Saturday, April 09, 2005

MC CCAC March '05 Meeting Highlights, Part 2

As promised, here is part 2 of the CCAC meeting highlights. See the previous blog entry if you missed part 1.

Verizon Starts Video Ball Rolling

Jane Lawton, MC Cable Administrator, finally gave the word - Verizon has officially approached the county to begin negotation for providing video service. There should be no question now - Verizon will seek a "cable" franchise in order to provide service in the county. This despite the existence of the unique Cable Commission and cable laws that exist in the county - which Comcast once claimed were illegal.

The 18 (or so, not sure of the exact number of) municipalities within MC will likely let the county negotiate for all of them together. Or almost all of them. Gaithersburg appears to want to negotiate on its own. Four have already indicated that the way the county to negotiate for them. This is similar to the way the Comcast and Starpower franchises were handled. If you look at the Comcast franchise, you'll see the last 10 or so pages are just filled with signatures of the officials representing the other municipalities.

Comcast Raises Rates (Or Tries To Anyway)

At the same time, Comcast is continuing to try and raise rates. I won't bore you with the details, but Comcast is trying to raise rates in a variety of ways.

1) The rates for basic service are regulated by the county and can only go up once a year. We should hear the final MPR (max permitted rate) by 3/31/05.

2) Comcast is also attempting to get a new regulated fee charged to customers - assessing customers for the network upgrade several years ago. This is rather peculiar as they asked for the privilege of charging customers $2.42/mo for 12 years in order to earn $80 million. So their rates for premium service are not bringing in enough dough?? Hmm. Why not just raise their unregulated premium rates? I suspect because it's easier to blame the FCC when the line on the bill says "regulated rate" on it even though Comcast gets the additional money.

The MC Cable Office has been aggressively battling this and knocked down Comcast's $2.42/mo to 19c/mo. (Thank you Jane!) Of course, Comcast can appeal this to the FCC so 19c may not be the last word. Frankly, I got the impression that Jane was quite annoyed not to reduce the charge to zero.

3) Comcast is also resetting the rates for equipment & installation. These are also regulated rates and have to be approved by the FCC (well, sort of). And Comcast, for the first time, is asking for a national rate. That's probably good for MC. Labor is expensive here so by sticking to a national rate, it might actually hold down our rates what they might otherwise rise to - although it means other parts of the country are going to really get hit hard. Or maybe we all will. We'll find out soon enough.

Some of the paperwork supporting these requests is available online. The Rockville Library has this plus additional material. You can't check it out - you can only read it there or copy it at 15c/page, sigh. The MPR request (see (1) above) alone is 106 pages!

Have fun reviewing the filings. I haven't gone through them yet myself but you can expect the Comcast submissions to reveal a number of creative accounting principles. That was my experience in reading their submissions the last time around. In a future blog entry, I'll cover examples of how Comcast (and probably other cable companies) do this.

Conflict Of Interest

The Cable Office is always horrified to hear me say this but they have to deal with a conflict of interest on a regular basis. Specifically, their funding comes entirely out of franchise fees. So it is in the county's interest to increase franchise fees but at the same time, it is in the county's interest to reduce the amount that subscribers pay for their service.

That's just the tip of the iceberg - one that I'm not going to delve further into at this time. However, it bears mentioning before I state the current amount that the county expects to collect in franchise fees this year (2005): $8,452,000. That's some serious cabbage! In fact, last year the county "borrowed" a healthy amount of it to help balance the rest of the county budget. (Do the words "Social Security lockbox" ring a bell?) I'd be surprised if this ever gets paid back.

Interestingly, that $8+ milllion dollar figure was well above what the county originally projected. Last year the county predicted that franchise fees would go DOWN, probably due to increased penetration by satellite. I don't have the figures so I can only conjecture, but I suspect that Comcast's internet service has staved off the loss of many subscribers that would've otherwise walked. In addition, the increasing sales of premium channels and higher costs of digital and HD services have increased Comcast's revenue despite the overall number of TV subscribers remaining relatively constant.

