News

L.A. Stalls TCI-AT&T Transfer

11/15/1998 7:00 PM Eastern

Tele-Communications Inc. is off to a rocky start in its
quest for approval of the transfer of its Los Angeles properties to AT&T Corp.

The city's Board of Information Technology
Commissioners postponed its first consideration of the transfer due to what the city sees
as foot-dragging by the cable operator on a franchise audit that the city has requested.

Commissioners said they were "put off" by the
arrogance of the company and concerned that its new partner may be of the same mind-set.

Board chairman Alan Arkatov cited reports out of Prince
George's County, Md., where AT&T recently angered regulators with the tactics
that it used in its attempt to defeat a 3 percent rights-of-way use fee. The measure
passed.

"I don't like the tone of these folks,"
Arkatov said of the potential partners.

The immediate problem is the audit. The Los Angeles
franchise, according to regulators, allows them access to the operator's general
ledger to determine if the cable franchise has paid the city its fair share of all
revenue. These include commissions on home shopping, ad revenue and other income.

TCI argued that it can't assure the confidentiality of
its records if they are released to the city. Executives said they were only comfortable
opening their books if no copies of the information in them would be recorded in city
documents. Otherwise, TCI fears, competitors can gain trade secrets.

The commissioners were ready to declare TCI in breach of
its franchise until TCI and AT&T officials promised the city that they would provide
access to the general ledger.

A delay in the transfer of the Los Angeles properties to
AT&T would also stall the long-planned property swap of those franchises with Century
Communications Corp.

Commissioners said they were reacting to reports of
AT&T's fight against a rights-of-way telecommunications fee in Maryland.

Prince George's County recently approved a 3 percent
gross-revenue fee on Internet access and on special telephone features like call waiting
and call forwarding. The county is taking advantage of a provision in the
Telecommunications Act of 1996 that allows municipalities to charge companies rent on
rights of way.

AT&T aggressively lobbied against the bill, angering
many council members, who found the company's tactics unfair, said Jim Estepp, the
bill's sponsor. The company, Estepp said, took out full-page newspaper advertisements
and embarked on a telemarketing campaign that misled local voters about the impact that
the fee would have on their phone bills.But a spokeswoman for AT&T said the measure
was too broad, and that it will ultimately result in higher phone bills."The cost for
this tax is going to be in the millions of dollars for AT&T," said Candace
Humphrey, director of public relations for Maryland, Virginia and West Virginia, adding
that the company will ask the state to allow it to pass the costs on to customers.

It was unclear if the fee would apply to cable modems, but
Wayne O'Dell, president of the Cable Telecommunications Association of Maryland,
Delaware and Washington, D.C., said it will clearly affect any cable company that tries to
break into the local phone business. Estepp downplayed the possibility that the regulation
would depress competition.

"It is a choice that they make to take off the cream
of the crop," he said. "If a company is going to take a few customers, they
aren't providing a service."Los Angeles regulators have already placed news
clips about that dispute in their AT&T-TCI files. While discussing the audit, city
staff members said Los Angeles plans to review AT&T's financials, too, and that
the city intends to hire a consultant specifically to do so.

States News Service contributed to this story.

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