AT&T Comcast Ready to Roll After Anticipated Green Light From FCC

Cable World,  Nov 11, 2002  

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Byline: STACI D. KRAMER AND K. C. NEEL

If all goes as planned - and when the federal government is involved that's a big if - Comcast president Brian Roberts should have a lot to be thankful for this Thanksgiving. That's assuming he has time to stop and smell the turkey while he marshals the $45 billion transformation of AT&T Broadband and Comcast into AT&T Comcast.

With the Federal Communications Commission clock already several days past its self-imposed 180-day timeline for issuing merger opinions, executives at the two MSOs were well aware that the next ring of the phone could send the yearlong merger process into its final phase. Most insiders expect the FCC to say yes to a merger of two companies with very little overlap despite the efforts of consumer groups and high-speed competitors (see sidebar). Meanwhile, a Washington lobbyist claimed late Friday that approval has been pushed to Tuesday while FCC Commissioner Michael Copps scripts his dissent.

Preparations are underway for a close within days of FCC approval. Standing in the way: a bond exchange set to expire at the end of last week and some internal details. But the real work of meshing the two massive companies into one 22 million-subscriber MSO has been underway for months, including plans for a rapid rebranding all the way down to the trucks.

Preliminary operating plans are in place for "life post-merger" as Comcast Cable president Steve Burke puts it, and 120 Comcast executives have been tapped to move into AT&T systems quickly. For instance, Comcast Cable CTO Brad Dusto has been working out of AT&T Broadband headquarters in Denver in preparation of becoming president of the new Mountain division. Dusto's charge includes the largest single group of layoffs - 1,700 AT&T employees whose jobs were deemed redundant as headquarter operations merge in Philadelphia. And Filemon Lopez, currently president of Comcast University, will take over problem systems as VP of the south Florida region.

Comcast Corp. finally got relief from its biggest franchise headache earlier this month, settling a dispute with regulators in Jacksonville, Fla., by agreeing to pony up $2 million this year and promising another yearly $150,000 for the next decade. It's unlikely other cities that have had problems with AT&T Broadband will see checks coming in the mail any time soon, experts say.

For one thing, says Matt Liebowitz, the attorney that represents the city of Jacksonville, things were so bad in the northern Florida city that it easily outstripped other problems around the country. In October, the city announced it was going to revoke AT&T's franchise. But now, as part of Comcast's reparation package, the two sides are crafting a new franchise agreement.

"We generally call this kind of settlement a purple cow," Liebowitz says, "meaning that this situation was substantially different from others around the country. To my knowledge, customer service in Jacksonville was the worst in the country. Some cities may try to use [this settlement] as precedent, but it won't be applied across the board."

That's not to say that Comcast won't have its work cut out for it when it takes control of AT&T. Service issues have plagued AT&T in other parts of Florida, New England, Portland, Seattle, Chicago and Atlanta.

Chicago's City Council ratified tough customer service standards that took effect last week. City cable administrator Joyce Gallagher is cautiously optimistic that relations between the city and Comcast will be better than they have been with AT&T, which she says, didn't understand the dynamics and intricacies of local operations.

"[Comcast's corporate management] has listened to the things I would like to see in Chicago," Gallagher says. "I don't know whether they will do all the things I would like them to do, including putting in a local person who understands this market in charge. But I am hopeful."

Meanwhile, the Los Angeles City Council finally approved AT&T Broadband's franchise transfer to Comcast on Nov. 6. The decision was a turnabout from the council's decision to deny the franchise in August. L.A. regulators are continuing to craft an open-access programming ordinance that would bar incumbents from cutting exclusive programming deals in the city. But that ordinance is separate from the transfer.

If Comcast is worried that its payoff in Jacksonville will encourage other cities to ask for monetary compensation to make up for big service problems, it isn't showing it. Rather than concentrate on the money the MSO agreed to give the city in return for the city's promise not to revoke the franchise there, Comcast general counsel Terry Bienstock would rather talk about the operational improvements being put in place. Comcast, he says, plans to install a general manager with direct authority. "When they have an issue," Bienstock says, "they'll have someone to call [locally]. They're not going to have to call someone in Philadelphia." With Alicia Mundy.