News

Cox: Customers Helped Resolution in Mesa

10/12/2003 8:00 PM Eastern

Several weeks ago, franchise renegotiations in Mesa, Ariz., were headed to court and the ballot box for resolution.

But now, city officials and the community's two operators, Cox Communications Inc. and CableAmerica, have resolved renewal differences with both the city and the cable companies offering concessions in order to reach agreements.

The city, which wanted Cox to upgrade its emergency alert system so messages could be telecast on all channels, including digital, secured a promise that Cox would give Mesa access to the EAS system for city and county emergency alerts.

Fees reduced

The two cable companies will also provide a government and an education channel on the basic tier for the community to use.

The cable operators secured a franchise-fee reduction to 4.5% of revenue from the current 5% charge. That reduction will result in $5.1 million in savings to consumers over the 15-year term of the refranchises, according to the city. That works out to about 34 cents a month.

The agreement also eliminates the city practice of collecting a city tax on top of a cable tax, saving consumers another 0.25%.

The new city cable ordinance and licenses "are in the best interest of the city and our residents," councilmember Mike Whalen said in a prepared statement.

The operators and the city had unsuccessfully attempted to negotiate a renewal for the last 20 months.

Talks stalled this summer over Cox's resistance to the legacy EAS franchise requirement. CableAmerica has hardware that can enable digital EAS messages.

Both operators objected to a contract demand that the companies pay cash in excess of the 5% franchise fee to support PEG programming. City officials said the fee represented only 12 cents per subscriber per month, but the operators said the pass-through to consumers would actually be much higher.

Tensions rose last July, when Cox filed a federal suit to challenge the city's franchise demands. The operators also advertised in local papers, soliciting the support of consumers to oppose the city's proposals. The squabble also spawned the formation of Citizens for Lower Taxes. That group, funded by the cable companies, launched an initiative to put a measure on the ballot next year that would have limited franchise fees to 3% and prevented demands for free service for city buildings and schools.

Cox credits public

Ivan Johnson, vice president of communications and televideo for Cox Communications, thinks the public's protests to city council members kicked negotiations back in gear.

"This was a huge victory for customers," he said. Cox will withdraw its federal suit upon the effective date of the franchise renewal, Oct. 19, he added.

Citizens for Lower Taxes announced it, too, would withdraw its ballot proposal.

"With the city's action, the objectives of the Fairness Initiative for Lower Cable Fees and Taxes, which we filed in July, have now been met," said Kirk Adams, chairman of the initiative committee, in a prepared statement.

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