Palo Alto, AT&T Spar Over Cable Bill

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The honeymoon appears to be over between Palo Alto, Calif., and AT&T Broadband, the new owner of its cable system.

Palo Alto's City Council wants a formal explanation of an 88-cent charge that appeared on consumer's bills in October, a levy that violates the terms of AT&T's purchase agreement, according to some in the city.

When AT&T Broadband bought the 28,000-subscriber system-formerly the user-owned Cable Co-Op of Palo Alto-it promised, as part of the deal, not to raise rates for one year after the purchase. The acquisition closed four months ago.

AT&T Broadband said the charge was a pass-through of expenses to upgrade and support the system's public, educational and government channel production facilities. PEG improvements were also mandated by the city.

Janet Freeland, senior financial analyst for Palo Alto, said the city began receiving complaints almost immediately, especially from residents of neighboring Menlo Park angry about a charge they thought would benefit Palo Alto. The PEG corporation is a joint-powers authority; Menlo Park and Atherton residents who subscribe to the Palo Alto system also receive its programming.

Freeland acknowledged that AT&T Broadband has the right, under federal law, to pass through charges generated by mandated programs. But Palo Alto has customer-service standards, and city officials want to know if AT&T Broadband met them by notifying consumers 30 days in advance.

The dispute may degenerate into the often-debated and litigated controversy: When is a charge part of a rate, and when is it a fee?

"The whole area's kind of murky," Freeland said. Litigation is not part of the discussion, she added.

Consumers have also complained about high-speed data reliability. That's an important product in an area that is home to Stanford University and a plethora of other high-end computer users.

AT&T Broadband has built a two-way-capable system, but has not yet upgraded to fiber optics. The operator has promised a $20 million upgrade, but the co-op had already rolled out high-speed data in partnership with ISP Channel.

That data product will remain until the rebuild is completed, because AT&T Broadband does not want to introduce Excite@Home Corp. service over a one-way system that would require a telephone return path.

Consumers complain the existing system is often down and electronic-mail functions are slow. About 4,000 customers use the cable system as their Internet provider, and complaints indicate that during the last four weeks, about 25 percent of subscribers have had trouble connecting to the service.

AT&T Broadband executives in the past have compared the system to a used car and stress to consumers they are working with ISP Channel to rectify current problems, and to complete the plant upgrade.

Extra technicians have also been taken on in an effort to improve service.

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