AT&T Broadband and Comcast Corp. made significant headway last week, scoring merger-related franchise transfer approvals in Sacramento, Calif., Chicago, and even Pittsburgh, where the local cable commission recently advised against approval.
But the process was delayed in Denver, where council members want assurance that the local rebuild initiated by AT&T Broadband will be funded and completed on time by the new owner.
California's Monterey County also delayed its vote until June 25. Supervisors there are holding the new owner to franchise obligations they say have been neglected by AT&T Broadband, such as basic-service connections to county buildings and the creation of an institutional network. Those deficiencies are in addition to poor customer service, according to supervisors.
In Denver, the vote was delayed, possibly until as late as Aug. 12. But any council member can reintroduce the issue in the interim, explained Dean Smits, director of the office of telecommunications. Smits urged the council to approve the transfer.
According to Smits, council members there are concerned because the current upgrade is only 40 percent to 50 percent complete and that AT&T Broadband has gone as long as a year without construction activity.
According to the franchise, the improvements are to be completed by the end of 2003. Regulators delayed the vote to seek assurances from Comcast executives that funds will be budgeted for the local system to allow for on-time completion.
The pending ordinance in Denver contains some unique language that Smits hopes will protect the city from franchise fee cuts as the company rolls out planned bundled services. He said the city is concerned that the operator will bundle service at a discounted price, then attribute all of the discount to regulated basic service in order to cut franchise fee obligations.
In Pittsburgh, the council approved the transfer after Comcast representatives assuaged organized labor. The Communications Workers of America expressed concern that the new owners would close or move a neighboring call center, endangering 500 jobs.
But Comcast sent written assurances to councilman Bill Peduto, the chairman of the telecommunications committee, that the company has no intention of closing the local call center and moving the work to another center in Philadelphia. The MSO also vowed to negotiate with the CWA after the merger closes.
That will be a big change for organized labor, since AT&T Broadband strenuously resisted unionization across the country.
The council approved the first reading of the transfer approval on a 6-0 vote.
Local regulators also watched Sacramento's approval process closely, since city officials privately said they would deny the transfer. Both Comcast and AT&T Broadband have served the community.
Rich Esposto, executive director of the Sacramento Metropolitan Cable Commission, said Comcast was well-regarded, but the current AT&T Broadband operation was responsible for many consumer complaints. Sacramento officials wanted concrete promises that the Comcast business philosophy will rule the new company.
Esposto listed AT&T Broadband's regional partnerships as an example of one of the MSO's current problems. He said AT&T Broadband corporate will not take responsibility for system problems, rather it dumps requests for dispute resolution back to the region that created the problem. As a transfer condition, Sacramento sought and received corporate guarantees of performance from Comcast officials.
Comcast also will resolve a long-standing AT&T Broadband franchise dispute with the city. Comcast officials agreed to connect four school districts, providing 155 megabits of capacity. The connections will be made within 30 days of the close of the merger, according to Esposto.
Comcast "finally acknowledged that an obligation exists," he said.
The regulators and the company will take five to 15 years to devise a plan to wire the rest of the schools. The cost to the schools of using that portion of the network, and the network architecture, are yet to be determined.
LABORING IN CHICAGO
Labor rights were also an issue in Chicago, but aldermen there unanimously approved the transfer once cable executives agreed to "respect the rights" of workers. The ordinance now directs labor complaints to be filed with Joyce Gallagher, the city's cable administrator.
Gallagher said she's seen an improvement in customer service by AT&T Broadband and believes the operator "beefed up" personnel in advance of the transfer vote. The transfer approval seeks to stem any fall off, now that permission has been granted, she said.
"I don't want anything to happen. We've had the fewest complaints, perhaps in the history of the franchise," she said.
Cable executives also told the city there might be some "tweaking" of the organizational structure of the new company, Gallagher said. If the structure changes too much, ATT Comcast will have to return to regulators for another approval, she said.
The city is not yet through with its demands. At the direction of the mayor, Chicago is developing a strong cable regulatory ordinance, with enforceable customer service standards, she added. That ordinance may be presented to the council in July.