Comcast, AT&T Face Local Queries

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Comcast Corp. and AT&T Broadband will have to act quickly to resolve current franchise disagreements — and answer many more financial queries — if the potential merger partners expect to complete their marriage this month.

Several local franchising authorities last week delayed scheduled votes to transfer Comcast- or AT&T-held franchises to the post-merger entity — to be called AT&T Comcast Corp. — as they held the operators' feet to the fire over issues ranging from debt retirement and incomplete rebuilds to an allegation of racial discrimination.

Just across Philadelphia-based Comcast's home state, the Pittsburgh Cable Advisory Committee voted to deny transferring AT&T Broadband's system there.

The 5-2 vote, which is not binding on the city council, was based on committee member concerns that Broadband has not done enough to complete an ongoing rebuild.

Only 25 percent of the city's system has been upgraded, but the franchise requires work to be completed by June 30, said assistant director of the department of general services Rodney Akers. AT&T Broadband could face liquidated damages. He said the city council could amend the resolution to satisfy local concerns.

POSTPONEMENTS

Other potential naysayers postponed their votes in order to work out problems with the new owners. Nashville, a Comcast market, and two consortia of Minnesota localities — the Central St. Croix Valley Joint Cable Communications Commission and the North Suburban Cable Communications Commission, served by AT&T — have delayed their decisions.

The two Minnesota groups represent franchises with about 25,000 cable homes. Attorney Tom Creighton, who has advised against the merger on financial grounds, advises both authorities.

Nashville director of information services Richard McKinney said the cable commission for the Metropolitan Government of Nashville and Davidson County agreed with Comcast to delay a City Council vote until Aug. 6. That will give Creighton and Comcast attorneys time to negotiate over the issues identified in the consultant's report.

The Minnesota consortia also delayed to get more information from the companies. Had they voted on schedule, Creighton said, the two groups would have denied the transfer.

In Florida, AT&T Broadband officials said they were surprised and profoundly disappointed by a Broward County staff report. The document, presented to the county commissioners, alleged that the company focused its rebuild efforts in affluent neighborhoods, bypassing minority communities.

The report was based on an analysis of 2000 U.S. Census data, said assistant to the county chief information officer Leslie Stout. Commissioners responded to those findings by directing Broward attorneys to negotiate a commitment to a countywide technical upgrade as a transfer condition.

Stout said she did not know if that directive would lengthen the approval process in the south Florida county. Broward is known to the cable industry as one of the local authorities that attempted to condition the transfer of ownership of Tele-Communications Inc. to AT&T Broadband on opening access to the operator's high-speed data platform to competitors.

REPORT 'FLAWED'

AT&T Broadband said the county report is flawed because it focuses on a limited area around one headend. MSO spokeswoman Maureen O'Neill said the company did its own analysis, including Broward's cities and unincorporated areas, and concluded that there is no significant difference between the original or upgraded areas, in terms of income and diversity. The county will hold a hearing on the transfer June 25.

Seattle's Office of Cable Communications has recommended approval of Broadband's franchise to AT&T Comcast, but first the MSO must make good on some present deficiencies.

Director Tony Perez's report highlighted some of the same financial concerns expressed by other cities, but Perez concluded he'd be more worried about the debt load of the merged companies if AT& T Broadband hadn't completed a two-way, 750-Mhz upgrade. Nonetheless, Perez was critical of the impact of the merger on the company's bond rating.

Seattle regulators are more concerned over local issues. According to Perez, AT&T faces a penalty for failing to provide the mandated 2001 performance report, which was due May 1. The company also recently closed a local call center without prior notice, and could be assessed liquidated damages.

Seattle also wants telephone answering statistics for AT&T's transition from the now-defunct Excite@Home Corp. data-over-cable service to an in-house data offering.

Other issues — including arguments over cable-modem charges and other taxes — will be left for refranchise negotiations, which will start next January, Perez noted. The council vote is planned June 19.

Sacramento, Calif., previously delayed a vote on the transfer, but has rescheduled it for June 17. Los Angeles' Board of Information Technology Commissioners has yet to receive a recommendation on the merger.

City staff has returned to AT&T Broadband three times for more information on what they have termed an incomplete merger request. Because the application was incomplete, the 120-day statutory clock has not started to run in the California capital, according to staff members.

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