen Pagano,
brings a record of operating excellence that is unmatched in our company. His
divisions have perennially ranked as the top performing units in Time Warner
Cable in customer service. cable penetration and bundled services. Mr. Pagano
brings a "nuts and bolts" expertise with a focus on the successful deployment of
reliable technologies like our digital phone product and a customer-first
philosophy with a commitment to minimizing customer-facing changes that could
scn a as a disruption to the customer experience.
This is the right leadership to successfully brine our Los Angeles Region
(including the North Division) operations into the next phase of our integration
efforts. By focusinz the skills and expertise of two top executives on the
challenges we face in Los Angeles Region. the company has demonstrated its
commitment to return to the fundamental hallmarks of our company that made us
the top performer in the past - excellent customer service. reliable technology and
the reasoned deployment of new innovative products and services, managed in
business units as close to the consumer as possible.
Our local Time NVarncr Cable team remains available to respond to any other
questions or concerns the City may have as we work to provide our customers with the
level of service they deserve. We believe that the steps outlined above are already having
a positive impact on the customer experience. W'hile disputing allegations of non-
compliance and reserving all rights, we remain steadfast in our commitment to our
customers. We look forward to a cooperative relationship with the City as our integration
efforts continue.
Sincerely:
John E: � garty
J F:�rt
Exhbiti 11311
wr»e.s O,rect O,a1
213.236-2735
Our Fde No
04303.0001
jmon1eS@bwslaw Com
May 17, 2007
John E. Fogarty
Vice President and Asst. Chief Counsel
Time Warner Cable
290 Harbor Drive
Stamford, CT 06902
Re: Notice of Public Hearing on Violations of Cable Franchise Obiiations
Dear Time Warner Cable:
This office serves as the City Attorney for the City of Moorpark ("Moorpark") and
writes on its behalf. This letter provides notice of a public hearing and responds to your
letter dated April 27, 2007.
Notice of Hearing
With regards to the public hearing, please be advised that the Moorpark City '
Council will have a public hearing at its regularly scheduled City Council meeting of
June 20, 2007 at 7 p.m., or as soon thereafter as the item may be heard, to consider
whether Time Warner Cable ("Time Warner") is in material default of its obligations
under the Franchise Agreement and the standards which are set forth in Moorpark
Municipal Code § 5.06.810.
At the public hearing, Time Warner will have the opportunity to address the City
Council and provide evidence that no material violation has occurred, that Time Warner
has corrected the alleged violations; or that Time Warner has diligently commenced
correction of such alleged violation and is diligently proceeding to fully remedy such
alleged violations.
The Standards Set Forth in Moorpark Municipal Code § 5.06.890 Apply.
With regards to your letter dated April 27, 2007, you assert that the standards in
Moorpark Municipal Code §5.06.810 do not apply because they were adopted in a June
2005 ordinance. Actually, those standards were adopted in 2004, prior to the effective
date of your franchise.
Recital 7 of the franchise agreement provides:
LA#4831-2304-2305 v1
Los Angeles - Inland Empir,, - Orange ,OUno,, - pan 0,eCO ?n lnca - ',:ontl Ira rnl Inns
Notice of Public Hearing
May 17, 2007
Page 2
"The City, on July 21, 2004, amended Chapter 5.06 of the
Moorpark Municipal Code, which amendment applies to all
Cable System Franchises granted or renewed after the
Effective Date of the amendment."
The franchise agreement further provides in Section 1.5:
(a) The provisions of Chapter 5.06 of the Moorpark
Municipal Code are hereby incorporated herein by reference
as if set out in full, and form part of the terms and conditions
of this Agreement."
Because Time Warner's franchise did not become effective until after the 2004
amendments to Chapter 5.06 (via Ordinance 303, a copy of which is enclosed for your
reference), Time Warner is subject to the standards set forth in Ordinance 303--under
normal operating conditions, at least 90% of the time telephones must be answered by
a customer representative within 30 seconds.
Accordingly, at the June 20, 2007 meeting, the City will be evaluating Time
Warner's performance under the standards set forth in § 5.06.810.
Sincerely,
BURKE, WILLIAMS & SORENSEN, LLP
Jos M. Mon s
Enc: Ordinance 303.
cc: Mr. Stephen Pagano, Executive Vice President, Los Angeles Region
Debi Picciolo, President, North Division, Time Warner Cable
Patricia Fregoso-Cox, Vice President, North Division, Time Warner Cable
Honorable City Council
Steven Kueny, City Manager
John Brand, Senior Management Analyst
Scott Porter, Assistant City Attorney
LA#4831-2304-2305 v1
d� ya �f0
Time Warner Cable
Exhibit 4
Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 H.
