Adelphia Communications Corp. shelled out $652,075.59 last week to cover unpaid franchise fees incurred by the former operator in Buffalo, N.Y., Tele-Communications Inc.
The payment covers $449,531 in unpaid fees unearthed by a New York Department of Public Service audit for 1992 through 1995, as well as a penalty amounting to the prime rate plus 3 percent.
It also includes unpaid fees for 1996 and 1997 that were later discovered by city officials, said Thomas Tarapacki, director of the Buffalo Office of Telecommunications.
The company inherited the debt when the Buffalo franchise was transferred from TCI to a partnership managed by Adelphia in August 1998, Tarapacki added.
TCI officials had claimed that the DPS audit had incorrectly included certain money in its gross-revenue calculations. Adelphia officials declined to discuss the payment, citing a series of challenges planned by the city.
The city will contest Adelphia's plan to pass the payment on to subscribers in the form of higher monthly bills, Buffalo Common Council president James W. Pitts said. "They've indicated that they want to do it over six, 12 or 24 months," he added. "We're going to challenge any pass-through to subscribers."
Buffalo officials also plan to object to certain deductions Adelphia took in calculating the amount of unpaid fees, which totals some $120,000, Pitts said.
Having notified Adelphia of its intentions, the city's next step will be to take matters to the DPS and the Federal Communications Commission as early as this week.
But Pitts conceded that the city has enjoyed a better relationship with Adelphia, which is running ahead of schedule with a required citywide upgrade it inherited from TCI. Adelphia has also reinstated a senior citizens' discount and donated more than $250,000 in musical instruments to the Buffalo Public School System.
"With TCI, these things were always contentious," Pitts said. "With Adelphia, we've been able to negotiate them."