Tele-Communications Inc. and officials in Dayton, Ohio,
have tentatively settled a long-running dispute over the MSO's alleged underpayment
of franchise fees.
Under the terms of the agreement, TCI, which operates a
48,000-subscriber system in Dayton, has agreed to pay the city $33,508 to cover unpaid
franchise fees dating back to 1996, when it acquired the local network from Viacom Cable.
In exchange, Dayton officials dropped charges that TCI was
in noncompliance with its franchise -- allegations that had some calling for revocation of
the company's right to operate in the city.
Nevertheless, Dayton cable administrator Tim Strach said
the matter had not been totally resolved, adding that the city planned an audit of
TCI's system to determine if the company was still in arrears in its franchise
"We don't believe that this amount covers it, and
we definitely don't think that this is over," Strach said. "We've sent
TCI a letter indicating that we require some preliminary information, because we really
don't know without the backup information."
Tom Cantrell, director of franchising and regulatory
affairs for TCI's Midwest region, said the MSO had crunched the numbers at various
"We did the math two or three different ways, then
accounting did the math, and this is what we came up with," Cantrell said. "I
think that the city appreciated the good-faith effort."
TCI and the city have been at odds since last year, when
the Fifth Circuit Court of Appeals overturned a Federal Communications Commission ruling
by declaring that cable operators must include franchise fees in the gross revenues that
they use to calculate payments to cities.
In Dayton, this meant that TCI had to determine exactly
when the local system stopped including its 5 percent franchise fee in the revenues that
it reported to the city.
For a time, the two sides appeared to be light years apart
in their financial estimates.
According to a memo written by city officials, TCI
potentially faced a bill of $300,000. The company, meanwhile, said that since its
franchise payments in Dayton amount to between $800,000 and $1 million per year, and the
FCC order was in effect for only two years, its unpaid fees could only total $80,000, at
"We appreciate the city's willingness to work
with us to resolve this matter professionally and to the satisfaction of both the city and
TCI," Cantrell said in a prepared statement issued when the settlement was announced.