12/21/2004, Negotiations for cable pact grind to a halt, The Record

By: James V. Franco

Negotiations for cable pact grind to a halt

TROY - Negotiations for a new cable franchise agreement with Time Warner have all but ground to a halt, city officials said.Deputy Mayor Dan Crawley said the city is awaiting a proposal to see what Time Warner is willing to give up in exchange for allowing the media giant to use public land for its infrastructure.

"We are at a standstill right now," Crawley said. "They are supposed to send a proposal and they have not yet. I would like to see what they offer."

Right now the two sides remain in "informal" negotiations, but according to law, if there is a prolonged stalemate the city can move to "formal" negotiations, which includes both sides making their case to an independent arbitrator.

"If we don't get anything, that is our next step," Crawley said.

Troy and Time Warner have been operating on six-month extenders since 1997, when the last 10-year deal expired. The city gets $494,000 a year and there are now about 14,000 Time Warner subscribers. Using a conservative estimate of $50 a month for service, consultant Steve Pierce said Time Warner grosses around $8.4 million a year off Trojans. A 10-year contract is worth $84 million.

Unlike in 1984, however, Time Warner now offers the popular Road Runner high-speed Internet access and is breaking into telephone service, so it is unclear what Time Warner will make off Trojans over the next decade. According to federal law, all franchise agreements are for 10 years.

Because it is such a lucrative contract - and by law no more than five percent of the gross revenue generated from a community's subscribers can go into the general fund - Pierce said the city can make any number of demands of Time Warner, including a community media center and an institutional network, or I-net.

An I-net would hard wire public and/or non-profit institutions to a central community media center, and from there programs - from religious services to city hall meetings to school plays - are broadcast to people's homes.

The city could demand Time Warner staff the media center, which would in turn train the organizations to use the equipment, Pierce said.

One fear often spread by Time Warner when a city takes a tough stand is that it will drive rates up. But, Pierce said, Time Warner is near a monopoly and people are paying as much as the company thinks it can get regardless of what they are giving up in return.

"We are paying the full freight now, we are just not getting our money's worth," Pierce said.
Councilman Bill Dunne, D-District 4, said he would like to see an I-net, more importantly state-of-the-art telecommunications infrastructure installed and maintained by Time Warner.

"We are losing businesses because we can't offer what they need," Dunne said. "There is a tangible benefit in terms of money, but there is an intangible benefit we stand to gain that not everyone may understand."

Peter Thompkin, vice president of government relations and public affairs for Time Warner, said the company already provides more than what is called for in the franchise agreements with 134 communities in this region.

In addition to upgrading infrastructure to help economic development and providing a venue for local programming, Thompkin said the company spent $2.6 million in cash and in-kind services supporting various causes and events. Time Warner also offers free Road Runner service to each accredited K-12 public and private school.

"Those are the facts. People can see what we do, in fact, provide," he said. "We are an involved business within the community and it is evident what we do in the community. It is a responsibility we take seriously."

Thompkin would not comment on the specifics of Troy's negotiations. The city retained the services of The Buske Group, a California consultant that specializes in negotiating franchise agreements.©The Record 2005

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