Asheville City Council

Is the new cable contract worth $46.42 to you?

That’s how much the average InterMedia customer will pay over the next 12 years, if Asheville City Council members approve the latest franchise proposal. Pocket change to some; but with approximately 23,000 cable subscribers in town, it adds up to nearly $1.1 million for Intermedia over the course of the contract.

That money would be spent as follows: $690,000 for new public-, educational- and government-access channels (called PEG channels), and $398,000 to construct a network linking city and county government buildings and some schools and libraries, said Assistant City Attorney Patsy Meldrum at City Council’s June 2 work session.

What is InterMedia offering in return for the proposed 12-year deal? Meldrum reported that the cable company would give the city 5 percent of all its local cable revenues — including pay-per-view, premium-channel and home-shopping services. Under the current contract, the city receives 6 percent of basic-service fees only.

The new rate should net the city about $25,000 more in franchise-fees each year than it is receiving under the current cable agreement, which was originally signed in 1967, estimated InterMedia attorney Bruce Stewart.

And InterMedia has agreed to pay $175,000 as a compromise settlement of the dispute over past franchise-fees. Meldrum explained that accepting InterMedia’s compromise offer, which some consider far too low, would avoid the high cost of suing InterMedia for more … and the risk of losing the case.

Is it enough?

The proposed contract doesn’t guarantee Internet service for the Asheville City Schools.

That’s one issue Council members have been adamant about. Earlier this year, they directed staff to renegotiate this and other points in the contract.

InterMedia agreed to some demands: for instance, upping the franchise-fee settlement from $150,000 to $175,000, and reducing the length of the contract from 17 to 12 years. But as for hooking schools into the World Wide Web, InterMedia has refused to make contractual promises, offering, instead, a “side letter,” a relatively informal promise of their intention to offer such Internet connections, should the company provide that service in the city.

The two lawyers on Council — Ed Hay and Chuck Cloninger — didn’t think much of the letter.

“Can’t we change these waffle words to be a little more direct?” asked Vice Mayor Hay. Words like “intend” don’t have the same weight as “will do it,” he contended. Hay complained that part of his frustration with the cable negotiations over the past few months has come from hearing InterMedia say one thing, and then offer another, weaker statement in writing.

“We’re reluctant to put it in writing,” Stewart replied. He stressed that Internet service is, at this point, just one of several potential services. If it doesn’t work out, InterMedia doesn’t want it in the contract.

InterMedia General Manager Joe Haight assured Hay, “If we provide [Internet service], we’d be happy to provide it [to schools].”

“So your contention is that it will happen?” Cloninger interjected.

“We think so,” Haight answered.

Cloninger urged, “We both want it. It would be a great public-relations [move] for you. Let’s figure out how to get it done.”

On other points of the contract, Council member Barbara Field complained about the $46.42 cost to subscribers, an amount that would be raised in the following manner: During the first five years, each InterMedia customer would pay a monthly 35-cent surcharge for PEG channels and the city’s institutional network; for the remaining seven years, the monthly charge would be 30 cents per customer. That’s nearly double the pass-through costs originally proposed by InterMedia in its initial franchise offer late last year.

Said Field, “I’ve been concerned about this all along. … [But] no matter what, somebody’s going to pay [for these services].” Either the cable company raises its monthly service charges, or it passes the PEG and I-net costs directly to subscribers … or the money will come out of property-taxpayers’ pockets, several Council members have noted. “We’re not going to get anything for free,” Field concluded, noting that she has heard little from the public on what they think about the pass-through costs.

Mayor Leni Sitnick also complained about the I-net costs: The $398,000 construction cost for laying lines and hooking them up to the various public buildings will be passed on to cable subscribers; the city will have to bear the cost of other related hardware and software. But in the end, Sitnick noted, InterMedia retains ownership of the network. “So we’re basically buying it for you to own?” she asked Stewart.

“That’s right,” he said.

City Manager Jim Westbrook argued that the deal actually benefits the city, saying that InterMedia must maintain the system — and, should fiber-optics technology become obsolete, the city wouldn’t be left with outdated equipment.

Stewart mentioned that, if the city installed its own I-net lines and equipment, it would easily cost $1.2 million. The proposed network will connect all city and county government buildings and city Fire Department divisions, as well as the city schools’ administrative office, Asheville High School, T.C. Roberson High, Pack Memorial Library and the West Asheville Branch Library.

Meldrum later clarified that Intermedia would own the outside I-net wiring, and the city and other I-net participants would have to purchase all inside wiring and equipment.

Let the public comment

Sitnick insisted that city residents have a chance to comment on the revamped cable agreement. Fellow Council members agreed, and set June 23 as the public-hearing date on the issue.

“We appreciate [that],” said Wally Bowen, executive director of Citizens for Media Literacy (CML), a watchdog group that has closely tracked the cable negotiations. He posed two questions for Council members, city staff and InterMedia to consider before the hearing: What portion of the $690,000 PEG funding would be set aside for the public-access channel and for citizen-produced programming? What hardware and software costs does the city estimate for the I-net system?

Bowen also reported that CML recently received an $8,000 grant for producing an educational video about public-access.

Sitnick urged city residents to comment on June 23. She also asked Council members whether they would like to vote on the contract immediately following the public hearing — or wait two weeks.

“Let’s quit messing around with this and start getting our money,” said Field.

“It costs us money every day we delay,” Hay added.

Council member O.T. Tomes remarked that he wasn’t sure the city would gain anything from further debate about the controversial franchise-fee settlement.

Council member Earl Cobb backed Sitnick’s call for the public hearing. “We said we were going to be more open about this [contract]. Let’s locate local experts to look at this [proposal] with us.”

Copies of the proposed agreement, as well as charts comparing it with the current 1967-vintage franchise and last year’s proposed agreement, are available in the city attorney’s office for a nominal copying fee. Call 259-5610 for information.