Vermont regulators want Adelphia Communications Corp. to explain why it is now unable to fulfill the plant-expansion commitment it made in order to win refranchises from the state in 2000.
Regulators were ready to slap the operator with as much as $2.2 million in penalties for "multiple past violations of law and regulatory standards." But they agreed to waive full assessment — and renewed the operator's franchises — when Adelphia assured the state it would upgrade most of its plant.
The plan calls for the company to upgrade all of its franchises, except for the smallest communities such as Newport, to 750-Megahertz capacity.
Adelphia had also agreed to extend its plant by 1,600 miles.
State officials said the line extensions are critical to the state's goal of universal broadband deployment.
Last November, the operator petitioned the state Public Service Board for relief, contending the line extensions have become "commercially impracticable." Adelphia cited increased construction costs and greater competition from direct broadcast satellite.
High costs plus reduced opportunity for return means the extensions are now unprofitable, Adelphia argued.
In April, the PSB allowed some of the relief Adelphia sought.
The Denver-based MSO now doesn't have to upgrade any area where a full range of services — including cable-modem service and digital programming tiers — is now available.
Adelphia can also modify cost formulas for the line extensions, making it easier to charge some of the cost to homeowners.
The state will also let the company count a DBS home along an extension as one-third of a house. That lowers the homes-per-mile count for an area and could allow Adelphia to justify the elimination of extensions in zones of heavy satellite penetration.
But regulators scoffed at Adelphia's assertions of unprofitability.
Adelphia said the state computes construction costs at $12,000 per home, when in reality the cost is $26,688.
Vermont regulators counter that construction costs are so high because Adelphia has dragged its feet since 1997, when costs were lower.
Adelphia "can't choose from a menu of obligations," the PSB said. Even if it is true that some line extensions will be unprofitable, that does not doom the entire enterprise.
Adelphia was to have built 1,600 miles of extensions by the end of this year. To date, only 338 have been built, according to the state.
Susan Hudson, the board's clerk, said there were no set penalties in prior board orders for failure to perform. The board will examine Adelphia's response and act accordingly.
Adelphia is the dominant operator in Vermont, having acquired FrontierVision Operating Partners and Harron Communications Corp. franchises in the state.