Cox Communications Inc. is soliciting words of support from suburban Mesa, Ariz., subscribers against refranchising demands that it claims would increase what's already the highest telecommunications tax burden borne by any operator in the Phoenix area.
The franchise for Cox's 17,000-subscriber system — as well as that of its 25,000-customer wireline competitor, CableAmerica Corp. — expired last October. The two companies have been negotiating with the city for more than a year under short-term operating extensions without coming to an agreement.
"I've had four [other] franchises completed in the time it's taken get this far" with Mesa, said CableAmerica executive vice president Chris Dyrek. "And I hate to say it, but we're still probably six months away [from a deal]."
Cox has launched an advertising campaign against the current proposal, which includes a one-time capital grant of $700,000, plus a monthly payment the city says amounts to about 12 cents per month, per subscriber.
That monthly fee would support public-access programming, such as a planned digital channel that would be used to train local police and fire personnel. The per-sub charge is on top of the 5% franchise fee the two operators already pay for use of the public rights-of-way.
Tax for freebie?
But Cox called the per-subscriber fee an extra tax that cable customers would pay "so Mesa City Hall can have free cable service," among other benefits, according to the company's Phoenix Web site.
In its communications with citizens, Mesa counters that municipal sites such as the Emergency Dispatch Center, fire stations and other offices need cable connections to view weather reports and news bulletins. Schools are also currently wired for cable, with one free connection.
The city says the charge is only 12 cents, but Cox argues the proposal would add $1.36 per month to bills, for a total of $4.10 in taxes on the average monthly cable bill. That's three times higher than the rest of the Phoenix area, Cox contended.
Cox has placed the e-mail addresses of the mayor and each of the councilmembers on its Web site so consumers can write their elected officials to complain about the proposal.
"We need to draw a line in the sand," said Cox Cable Phoenix spokeswoman Andrea Katsenes.
Dan Brewer, Mesa's E-Streets and licensing director, said Cox's advertisements are misleading. Some customers who've contacted the city believe their whole bill — not just the tax portion — may increase 50%.
The public-access fee is justified, Brewer added, noting that the city spent $1.2 million to support access over the last 15 years. The $700,000 cash payment and per-subscriber charge will barely meet future equipment demands, he said.
Compared to other recent franchise renewals, Mesa's demands "are miniscule," he said. The public-access and other support are a fraction of what the company pays for signage at Bank One Ballpark in Phoenix, for instance, Brewer said.
The access-support fee is not the only issue that has the parties at loggerheads. Due to heightened national security, city officials said, there is a need for a local Emergency Alert System (EAS), as well as a national one.
The EAS mess
Officials argue that the current franchise requires the operators to have a local EAS that allows the city to override audio on all cable channels, including digital ones. According to communications between the parties, Cox is in compliance with national EAS rules, but can only override analog channels for local alerts using its current technology.
Carriage of local messages is voluntary, Cox countered, noting that a Mesa-only alert system would duplicate a countywide system.
Mesa officials note that CableAmerica has different technology and can override all channels.
"Our system is newer than Cox," Dyrek said, expressing dismay over the current negotiating climate. "We're gotten along fine with the city for 15 years, now they're asking for so many new taxes and fees."
Cox's Katsenes said the operator took the step of going public with its complaints in an effort to make refranchising discussions more inclusive. Currently talks are with city staff but it will be up to the mayor and council whether they get involved, she indicated.
The parties continue meeting in an effort to hammer out an agreement.