Ameritechs Cleveland Gains Stall in Parma

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The on-again-off-again courtship between Ameritech New
Media and Parma, Ohio -- a community of 87,000 located south of Cleveland -- is apparently
on again, but just barely.

After three years of "more off than on," the MSO
said it's ready to resume talks on a cable franchise in Parma despite the city's
deal-breaking demands.

"The city has told us they're willing to negotiate in
good faith, and so are we," ANM vice president of public affairs Donna Garofano said.
"We'd like to bring some closure to this."

City officials, meanwhile, insisted that their demands are
"negotiable," but they remain skeptical about ANM's willingness to compete on a
level playing field with incumbent operator Cox Communications Inc.

"[ANM] wants us to forget what we've been requiring
from our current operator and give them a better deal," City Council president Chuck
Germana said.

Lurking in the background is Cox, which wants Parma to
impose the same requirements on ANM that it does on the Atlanta-based MSO.

Any chances of a deal being struck were dealt a setback
recently when the city enacted an ordinance that would require ANM to provide Internet
services to schools, libraries and city offices. ANM does not currently offer Internet
services.

The ordinance also mandates that any cable operator
entering the local market must construct a regional service center and public studio
similar to facilities provided by Cox.

Other major stumbling blocks include demands for a
technologically advanced 860-megahertz-capacity network and that ANM include advertising
dollars in the gross-revenue totals used to calculate franchise fees.

So far, ANM's principal argument has been that it can't
meet Parma's demands or other Ohio cities where it's negotiating for franchises will
insist on the same deal, Germana said.

"They're saying, 'If we give you what you want, we'll
have to give the same thing to every community in northern Ohio.' That's ridiculous,"
he added.

Garofano said ANM does not include ad receipts in the gross
revenues it reports to its other 109 communities, nor does Cox provide such a benefit in
Parma.

As for as the studio, ANM is willing to provide an
additional percentage of gross revenues to avoid having to duplicate the studio provided
by Cox. It's a strategy that has worked in other communities, she said.

Germana countered that Cox has indicated a willingness to
include its ad dollars in the gross revenue calculations.

He conceded, "We don't need another studio," but
he argued that city officials want a local service center so their senior citizens can pay
their bills locally.

As for the demand for an 860-MHz system, Germana said the
city simply wants the best network available.

"If they have an 860 network anywhere else, why can't
we have it here?" he asked. "All Ameritech has to do is show that some of the
things we're requiring are not required by other cities of 87,000."

The two sides haven't even been able to settle on what the
citizens of Parma want. Germana contended that residents are happy with Cox's cable
service, and they have not overwhelmed the city with demands for a competitive cable
franchise.

ANM, meanwhile, countered with a survey conducted by
Linentelser + Partners Inc., a Michigan-based research outfit that polled 100 Parma
residents earlier this year.

According to its findings, 72 percent of respondents want
the city to authorize a second cable operator, with 51 percent saying they were
"likely" to switch to the new provider. Overall, 67 percent said competition in
the local market was very or somewhat important.

Garofano contended that a city that had to slash its school
budget should be eager to rake in the franchise fees and property-tax revenue an ANM
system would produce. "We've got a lot to put on the table," she said.

She added that city officials may have been swayed by Cox's
threats to close its service center and studio if ANM isn't required to provide the same
facilities.

In an interview with Cleveland newspaper The Plain
Dealer
, an attorney for Cox confirmed that the MSO stopped offering several services
in Fairview Park, Ohio, after ANM was granted a franchise there in 1997.

Garofano speculated that Parma officials are still angry
with ANM's parent, Ameritech Corp., for dividing their community into two separate area
codes. "At one point, we were told that there would be no discussion of a cable
franchise until the area-code issue was resolved in the city's favor," she said.

The Ohio Supreme Court has since ruled in Ameritech's
favor.

City officials said Ameritech could have kept all but a
small portion of Parma under the same area code, but it chose not to out of the same fear
that other area communities would demand the same treatment.

ANM, meanwhile, would like to obtain a franchise in Parma
in order to continue building its cluster in the Cleveland suburbs, which includes the
nearby communities of North Royalton, Brooklyn, Brook Park and Middle Brook Heights.

Overall, ANM has signed 14 franchise agreements in the
area, with its last four coming in as many months.

Germana believes ANM has continued pushing for a franchise
in Parma simply because it needs to be in the eighth-largest market in the state.
"Parma can be a jewel in terms of being a very lucrative cable market," he said.

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