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REQUEST FOR COUNCIL ACTION PREPARED By Richard E. Lay _ DATE 1OZ2 5 78 PHONE 834 -4900 SUBJECT Ordinance Revision of CATV Regulations MS -N-L 1 APPR DEPIiTY CITY MAN A77RR R. 2 Y DATE OF COUNCI L ACTION C. Iy %JP It -21TY MANAGER CLERK 6F THE C NCIL RECOM W ND`rD AC[10N Place on first reading and authorize publication of title. BACKGROUND CATV ( "Community Antenna Television "), also known as "Cable Television ", is a system by which television signals are transmitted to subscribers throughout a service area by cables running from a central receiver, as an alternative to individual antenna reception. CATV should be distinguished from the term "pay television" which refers to a special charge for particular program or channel reception. Both CATV and regular airwave television can provide "pay television" programming, along with ordinary commercial channels. State law authorizes cities to grant franchises for CATV systems, and cities also have the inherant right to regulate the use of their streets through franchises. Santa Ana adopted an ordinance regulating CATV franchises in 1968 (Chapter 15, Article 2). No such franchise has been granted, however, presumably because, until now, no CATV operator considered it feasible to operate in an area which receives quite adequate airwave reception. Six Star Cablevision, Inc., however, represents that, due to advances in CATV technology,CATV can be commercially successful even in major broadcast areas such as the greater Los Angeles region. It hopes to obtain franchises from many cities in the region, including Santa Ana. The present City ordinance regulating CATV franchise is recommended for revision for the following reasons: 1. It prohibits "pay television" programming. This prohibition reflects the "Free Television" initiative of 1964, which was subsequently held unconstitutional on First Amendment grounds. Pay television is now available by airwave transmission through the "scrambler" technique. It also appears to be the major commercial incentive for CATV in this area. 2. It requires the Council to fix subscriber rates through periodic public hearings. Such rate control is normal in areas where CATV is in a monopoly position due to lack of airwave reception. In this area, however, there is a multiplicity of airwave channels, VHF and UHF, including specialty channels and "pay television." It appears more than likely that competitive pressures from airwave television will require a CATV operator to offer reasonable service at reasonable prices, without the need for municipal regulation. Furthermore, the City needs flexibility in drafting franchise grants for CATV in the future, both because the technology of CATV is rapidly developing, and because federal regulation of CATV is in a state of great uncertainty and change. �:UT!ON J� Z