Washington, D.C., regulators have approved the transfer of the local cable franchise to Comcast Corp. from AT&T Broadband-but extracted a $5 million bounty from AT&T to seal the deal.
City officials used the transfer process to pressure the incumbent into resolving longstanding service complaints. Comcast promised to make "reasonable" technical improvements.
The settlement was "one of the largest in the country in connection with a cable television transfer," Mayor Anthony Williams said in the statement.
AT&T-which operated locally as District Cablevision-had been under fire from both consumers and regulators for years. Among those gripes: installation backlogs that have lasted as long as 30 days, service interruptions and limited programming choices.
The 100,000-subscriber D.C. system provides service to many members of Congress, federal regulators and Congressional aides, some of whom have expressed dismay with rates and service quality.
AT&T Broadband dealt with the programming issue with a technological upgrade that added five more channels than the aging plant was designed to deliver. But its channel lineup still fell short.
The city's franchise required the operator to upgrade to 79 channels whenever it became "viable and financially feasible." The two sides disagreed over whether that qualifier had been met.
City officials said subscribers in the nation's capital have received substandard service since 1986, but regulators agreed to transfer the franchise based on indications of Comcast's stated willingness to "establish a positive presence in the city."
The Philadelphia-based MSO has committed to improve its customer service (the operator has already opened a major call center in the suburbs as part of its efforts in that area), continue an ongoing technical upgrade and establish a local diversity board to promote minority hiring.
The $5 million payment has some precedents. For example, the former MediaOne Group Inc. paid $8.1 million to Atlanta during a contract reopener nearly two years ago to retire a dispute over missed rebuild deadlines and for relief of institutional network and public-access channel requirements. The city wanted the money to set up neighborhood computer centers.
District officials said AT&T Broadband's payment would fund the city's technological initiatives for the public school system, the University of the District of Columbia, the Public Access Corp., the Commission on Arts & Humanities, the cable regulator's office and the municipal Office of the Chief Technology Officer.
AT&T Broadband spokesman Steve Lang said the company could have litigated the matter but decided a settlement "was in the interest of everybody to get it resolved and move ahead."
The city and Comcast must still negotiate a new franchise. Comcast has agreed to abide by the terms of the current franchise, except for the institutional network and rebuild requirements, until it obtains a renewal.