Fla. City Settles Suit Over Franchise

Author:
Updated:
Original:

Mere days before a federal lawsuit was set for trial, the city of Weston, Fla., and cable provider Advanced Cable Communications settled their dispute over the city’s challenge to a unique franchise that gave the operator a captive rate-paying base in the community.

All homes in Advanced’s service area will remain committed to basic subscription and the cable company, which filed the suit two years ago, is guaranteed the ability to raise rates up to 5.5% per year, per the Feb. 6 agreement.

The community’s major developer originally created the cable system in the 1980s. Because no established cable companies offered to build out the area, the developer built its own system.

To ensure a financially viable operation, homeowner’s agreements committed every resident to buy basic cable from Advanced.

Today, about two-thirds of community residents, or 14,914 homes, are covered by the legacy agreement. Comcast Corp. serves the rest of the community of roughly 61,000.

Advanced bought the system in 1998, spending $7 million on an upgrade. The investment was made with reliance on the guaranteed rate base through 2013, Jim Pagano, the company’s vice president and general manager, said in 2004.

In late 2004, the city council — which also leads the homeowners’ association — decided to change the rules. Citing complaints from residents who wanted to buy satellite service but would have to continue buying basic cable, the council told Advanced it would end its agreement in 2007.

The council also set the basic cable rate at $10.41, compensating Advanced for broadcast basic but not the $32.99 Advanced was charging for a suite of 76 channels of broadcast and cable channels.

The city continued to collect $32.99, banking the difference in escrow because of the dispute with Advanced.

Advanced sued in federal court in 2004, claiming theft of service.

The company will now get the disputed funds back. Had there been a trial, the community faced potential legal fees and possible interest charges on cash withheld from the company.

Subscribers now pay $36.09, plus local taxes and an assessment for the legal fight that raised the bill to about $43.

As the dispute continued, Advanced improved its service offerings and subscribers can now purchase optional high-speed data, HDTV service, digital video recorders and voice-over-Internet protocol telephone service, in partnership with Vonage Holdings Corp. The settlement is “probably the best-case scenario for us,” Pagano said last week. “We’re very happy with the terms and conditions.”

Advanced, which also serves larger nearby city of Coral Springs, is owned by Schurz Communications Inc.

Related