Cable Fear D.C. Changes

Television Digest with Consumer Electronics, April 24, 2000

Cable and telecom companies are rankled by recent Washington, D.C., City Council regulations aimed at curbing disruption caused by utility trenching of streets that they fear will be onerous, time-consuming and result in price escalation and tardy service for customers. Besides levying rights-of-way "rental fee" for first time, city adopted guidelines for coordinating trenching activity to minimize disruption from digging. Moratorium imposed on digging, which is in last leg of its 2nd extension, also is holding up upgrades of cable system. While supporters of rental fee such as National Assn. of Telecom Officers & Advisers (NATOA) believe fee is reasonable since it's less than those charged in most metropolitan cities, industry officials pointed out that D.C. comes out on top on gross receipts tax (GRT), "which is not found in most jurisdictions." Many other cities and counties are considering similar rights-of-way ordinances but none is believed to have same provisions.

According to estimates, fees would work out to $739-$2,059 per mile, depending on area where pipe or cable is laid. Bell Atlantic spokeswoman said if fee is added to 10% GRT that "we are already paying, it's much higher than in other jurisdictions." Calling city's decision "to take action" wonderful, NATOA Exec. Dir. Elizabeth Beaty said Washington had come up with "very reasonable" fee structure that was lower than those of such major cities as Chicago and N.Y.

Regulations exempt cable from rental fee, giving it potential advantage over telecom companies, officials said. Spokeswoman for city's Dept of Public Works clarified that cable exemption stemmed from its payment of 5% franchise fees. Most controversial provision is requirement that they file plans for all excavation work anticipated to be done in public rights-of-way in 2-year period immediately following filing date. Plan should be filed twice per year, on first day of June and Dec. If no work is planned in 2-year period, companies must certify to that fact. To coordinate trenching activities among companies, Dept. of Public Works would review all 2-year plans as part of semiannual update to identify conflicts and opportunities for coordination, spokeswoman said.

Following up on their open access pledges, America Online executives said they were working on deal to place AOL on Time Warner cable systems by end of June. AOL Chmn. Steve Case said it's "highly likely" that AOL and Time Warner would reach carriage agreement in "this quarter." He said he expects agreement, which will spell out price that AOL will pay Time Warner for carriage, to become template for carriage deals that ISP intends to reach with other cable operators as well as those that other ISPs will sign with Time Warner. "We do believe it'll be a model embraced by other companies," he said. Spokeswoman for Road Runner, Time Warner-owned high-speed data service that now enjoys exclusive carriage on MSO's cable systems through 2001, said its status had not changed. "We do have preexisting binding contracts and we are not in any active mode to renegotiate them," she said. AT&T spokesman declined comment on impact Case's statement might have on AT&T's exclusive arrangements with its high-speed cable ISP, Excite@Home. Case said new Netscape 6.0 has generated "a lot of enthusiasm," with nearly million users downloading it in several weeks. With Microsoft having "such a stranglehold" on PC operating systems, he said, Netscape that's optimized for wireless and other mobile devices provides AOL "opportunity for a fresh start on other appliances." Pres. Bob Pittman said next version of AOL will take into account growing demand for ability to use service simultaneously on multiple PCs or devices, akin to multiple-TV trend. "That's very good for us," he said. Meanwhile, company's strong earnings carried it to 1-3/8 (2.3%) gain on Wall St. April 19, closing at 62-1/8. Wit Capital raised its already bullish share price target for AOL to $95 from $88.

Tribune Co. CEO James Madigan received total compensation (including salary, bonus, stock options and other "payouts") of $4.92 million in 1999, according to proxy statement for May 2 annual meeting in Chicago. James Dowdle, who retired Dec. 31 as exec. vp-pres. of broadcasting, received $2.92 million; Dennis FitzSimons, who replaced Dowdle as head of broadcasting and on Tribune board, $2.15 million; Tribune Publishing Pres. Jack Fuller $1.63 million; Senior Vp-Development David Hiller $1.54 million. Madigan's bonus was $1.75 million, up from $797,065, while Dowdle received bonus of $650,000, up from $475,000.

AdForce and wireless carriers and equipment makers plan to start Wireless Advertising Industry Assn., in part to address issues such as standards development. Formation of group, which bills itself as first of its kind, comes after Internet Advertising Bureau unveiled initiative to set ad guidelines for wireless Internet services, including how to measure traffic.