Chicago Mayor: No Renewal Without Lower Late Charge

Author:
Publish date:
Updated on

The Chicago mayor's office has vowed to spike any
refranchising agreement presented for approval that does not include vastly lowered
late-fee charges.

The edict was targeted toward Prime Cable and
Tele-Communications Inc., which are under fire for their fees. In total, the two MSOs
serve five franchises within the city that are in renewal talks, although the earliest
franchise-expiration date is March 1999.

The statement from the office of Mayor Richard Daley was
issued shortly before Christmas.

'The Office of Cable Communications will not present
any cable-franchise agreements to the City Council until the cable operators have agreed
to reasonable late fees,' Daley's directive read.

The city's operators, and others in Illinois, have
been swept up in a wave of criticism resulting in class-action suits, an investigation by
the State Attorney General's Office and examination by the Chicago Office of Cable
Communications.

Most of the dissatisfaction is based on the industry's
practice of charging a flat fee, rather than a percentage of the late bill, for overdue
accounts. In the case of Prime Cable, this means that a broadcast-basic customer could
face a late fee of $7.50 per month, amounting to 45 percent of the bill. TCI's $5
late fee is 30 percent of the bill for most basic customers.

The city's cable commission late last year demanded
justification from the operators for their fees. City officials said the current rate is
'unreasonable,' and they could demand that it be halved before refranchising the
operators. They stressed that they will also pursue lower late fees from telco Ameritech
Corp.'s video arm, Ameritech New Media. The telco initiated negotiations this fall
for a franchise on the city's south side, currently served by TCI. Ameritech's
suburban operations charge a $5 late fee.

Other attacks on late fees in the state continue to move
forward. A late-fee challenge in the Chicago suburbs against Multimedia Cablevision Inc.
was certified as a class action just before Christmas.

Another suit, against TCI and Prime Cable -- which stalled
late last year, when the judge quit the case -- has a new jurist. Its class-action
certification will be decided Jan. 20.

The attorney behind most of the suits, Philip Friedman of
Washington, D.C., would not reveal his next targets, but he predicted more suits after his
successes in Baltimore and Washington, D.C. -- both against TCI affiliates.

The jury in that case ordered an award of $6.7 million in
restitution and punitive damages. That final judgment has not been signed, so TCI
can't launch an appeal yet. But the ink has been put on the outcome in the Baltimore
case, where the jury ordered United Cable Television of Baltimore L.L.P., a subsidiary of
TCI, to pay $5.4 million to subscribers.

Friedman-backed suits are currently pending in several
states, including Illinois, Indiana and Oklahoma.

Related