Cable by the numbers

Dig into Buncombe County’s cable-franchise history, and your head spins. Since the late 1970s, there have been more franchise agreements, more buyouts and ownership transfers, and more amendments piled on top of amendments than the number of court hearings in the Florida presidential race.

County Clerk Kathy Hughes summed things up succinctly when Mountain Xpress tried to follow the trail of the county’s attempt to negotiate a new franchise agreement: “It gets kind of foggy.”

In north and northwest Buncombe, Crystal Clear Cable TV garnered a 15-year franchise in 1981, but Crown Cable bought Crystal Clear and its franchise agreement with Buncombe County in 1994. Four years later, it ended up as part of Charter Communications, one of the largest telecommunications companies in the United States (owned by Microsoft co-founder Paul Allen). To the east, Sammons received a franchise in the late 1970s but was purchased by Marcus Cable Associates in 1995; it, too, ended up under Charter’s wing within a few years. American Cable TV Investors laid claim to the southeast portion of the county in 1983, but eventually was bought up by InterMedia, which — you guessed it — Charter bought out in 1999.

Add to this morass the county’s much-amended cable ordinance, which has governed the granting of franchises since 1979. The original ordinance mandated a franchise fee of 3 percent of a cable company’s gross revenues. Although Congress approved a maximum fee of 5 percent in the 1984 Cable Act, the commissioners didn’t revise their ordinance to mandate this rate until 1997. Two of the three franchise agreements were renegotiated at the lower rate during those years.

The old Crown franchise, renewed in 1994, doesn’t fall under the newer ordinance, so Charter pays only 3 percent of gross revenues received from the approximately 18,000 subscribers covered in the Enka, Candler, Leicester and Barnardsville areas, reports Charter representative Diane Gilkeson.

That 2-percent difference isn’t exactly small change. In 1998, when the old American agreement expired and the county negotiated a new agreement with InterMedia, Assistant County Attorney Stan Clontz estimated that an extra 2 percent in franchise fees would net the county at least $150,000.

“We want every cent that the county can get,” says Buncombe County Manager Wanda Greene about the negotiations for a new countywide agreement with Charter. And now that Charter owns the whole system, county officials want a single franchise agreement to govern cable service in the unincorporated parts of Buncombe. “From an administrative point of view, it would be much simpler to have one agreement,” Greene observes.

The trouble is, two of the three individual franchise agreements aren’t even up for renegotiation yet, technically: the InterMedia portion runs through 2013, and the old Marcus agreement extends through 2009. But the old Crown agreement expires in September 2001 — giving the county a chance to push for a single agreement and a 5-percent fee.

The expiration of the Crown agreement also offers the county a chance to negotiate for a few other goodies, such as a stash of operating cash for a public-access channel — a benefit the city of Asheville didn’t quite secure (for a tangle of reasons) when city staff and Council negotiated a new franchise agreement with InterMedia in early 1998. In the give-and-take of negotiations, though, Intermedia did agree to give the city $340,000 worth of equipment and funds, the money coming from a surcharge on cable subscribers’ bills.

But that’s not enough to get the channel up and running, reveals Beth Lazer, chair of Asheville’s Public Access Commission. Members of that group would like to see the county secure operating funds for a public-access station, to be shared with the city of Asheville and other municipalities in Buncombe County.

“Moneywise and administratively, there’s no reason to have two public-access channels,” agrees Tom Sobol, outgoing chair of the Buncombe County Board of Commissioners. “We [have been] looking at working out some sort of cooperative agreement with the city, [such as setting up] a joint, independent board [to oversee the channel] and a nonprofit to manage it. But there’s going to have to be some [operating] money up front from the cable company.”

That effort — and the overall negotiations — should be countywide to obtain more bargaining power with Charter, argues Sara Marcia Rafter, who chairs Black Mountain’s Economic Development Committee. “A community the size of Black Mountain would have trouble generating either the funding or the programming for its own PEG [public-access, education and government] channels. We’re hoping to partner with Asheville and the county,” she notes.

Greene anticipates securing such a partnership, envisioning a total of four channels in Buncombe: two for local government (one for the city and one for the county) plus two joint channels — one for educational use, the other for public access.

