Chicago May Fine RCN Over Access Flap

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A Chicago City Council subcommittee has recommending fining RCN Corp. $750 per day for each of its three franchise areas for failure to pay for its programming-access commitment.

The Princeton, N.J.-based operator owes $645,000 in access payments, which were due in January to Chicago Access Network Television (CAN-TV). RCN had acquired 21st Century Telecom, an overbuilder serving the city's "Gold Coast" neigborhood, and is also building out franchises it obtained on its own. But a lack of capital has prompted the MSO to halt both construction and fee payments.

RCN said it paid the full fee for the former 21st Century system, but proposed a revised payment for the rest of its franchises. But CAN-TV asserts that RCN offered only $35,000.

Early in the battle, RCN senior vice president of regulatory and government affairs Scott Burnside said the company wants to negotiate a reasonable settlement that scales the payments down to represent the actual number of customers served.

Some observers also questioned whether the shortfall is critical to CAN-TV. The nonprofit corporation has banked $3.6 million from support payments from incumbent AT&T Broadband, as well as pre-payments from RCN.

But CAN-TV's executive director, Barbara Popovic, said the group has already spent the funds it expected to receive from RCN. It also needs to replace aging camera and editing equipment, a swap-out that will cost at least $500,000, she said.

OFFICIALS IN BIND

Each day, CAN-TV must draw from its reserves to keep access operations intact, the organization said. CAN-TV has no cost of living escalators in its support contracts, so the organization can't afford to leave any money on the table, it said.

Thus, the city's cable regulators are caught in a bind. The administration supports competition for AT&T Broadband, and is wary of creating financial pressure that will delay the resumption of RCN's build, once the economic climate improves.

CAN-TV has kept up the political and public relations pressure as city officials tried to work out a deal with the overbuilder. The vote by the council's finance subcommittee appears to signal that elected officials have lost patience with the operator.

The fines must be approved by the entire City Council before they would take effect. The city and RCN continue to meet about the issue, but aldermen are set to vote on the fines on Sept. 4.

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