Cerritos Turns to Cable TV Plan Co-Starring General Telephone

Innovation has been a trademark of this city, and its leaders are again gambling on the creative rather than the conventional in finding a way to deliver cable television.

Unable to find a company to both build and operate a cable system, the city is pursuing a novel approach that would tap the expertise and pocketbook of a huge public utility and the know-how of a private cable firm.

The City Council has given its initial blessing to a joint venture between General Telephone Co. of California and Apollo Cablevision, a tiny subsidiary of a San Luis Obispo-based construction company, T. L. Robak Inc.

As proposed, General Telephone would finance the construction of an underground system that would use two-way wire cables to transmit signals, said Tom Robak, owner of both T. L. Robak and Apollo Cablevision.

Exotic Features

Apollo would then lease the system from the utility and provide programming to residents, including a series of exotic features like home banking and shopping, stock market data and electronic mail. Robak said his construction company would be the prime contractor on the installation of the system, which city officials have estimated could cost up $10.3 million. Design of the cable network would be shared by the phone company and Robak’s construction business.

Under the plan, the city would have no financial investment in the project, Robak said.

The City Council voted 5 to 0 Wednesday to negotiate an agreement with General Telephone and Apollo Cablevision.

The city has been talking with the phone company about cable options since 1982, but only seriously since last year, city spokeswoman Michele Ogle said.

If General Telephone is eventually awarded the Cerritos franchise, it would be the utility’s first city franchise ever, according to Darrell Hughes, director of marketing for the Thousand Oaks-based phone company. He predicted that an agreement with Apollo Cablevision can be worked out by the end of the year, clearing the way for the council to approve the deal and award the phone company the franchise.

Barring major delays, Hughes said, construction of the system should take a year with the first Cerritos residents receiving service near the end of 1987 or in early 1988.

Cerritos is a test of sorts for General Telephone. If successful, Hughes said, it could pave the way for other cable projects with cities statewide.

Palo Alto Like Cerritos

Only one other city, Palo Alto in Northern California, has gone with a phone company. A Bay Area consumer group and Pacific Bell are teaming up to build and operate a system in the city of 56,800 residents south of San Francisco. The phone company will build and maintain the system, while the consumer group, Cable Co-Op, will handle the programming.

Industry analysts and city officials say that telephone companies are moving into the market because they have ready access to the capital and technology needed to build the state-of-the-art cable systems now sought by many cities.

Simply offering special movie and sports

channels is no longer enough, said Ogle, one of Cerritos’ cable coordinators. The emphasis is now on “interactive” systems like the one Cerritos wants, that would allow features like pay-per-view watching, home access to libraries and residential or business alarms.

“We have been in the business of transporting information for a long time,” Hughes said, “and cable television is just the logical extension of that process.”

Cerritos is one of the few cities in this corner of Los Angeles County without cable service.

Despite predictions that there would be many subscribers, many cable companies have shied away from Cerritos because of the city’s insistence that cable lines, like all other utilities, be placed underground. Trenching and laying lines underground is an expensive proposition, costing up to $60,000 a mile, contrasted with $20,000 a mile for an above-ground system, according to city reports.

In recent years, when many cable companies were either merging or, in some cases, going broke, few could afford or wanted to undertake a cable project in Cerritos.

“When cable companies were going around a few years ago promising cities all kinds of things,” Ogle said, “nobody was looking at Cerritos.”

More Than 70 Firms Contacted

In the last year alone, the city contacted more than 70 cable operators across the country, and twice had to extend deadlines for submitting bids before receiving four proposals, including one each from General Telephone and Apollo.

City officials also say they waited until a year ago to take a serious stab at cable because of the tumultuous state of the industry, in which there was a steady stream of buy-outs, bankruptcies and court decisions.

“It was like a moving target,” veteran Councilman Barry A. Rabbitt said. “The rules of the cable game have constantly changed. . . . We wanted a quality system, but not one that would lead us into lawsuits or disappointments like so many other cities.”

And while the city has slowly circled the issue since the early 1980s, spending more than $20,000 to study cable options, the demand for cable in Cerritos has grown.

Ogle said her office receives 40 to 50 calls a month from residents asking about the availability of cable service.

Mayor Don Knabe quipped at a recent council meeting that the question most asked by residents is: “When the hell are we going to get cable in this city?”

In an affluent city that boasts the nation’s first solar-heated City Hall, a solar-powered Olympic pool with underwater music and one of the first auto malls anywhere, Councilwoman Ann B. Joynt said many residents enviously eye surrounding cities with cable service.

“Most people in Cerritos are not used to being a have-not,” Joynt said.

Because the city received so few cable proposals, Joynt said, the council really had little choice but to go with the recommendation by city staff to negotiate with General Telephone and Apollo on a joint venture.

Two of the four companies that did submit proposals--Kinneloa Television Systems Corp. in Pasadena, and Mecum Enterprises Inc., in Troy, Mich.--apparently were never serious contenders because they lacked the financing or ability to handle a system the size Cerritos is seeking, Ogle said.

Big Challenge

Even for Apollo, Cerritos represents a big challenge.

If the city’s cable telecommunications consultant, George L. Page, is right that 60% of Cerritos’ 15,150 households would subscribe to the system, it would be by far Apollo’s largest undertaking.

Formed in 1983, the company supplies programming for a tiny 252-subscriber system in Los Alamos, a small farming community in northern Santa Barbara County. The company, owner Robak said, recently landed its second franchise, a 500- to 600-subscriber franchise in the town of Le Grand in the central San Joaquin Valley.

While relatively new to the programming end of the business, Robak said, his construction company of 200 employees has been building cable systems since 1980. So far this year, he said, the company has installed nearly 200 miles of cable lines in cities around the state.

Cerritos officials estimate that at least 100 miles of cable will be needed for their system.

In Apollo’s proposal, residents would be charged between $15 and $34.50 a month, ranging from the basic service of 20 channels to a series of extras such as stereo reception, access to pay-per-view specials and additional cable outlets. It is unclear whether that price would go up when features like home banking and access to the local library are added, city officials said.

Because of strict federal regulations, General Telephone’s role in the Cerritos project would be limited to financing construction and eventual operation and maintenance of the cable lines, Hughes said. Phone companies are severely restricted from getting involved in any phase of the content shown on cable beyond transmitting programs and information without approval from the Federal Communications Commission, he said.