Rafter offers a few tips about negotiating with Charter. In 1998-99, she chaired Black Mountain’s Cable Television Task Force, which partnered with town aldermen, town staff and telecommunications expert Joe Van Eaton to negotiate with Charter. They threatened to deny Charter’s request to transfer ownership from Marcus, based on two points of noncompliance with the franchise agreement: Marcus had failed to provide the then-new cable channel C40, which was available in the rest of the county, and there were numerous complaints about inconsistent audio and video reception. Black Mountain won the argument, getting $30,000 from Charter, Rafter explains. That’s up-front money for PEG and for digital-video equipment at Owen High School, she emphasizes.

“We were pretty pleased with [the agreement], but it required pushing to get. We were negotiating up to the last [possible] day,” says Rafter. Having an outside expert was a contributing factor: A consultant was hired and paid by Charter, she mentions, “but we felt it would be hard [for that consultant] to be nonbiased.”

Asheville hired a consultant for its negotiations in 1997-98, but the county is relying on the negotiating savy of Greene and Clontz and the expertise of county residents such as Wally Bowen, director of Citizens for Media Literacy. While expressing cautious confidence in Greene, Bowen remarks, “In the past, a lot of [local governments] — because of the legal and technical complexities — have had to rely on the cable companies for expertise, and, in that sense, the cable companies have already won.”

He emphasizes that the negotiations are about more than a few percentage points on the franchise fee: Charter now offers Internet services, both for residential use and for businesses. The Charter franchise “has implications not just for entertainment but for local news, information and economic development,” says Bowen. “If I were a competitive business, looking for broadband [the capacity for high-volume, high-speed data transmission], I’d be looking for the cable company to be a provider, but there’s [currently] no obligation for the cable company to move into that market,” he comments.

Bowen urges county officials to: recognize the economic-development issues; push Charter to provide a system that keeps Buncombe on par, technologically, with other areas; and hang tough in the negotiations. Recently, officials in San Juan Batista, Calif., netted a $700,000 initial grant and $209,000 in ongoing operating funds for its PEG operations from Charter, he mentions.

“Life and technology change too fast not to have a state-of-the-art clause,” says Greene, in answer to Bowen’s concern. Such clauses require cable companies to maintain a level of service on par with that provided to similar-sized communities, and to stay up-to-date with technological advances. Asheville secured such a clause three years ago, and, says Greene, “We’re taking advantage of what’s gone before. We expect to have something similar to Asheville’s state-of-the-art clause.” She also notes that cable companies “have to stay somewhat competitive, in any case, or people will go to the [satellite] dish.”

Charter representative Diane Gilkeson agrees with that notion: “As an industry and a company, we want to stay on the competitive edge and battle the [satellite] dishes.” Competition and demand will drive the need for greater broadband capacity, she argues, adding, “As technology changes, that enables us to do more with the bandwidth we offer.”

But Van Eaton cautions: “Think of [bandwidth] as a highway. The less bandwidth you have, the more people have to get on the same highway [for data, video and audio transmissions] — and the more likely [it is that] things will slow down.” In Buncombe, the system is built to a bandwidth of 550 megahertz — though some like-sized areas are already being built to an 860 MHz capacity, he mentions. Van Eaton recommends that Buncombe push for more capacity or risk ending up with an obsolete system: “550 MHz is nowhere what folks need for modern technologies.”

Buncombe Commissioner David Gantt gets the point. He says he’d like to see the county push for a shorter franchise term than the 15-year standard they’ve used in the past. “The longer the contract, the more likely we are to end up with technology that’s not cutting-edge,” he says. “Think how much the cable industry has changed in the last 15 years.”

But, he adds, the length of the contract may give the county a strong bargaining point.

Commissioners — and the public — will get their first crack at the franchise agreement this winter, Greene reports. She anticipates holding a public hearing in January or February.

Says Bowen: “We’re not exactly a backwater anymore. Granted, Asheville and Buncombe aren’t a first-tier service area [like Charlotte], but we’re a sophisticated community with a growing need for broadband services.”

For a detailed report on all the issues raised by Bowen and a chart illustrating the services other similar-sized communities have secured in franchise agreements, check out the Web site www.main.nc.us/bowen/.