Warned to Wait for Court Decision : City Atty. Tells Cable Firms Not to Raise Rates

City Atty. John W. Witt, following directions from the San Diego City Council, mailed warning letters Tuesday to Cox Cable and Southwestern Cable Television, demanding that the companies not raise subscriber rates until a court decides the legality of the planned increases.

The letters were mailed five days after the companies announced plans to increase subscriber rates by at least 11% beginning June 1. Company officials said the increases are needed to offset rising programming costs.

City officials say that because the companies use public right of ways for their lines, they must have city permission to increase rates.

But cable officials argue that, based on Section 53066.1 of the California Government Code, cable companies are exempt from city rate regulations upon meeting certain performance standards.

A hearing on the issue is scheduled for June 5 in Superior Court, but Mayor Roger Hedgecock said Tuesday that he and other City Council members are angry because the companies refuse to wait for the court ruling.

No company can reasonably expect to use public rights of way and not have a responsibility to answer to the city about rate increases, Hedgecock said.

Under the franchise agreement, the cable companies are allowed to use public rights of way as long as they do not violate contract terms. Hedgecock said the contract states that rate increases should be no greater than the San Diego inflation index. Larger increases must be approved by the council after a public hearing.

“Since the city has lived up to its side of the contract, the companies should live up to their side as well,” the mayor said. “These rate increases are not justified, and City Council will take action to stop the increases from taking place.”

At the very least ,the city will ask for a court injunction to freeze cable rates, Hedgecock said. As a more serious action, the city might hold a public hearing to discuss canceling the two franchises.

“We don’t want to take any of these steps,” Hedgecock said. “What we want is to continue a good working relationship with these franchisees.”

Daniel Mahon, vice president of Southwestern, said his company wants to preserve a good working relationship with the city. However, he said, the city must understand that the company has some cost increases of 200%, although he did not specify any of the increases.

“A rate increase is not an unusual thing for businesses, and we are a business,” Mahon said. “It’s not a question of more profit. It’s a question of increased costs.”

The increases would mean that the 255,000 Cox Cable subscribers would pay $14.95 a month for basic services, compared with the current $11.78 charge. Southwestern rates would increase from $11.94 a month to $13.29 a month for about 80% of the company’s subscribers.

Mahon said he could not comment on the city’s letter because he had not received it. However, he said the company would answer the letter by the city’s May 6 deadline.

Gene Yee, vice president of community relations for Cox Cable, said his company also had not received the letter.