No Franchise Hurdle Seen for AT&T6/28/1998 8:00 PM Eastern
Washington -- Cable-industry legal experts predicted that
AT&T Corp. will have little trouble transferring hundreds of local franchises that are
currently held by Tele-Communications Inc.
The consensus at the Strategic Research Institute's
Cable/Telco Franchising & Competition Conference here last week was that most cities
will be eager to shift control of their cable systems to an owner with the financial
wherewithal of AT&T.
"Most are going to step back and say that their
systems are going to be owned by a company that's going to be here for the
foreseeable future, and which has the resources to upgrade these networks into the most
modern in the industry," said Robert J. Sachs, a principal with Continental
Consulting Group LLC, a Boston-based management-consulting firm.
However, the process will not be without its headaches, as
some communities are expected to use it to settle long-standing grievances with TCI.
Madie Gustafson, TCI's senior counsel for franchising,
conceded that a series of joint ventures makes it difficult to estimate how many of the
MSO's 4,800 franchises will require transfer consents.
Nevertheless, the total is expected to be north of the 900
franchises that TCI would have had to transfer in order to complete the aborted Bell
Atlantic Corp. deal five years ago, she said.
Gustafson said the process may be helped along if cities
follow the lead of a consortium of 90 Illinois municipalities that have banded together to
share the cost of reviewing TCI's recent acquisition of Chicago cable properties from
MediaOne and Jones Intercable Inc.
"Some cities will look at it as an opportunity to put
their hands out," Gustafson said, "[but] I think that a lot will see it as an
opportunity to further enhance our relationship."
Nick Miller, managing director of Miller & Van Eaton, a
Washington, D.C.-based law firm specializing in municipal-telecommunications consulting,
disagreed that cities will try to exploit the transfer process.
"It's not a matter of overreaching," he
said. "There are a lot of communities out there with serious concerns about the
existing quality of service that they are receiving. And the transfer process is the
legitimate time to address those issues."
Moreover, Miller argued that municipalities will have to
review TCI's joint ventures, many of which limit the MSO's financial
responsibility for upgrades, which, in turn, would curb AT&T's obligations if the
franchises are transferred.
He also said cities should insist that AT&T officials
take part in transfer negotiations.
"If the buyer is not at that table, there is always
the prospect that six months from now, the buyer will say, 'Hold on -- I never agreed
to that,'" he said.