News

Iowa City, Calif. County Eye TCI Fines

3/08/1998 7:00 PM Eastern

Iowa City, Iowa, is preparing to fine Tele-Communications
Inc. $250 per day for failing to meet a Feb. 26 deadline to upgrade its local cable
system.

The City Council is expected to review a report tomorrow
(March 10) from its cable commission recommending the daily fine and suggesting that
TCI's request for an extension until Aug. 31 be rejected, sources said last week.

Moreover, city officials said they expected to file a
petition with the Federal Communications Commission challenging a new round of rate hikes
that would boost the price of expanded basic in Iowa City by $1.65 per month June 1.

Meanwhile, in Contra Costa County, Calif., the Board of
Supervisors has ordered TCI to roll back its rates and to offer a one-time refund for
allegedly overcharging its customers in part of the county.

After analyzing TCI's Form 1205 rate filing for 1997,
a consultant to the county determined that the operator is overcharging for basic in the
unincorporated area of Richmond and for equipment charges and first-time installation
charges in all county homes.

The county wants TCI to refund 1,700 customers 80 cents per
month for each month of the infraction -- theoretically $6.40 per subscriber, or $10,880
-- plus the alleged overcharges for equipment costs in the rest of the affected area.

These pricing categories are lightning rods for the cable
operator. Rate-rollback orders involving equipment pricing or basic rates are pending all
over the country, including in Pittsburgh; Tucson, Ariz.; and San Jose, Calif.

Just last month, the New Jersey Board of Public Utilities
ordered a $6.50-per-customer refund -- about $4.1 million -- for overcharges in 1997.

TCI argued that the rates are in compliance with state and
federal standards and that in each case, it has filed an appeal with the FCC.

In Iowa, the expected fines and FCC filing are the latest
problems for TCI, where 12 local governments in the past three years have voted to pursue
possible overbuilds of the state's dominant MSO, citing poor service and skyrocketing
monthly bills.

John Margeson, TCI of Iowa regional vice president, said
the MSO hopes to convince the City Council in Iowa City that enough progress has been made
on the rebuild to justify an extension of the completion deadline.

However, cable administrator Drew Shaffer said the City
Council will likely be put off by a recent newspaper story in which TCI officials
reportedly said the company will pay any fines imposed, but ultimately, "the customer
always pays for everything."

"I don't think that the City Council is going to
like that comment at all," Shaffer said.

Under the terms of TCI's 10-year franchise, which was
renewed in 1996, the MSO had two years, or until Feb. 26, to upgrade its system to 550
megahertz.

Shaffer said TCI missed that deadline because it spent most
of the past year trying to convince local officials that it could meet its franchise
obligations by introducing digital compression technology that would expand the
city's 38-channel system.

When that failed, the company claimed that the 1996
Telecommunications Act did not require that it rebuild the Iowa City system, and only that
it introduce additional channel capacity.

The city disagreed with both arguments, Shaffer said.

That argument became moot when tests ultimately revealed
that the aging Iowa City system had to be upgraded in order to deliver a digital system.

By that time, however, it would have been impossible to
meet the Feb. 26 deadline, Shaffer said.

"But if they had started their rebuild two years ago,
they wouldn't be in the situation that they're in today," he said.

Margeson said TCI has made enough progress on its rebuild
that the first Iowa City customers will be hooked up within "the next few
weeks," and that the entire system will be rebuilt by this summer.

As far as TCI's rate hikes, Shaffer said the city has
won FCC challenges in each of the last three years, and TCI has lost its appeals to the
commission.

Want to read more stories like this?
Get our Free Newsletter Here!
October