News

Charter Agrees to Service Standards in Texas

5/30/1999 8:00 PM Eastern

Charter Communications and a consortium of Texas local
governments have agreed to new customer-service guidelines governing almost two-dozen
former Marcus Cable systems.

The agreement, which amends franchises held by 20 Fort
Worth-area communities, includes a mix of stiff financial penalties and existing
cable-industry service standards.

More important, it clears the way for local franchising
authorities to complete the transfers of franchises to Charter, the St. Louis-based MSO
owned by billionaire Paul Allen.

Charter inherited a legacy of operating problems by Marcus
in Fort Worth, but it has shown progress in improving conditions there. Among other
things, Charter pumped $1 million into higher salaries to hire and retain qualified
employees.

The agreement between Charter and the LFAs is primarily a
standardized document, but with enough wiggle room to be adapted to the specific needs of
each community.

"It's about 80 percent standard, but it also
addresses each city's little nuances," Charter senior vice president of
operations Dave Barford said.

Failure to meet the new customer-service guidelines would
result in a $1-per-subscriber fine for the first violation -- or $130,000 under a
worst-case scenario involving all 20 cities -- and a $3-per-subscriber penalty for the
third infraction.

Conversely, if Charter performs well under the agreement,
the fine drops after three years to 25 cents per subscriber for a first-time violation.

"Our intent was to give them an incentive to do
well," Fort Worth assistant city manager Pat Svacina said. "There was a stick,
but there was a carrot on the end of it. We want good customer service, not to collect
fines."

The remaining service provisions in the amended franchises
require that the MSO:

• Make customer-service representatives available
seven days per week, 24 hours per day;

• Answer 90 percent of inbound calls within 30
seconds, as required by National Cable Television Association standards;

• Respond to service interruptions within 24 hours;

• Keep a local office open six days per week;

• Limit rate hikes to once per year; and

• Connect municipal facilities to the local
institutional network as it upgrades its system.

Svacina said all 20 communities have held at least one
reading on the proposal, which virtually assures complete approval by the consortium. Fort
Worth was among the first to sign off on the deal.

In order to assure the communities of his company's
intentions, Allen initialed the documents, thereby accepting personal responsibility for
Charter's compliance, Svacina said.

Barford said the financial penalties are "an issue of
the previous problems they had down there. But we're going to make the standards. We
feel that we'll never have to pay the penalties. We're getting good feedback on
our customer service. Complaints coming into city hall are way down."

According to a quarterly report Charter submitted to Fort
Worth recently, customer calls to the local phone center averaged 4,000 per day at the end
of 1998, a decrease of 23 percent. This corresponded with an almost 50 percent drop in
service calls and a 30 percent reduction in service outages since Charter took over the
Marcus systems late last year.

Svacina agreed that Charter is already living up to its
promises, and that complaints have dropped to between 50 and 70 per month, with most of
those involving routine matters.

"The calls have literally gone away," he said.
"They're back to the normal numbers we had before these problems began a few
years ago."

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