I don't know what Comcast is predicting but the County is planning for increased franchise income of $220K/year that amounts to overall growth of roughly 2.5% per year for the foreseeable future. That must be disappointing to Comcast.

Strathmore - Good news and Bad News - Which do you want to hear first?

Good news

Strathmore is now online. As part of the county's longstanding project to bring most of its facilities online with highspeed connections, Strathmore now has their own fiber drop.

Bad News

The fiber to Strathmore was, of course, paid for by taxpayers (or more specifically, the franchise fees of cable customers). But that's not the news. (Well, it's not the new news.) The new news is that Strathmore is not streaming their productions over any of the PEG channels for the community to enjoy. Ok, I could see that streaming in real-time might undercut ticket sales. However it is my understanding that Strathmore is not going to be releasing their productions after the fact, either. So if you can't afford tickets, you can forget about those wonderful Strathmore productions. Ok, I give up. Why did we pay to give them a fiber connection at all if they're not using it?

PS: Originally budgeted at $68 million, Strathmore came in at roughly $100 million (how can you have a project go 47% over budget??) plus the center is selling naming rights for the music center for $15 million, the concert hall for $10 million and the education center for $5 million (I can see it now - The Comcast Center for Excellence in Education at Strathmore) so it evidently really cost another $20 million that we were never told about. More disinformation: Strathmore claims to be self-supporting but that doesn't include $1 mil in operating expenses that county taxpayers pay annually.)

And did you know that MC has been named as a co-defendent in a lawsuit by a contractor for nonpayment of work done on Strathmore. Damages sought: $724K. And a 2nd company is preparing to file suit for $1M for nonpayment. (If a judge ruled for the plaintiffs, it would allow them to take possession of the property if not paid.) Evidentally, MC really has yet to make final payments, roughly about $10M. I don't fully understand why but it has something to do with MC failing to obtain a performance bond like they should have. Here's a link for more info.

Anyway, if you think that's bad, wait til we start paying for the ICC. Then we'll talk pain! Oh wait, we'll just sell naming rights ...

Meeting Transcripts

Some really good news - to me anyway. In the past, attending county meetings has been rather challenging. Not just to get to the meetings but to get transcripts. The county is taking some giant step forwards. All videos of the council will now be saved for one year (I think it used to be a month) and they will all be transcripted. The transcripts will not only contain all the words spoken but will identify the speaker. This is obviously a manual process and because of that (or maybe because we weren't willing to pay even more), there will be an 8-day delay between the meetings and the transcripts. But even with the delay, transcripts are a wonderful thing. I used to have to click play/rewind dozens of times to get the complete sentence that was spoken. It was painful. I'm so happy that the county is doing this.

Look forward to lots of quotes of councilmembers. You cannot believe how childish the proceedings can be at times.

There is also a proposal to tape and broadcast the CCAC meetings. I hope this comes to pass as it would shine even more light on telecommunication issues in the county. Indeed, I don't report on parts of the meetings that I don't find particularly interesting. For example, in the last meeting, Jane spent a fair amount of time reviewing some issues having to do with telecommunications towers in the county. Fascinating stories (well, ok she does make them interesting) but not the subject of this blog.

Oh, one more tidbit that Jane did mention - Comcast asked her to review their newest Privacy Policy. She found that it included the same language that her office had rejected last year - so the Cable Office rejected it again! Jane mentioned that Seattle had passed actual privacy legistlation that reflected their understand of federal law that governs local companies. If you want to hear more about this, see the video. Oh wait, there is no video yet. See? If you want the CCAC meetings to be recorded, contact your council member with some encouraging words.


April 11 at 2:15pm - As I mentioned in Part 1, the MFP committee of the MC Council will review the problems associated with Verizon's FIOS construction. The package is already available at the council website. These meetings are generally not streamed (although they are taped but you have to pay for copies). See you there?

April 19 at 2:30pm - The MFP committee will meet to discuss the cable fund as part of the annual county budgeting approval process.

April 20 at 7:30pm - The CCAC will hold its regular monthly meeting.

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