rt
A
Repair Log*
Headend 3 2
Transportion 1 3 0 0
0 2 0 0
Distribution 0 0 7 0 0 0 0 2
Drop 21 23 22 14 22 28 28 20
Customer Premise 199 231 189 183 147 178 155
Administrative 0 0 192
0 0 0 0 0 0
Total Service Calls 224 259 218 197 174 208
Less Customer Calls -199 -231 -189 -183 -147 183 214
%Calls/Customers 88.8% 89.2% 86.7% '.6% -.7% .7%
92.9% 84.5% 85.6% 84.7% 89.7%
Total Repair Calls 25 28 29 14 27 30
28 22%Calls/Re air 11.2% 10.8% 13.3%
7.1% 15.5% 14.4% 15.3% 10.3%
Outage Log
Total Outages 1 2 1 0 1 2
Total Minutes 70 1 3
125 330 0 60 135 110 498
Telephone Log*
Total Calls 841,283 852,755 866,654 883,991 809,838 847,218 848,625 902,279
%Busy Signals Received 0.5% 1.1% 3.2% 2.4% 2.3%
%Calls Answered in 30 Sec 89.8% 2.4% 2.4% 2.4%
93.3% 78.0% 75.6% 75.6% 81.1% 75.0% 84.6%
Total Calls Abandoned 10,389 6,098 23,673 21,758 19,114 12,152 20,898 13,089
%calls Abandoned 1.2% 0.7% 2.7% 2.5% 2.4% 1.4%
2.5% 1.5%
**This was a major outage due to damaged fiber optic lines that had to be respliced.
***This was due to a burned fuse. Replaced fuse system retored.
*NOTE: Due to the integration of Adelphia and Time Warner's call centers, the August 2006 telephone log reflects only partial information.
6/12/2007
Time Warner Cable Exhibit 4
Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07
Repair Log*
Headend 0 0 1 0 0 0 0 1
Transportion 2 0 0 0 4 0 0 0
Distribution 2 0 2 0 0 2 2 0
Drop 16 18 7 15 16 14 14 15
Customer Premise 146 155 171 180 199 236 236 216
Administrative 0 0 0 0 0 0 0
0
Total Service Calls 166 173 181 195 219 252 252 232
Less Customer Calls -146 -155 -171 -180 -199 -236 -236 -216
%Calls/Customers 88.0% 89.6% 94.5% 0.0% 90.9% 93.7% 93.7% 93.1%
Total Repair Calls 20 18 10 15 20 16 16 16
%Calls/Repair 12.0% 10.4% 5.5% 0.0% 9.1% 6.3% 6.3%
6.9%
Outage Log
Total Outages 1 0 0
Total Minutes 55 0 0 0 95150* 565 250 10350***
Telephone Log*
Total Calls 862,554 956,157 1,683,023 2,154,234 1,748,276 1,404,961 1,641,720 1,385,937
%Busy Signals Received 2.4% 2.6% 4.0% 2.6% 2.3% 1.5% 2.6%
%Calls Answered in 30 Sec 70.8% 51.5% 57.6% 44.2% 48.8% 60 6.3%
.7% 50.8% 56.0%
Total Calls Abandoned 24,406 70,346 .60,568 236,825 466,718 298,393 427,302 301,958
%calls Abandoned 2.8% 7.4% 3.6% 11.0% 26.7% 21.2% 26.0%
21.8%
**This was a major outage due to
***This was due to a burned fuse.
ry *NOTE: Due to the integration of
�y
6/12/2007
Time Warner Cable Exhibit 4
Quarterly (90 Day) Summaries
Dec-06 - Sep-06 - June-06 - Mar-06 - Dec-05 -
Report Summary Feb-07 Nov-06 Aug-06 May-06 Feb-06
Repair Log
Headend 1 1 0 2 2
Transportion 0 4 4 0 3
Distribution 4 2 2 5 7
Drop 43 38 54 78 59
Customer Premise 688 550 493 480 603
Administrative 0 0 0 0 0
Total Service Calls 736 595 553 565 674
Less Customer Calls -688 -550 -493 -480 -603
Calls/Customers 93.5% 92.4% 89.1% 84.9% 89.6%
Total Repair Calls 48 45 60 85 71
% Calls/Repair 6.5% 7.6% 10.9% 15.1% 10.4%
Outage Log
Total Outages 6 2 1 0 1
Total Minutes 815 95,150 330 0 60
Telephone Log
Total Calls 4,432,618 5,585,533 2,720,990 2,505,681 2,603,400
% Busy Signals Received 1.5% 3.0% 2.5% 2.4% 2.2%
% Calls Answered in 30 Sec 55.8% 50.2% 69.0% 77.2% 82.3%
Total Calls Abandoned 1 ,027,653 764,111 107,841 52,164 51,529
calls Abandoned 23.2% 13.8% 3.9% 2.1% 2.0%
r�
�'' 6/12/2007