TCI Faces $4M Refund in N.J.

Author:
Publish date:
Updated on

Tele-Communications Inc. faced local problems on two fronts
last week as it sought to appeal a $4.1 million refund ordered in New Jersey and a threat
to revoke its franchise in Dayton, Ohio.

In New Jersey, the Board of Public Utilities ruled that
TCI, with customers in 65 communities in the state, must refund approximately $6.50 to
636,000 subscribers for overcharges in 1997. Further, TCI must reduce rates an average of
2.5 percent for this year, beginning in June.

Last June, TCI raised rates for basic and expanded basic
service approximately 6 percent in systems across the state.

Dave Capo, executive director of communications for
TCI's Atlantic division, said the operator had filed its rates in accordance with
state and federal law and has filed an appeal with the Federal Communications Commission.

"We believe the rates will be upheld in review,"
Capo said.

The New Jersey BPU also ordered TCI to refile all equipment
and installation charges after finding that the cable operator had inflated those costs.

TCI relinquishes ownership this week of most of its New
Jersey systems to Cablevision Systems Corp. as the result of a systems-for-equity swap
deal done last year. The change of ownership does not affect the BPU ruling, however, and
Capo said TCI would be responsible for the appeal and possible payments.

In Dayton, the city is upset over an alleged $300,000 in
unpaid fees.

In a Feb. 13 letter, Dayton officials warned the MSO that
it had 30 days to resolve the problem, or there was a "reasonable probability that
grounds exist for revocation" of the franchise on TCI's 48,000-subscriber
system.

Officials in the Department of Information and Technology
Services reported being stymied in attempts to obtain information from TCI concerning how
much it has paid in franchise fees since acquiring the system from Viacom Cable in 1996.

Instead, the MSO reportedly turned the tables by asking the
city for information of its own.

"They just keep blowing us off, acting as if
we're speaking a foreign language," said city cable administrator Tim Strach.
"Basically, we're asking for information the cable company is suppose to
have."

TCI said it had not responded because the city had not
provided details about the alleged franchise violations, including a specific dollar
figure. Instead, the company said it first learned of the city's $300,000 estimate
through a story last week in the Dayton Daily News.

"Yes, we're asking for specifics," said Tom
Cantrell, director of franchising and regulatory affairs for TCI's Midwest region.
"When somebody sends you a letter saying that you are in violation of your franchise,
and doesn't specify what you're in violation of, you have to ask for
specifics."

Strach conceded that the city had not furnished TCI with
the $300,000 figure.

The problem began last November when TCI informed the city
it would comply with a Fifth Circuit Court of Appeals ruling that said cable operators
must include franchise fees in the gross revenues used to calculate payments to cities.

That decision overturned a Federal Communications
Commission ruling that allowed operators to pay franchise fees on only 95 percent of gross
revenues.

Cantrell said that TCI had not been able to respond because
it was still trying to determine exactly when it had stopped paying the extra 5 percent to
the city.

"We're definitely saying that we don't owe
$300,000," Cantrell said.

However, Strach said a city internal audit indicated that
the franchise fees had been unpaid since at least 1991, when the system was still owned by
Viacom.

"We have a mechanism for dealing with these kind of
problems," Cantrell said. "We're working with the city, and this one will
be resolved, too. TCI is not going to lose its franchise."

Related