Calif. County Rejects Falcon Rate Hike

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The San Luis Obispo County (Calif.) Board of Supervisors
has rejected a proposed rate increase by Falcon Cable TV Corp. there, ruling instead that
the operator is entitled to only a fraction of the hike that it sought.

Falcon, which serves about 9,000 county residents, proposed
a $3.83-per-month increase on its basic tier and $2.69 on its expanded-basic tier.
Instead, the board approved the recommendation of its own staff, which said a total of 87
cents per month was the only justified increase (62 cents on basic, 25 cents on expanded
basic).

Falcon officials said they will appeal the rate order as
soon as they get the official ruling from the county. Meanwhile, the operator will limit
its rate hike. Falcon had already raised rates Aug. 1 by $2.50 total ($1.50 on basic and
$1 on the expanded tier). The system will decrease that by 62 cents per month on the basic
tier, but it will not lower rates for the expanded tier.

Company spokesman Art Maulsby explained that Falcon is
challenging the county's authority to dictate expanded rates. So, going forward,
basic will cost county residents $20.03 per month, with basic plus the tier priced at
$29.47. Consumers who paid the rate hike before the county order will get rebates, he
added.

The county disputed the rates because the increase is tied
to a fiber optic rebuild that Falcon conducted throughout the region. Falcon said it is
entitled, according to federal policy, to hikes equaling 11.25 percent annually to help it
recoup the cost of system improvements.

But the rebuild exceeded initial estimates, coming in at
$7.9 million, versus the $5.5 million figure that was proposed in the franchise's
renewal plan. County officials believe that cable ratepayers should not pick up the tab
for what a consultant deemed an inefficient construction project on behalf of the
operator. County officials also believe that the cost of improvements that benefit the
entire cluster were included in costs attributed to the county-only portion of the
franchise area.

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