Cable service remains a sore spot in Dallas, where local officials have rejected AT & T Broadband's bid for a 31-cent hike in basic rates.
During a recent heated meeting in which one official labeled AT & T Broadband's service as "lousy," the Dallas City Council voted overwhelmingly against the MSO's plan to boost its basic price by 2.8 percent, to $11.40 per month from $11.09, as of this month.
Expanded-basic fees, which the city does not regulate, increased 7.3 percent to $21.59, a jump of $1.47 per month.
AT & T Broadband immediately asked the Federal Communications Commission for an emergency stay of the city's rate order, indicating that it plans to charge the higher basic rate while the agency decides the issue-something that could take years.
The city acted against the advice of its own outside consultant, Diversified Utility Consultants Inc., which found AT & T Broadband's calculations to be "mathematically correct" and "not unreasonable." The council's staff concurred, determining that the MSO had "complied" with FCC rate regulations.
"Unfortunately, the council voted to deny our rate request, and we have asked the FCC for an emergency stay," AT & T Broadband spokeswoman Angel Biasatti said. "If the FCC upholds the city's position, we'll refund the difference in July's bills."
The FCC granted AT & T Broad-band a stay late Tuesday, allowing it to implement the new rates.
Meanwhile, Mayor Ron Kirk fueled the fire with his almost-annual tirade against any increase in cable rates. This time, Kirk suggested that consumers "ignore" the proposed increase, but worried later about using public money to defend the city's position at the FCC when the MSO was virtually assured of winning.
Biasatti said AT & T Broadband expects subscribers to "pay their bills in full."
The council's action further complicates AT & T Broadband's position in Dallas, where the MSO is trying to negotiate a franchise renewal for its 150,000-subscriber system. Its existing deal with the city expires in September. The renewal talks have become entangled with the rate case.
"Several members of the council wanted to review the proposed rates at the same time as the franchise renewal, and they wanted AT & T to suspend the increase until then. But AT & T said no," said Eric Kaalund, head of the Dallas Controllers Office.
Kaalund conceded that several members of the City Council were angry over continuing service problems brought on by AT & T Broadband's ongoing upgrade of its local system.
"We still get 20 or 25 [cable-related] complaints each month, compared with four or five for the electric and gas utility," he said. "That might not seem like a lot for a system serving 150,000 subscribers, but it's still four times the rate of other utilities."
Meanwhile, a new wrinkle emerged with the arrival of WideOpenWest LLC. It was set to meet with Dallas officials last week to start hammering out the final draft of a franchise that will allow it to compete with AT & T Broadband for area cable, Internet and telephone customers.
The city is also negotiating with Colorado-based Western Integrated Networks LLC.
One of the city's reasons for inviting alternative service providers was to boost cable's local penetration rate, Kaalund conceded. Penetration presumably stands at only 30 percent in Dallas because of a history of poor service by AT & T Broadband's predecessor, Tele-Communications Inc.
"I think the city is eager to expand the number of cable households because of service, and because more cable households means more franchise fees," he added.