News

CORD-CUTTERS IN THE CITY?

9/20/2010 12:01 AM Eastern

New York City wants to
be sure it doesn’t lose millions in
franchise fees if “cord-cutters” —
subscribers who cancel service
in favor of Internet video — ever
become a serious problem for
the cable industry.

Under preliminary franchise
agreements the city reached with
Time Warner Cable and Cablevision
Systems, New York officials
reserve the right to terminate the
contracts if broadband-delivered
video starts to significantly erode
cable-TV revenue over the next 10
years.

The provision — believed to
be the first of its kind in a cablefranchise
agreement — “helps
protect City franchise revenue
by enabling the City to renegotiate
if there is [a] substantial shift
in content delivery from cable to
‘new’ and/or emerging technologies,”
New York’s Department of
Information Technology & Telecommunications
said in a fact
sheet on the agreements, announced
Sept. 14.

City officials will have the option
to terminate the agreements
if franchise fees decline 22.5% or
more, compared with the “peak
year.” Otherwise, the franchise
terms will run until July 2020,
as does the agreement the city
reached with Verizon Communications
for FiOS TV in 2008.

The agreements cap franchise
fees at 5% of cable-TV service revenue,
the maximum allowed by
federal law.

In another new provision under
the renewals, Time Warner
Cable and Cablevision would invest
about $10 million to install
Wi-Fi access in 32 public parks
in all five boroughs (with specific
parks yet to be determined). The
Wi-Fi buildouts are to be substantially
completed within two
years of franchise approval and
to be maintained by the companies
through 2020.

The MSOs’ customers would
have access to the Wi-Fi hot spots
for no extra charge, as they do in
a few parks and public areas already.
For nonsubscribers, Wi-Fi
would be free to anyone in up to
three monthly sessions of 10 minutes
each, with TWC and Cablevision
allowed to charge 99 cents
per day for access thereafter. That
pricing is fixed for three years,
with moderate increases possible
starting in the fourth year.

In addition, the cable companies
will be required to extend
subscribers a credit equal to a
full month’s bill if a service technician
fails to show up at the appointed
time. Subscribers are
entitled to online appointment
confirmation and “multidevice/
phone” confirmation when a
technician is en route, and TWC
and Cablevision will be required
to connect customers to live representatives
within 30 seconds
of navigating a phone menu. The
customer-protection provisions
in the agreements are intended to
match those in the contract Verizon
operates under.

“We’ve made good progress
during these negotiations but we
still have some work to do,” Time
Warner Cable said in a statement.
“We expect those discussions to
wrap up soon and look forward to
continuing to serve New Yorkers
for the next decade.”

Cablevision, for its part, said:
“In the nation’s most competitive
market, Cablevision is honored to
deliver peerless video and voice,
the nation’s fastest broadband
service and extensive access to
free Wi-Fi, and we look forward
to providing service in Th e Bronx
and Brooklyn for many years to
come.”

The franchise agreements still
require approval by the city’s
Franchise and Concession Review
Committee and the New York
State Public Service Commission.
New York’s previous agreements
with Time Warner Cable and Cablevision
expired in 2008.

March