Rate-Hike Plan Raises Tempers

Carol Lindberg’s crusade might not even register a blip on the screen of the multibillion dollar cable television industry.

No matter.

The east Ventura woman is unwilling to watch the only cable television provider in her neighborhood raise its rates--already the highest in the county--without a fight.

Like hundreds of other Century Cable subscribers in Ventura, she refuses to take a 6% increase in her monthly cable bill sitting down.

She’s out pricing satellite dishes, calling City Hall, firing off angry letters to the Federal Communications Commission and complaining to the company’s Connecticut headquarters.

For good measure, she’s making the cable company wait until the very last minute for her monthly payment.

“What frustrates me most is the fact that Century Cable charges more for basic service than any other cable company in Ventura County,” said the 61-year-old retired schoolteacher, echoing a battle cry that bounced off City Hall’s walls all week long. “We don’t have any competition. If everybody got a dish, they’d be left with no customers.”

So it goes in Ventura, which is fast becoming the latest case study in what happens when there is virtually no competition in a cable television market.

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Over the last two weeks, Century Communications Corp. has not only announced plans to raise its monthly basic cable rate by $1.89, but has challenged the city’s congressionally granted authority to police the company’s basic cable rates.

The action comes amid what had already been evolving into bitter negotiations over the renewal of the cable giant’s 15-year franchise agreement with the city. The agreement is set to expire Oct. 1.

“Without any qualms at all, just before the review of their franchise, they’re saying we challenge the city’s rights to regulate our basic rates, and then they go ahead and raise them,” said City Councilman Jack Tingstrom, a Century subscriber and outspoken company critic. “Common sense would tell them their timing stinks.”

Beginning May 1, the company’s basic cable rates for 15,800 subscribers in Ventura will increase from $31.50 to $33.39 per month.

The rate increase comes in a county where the average basic service subscriber pays about $15.25.

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City officials say Century should be charging just $25.07, and that if the rate increase stands, they plan a challenge before the FCC.

The City Council has scheduled an April 27 public hearing on the rate increase, after which the council is expected to order that the rates be lowered to $25.07. The move would touch off a 90-day FCC review.

If the federal agency rules in the city’s favor, the company would be forced to roll back its rates and issue refunds to subscribers.

In a separate rate dispute, the FCC ordered Century last November to refund $4.6 million to about 177,000 subscribers in Los Angeles, Beverly Hills, Santa Monica and West Hollywood Hills. The rate disputes originated the same way: the cities thought Century’s rates for basic service were unreasonably high.

Ventura city leaders say the scenario is an all too common one in a nation where 95% of cable subscribers live in areas with no direct cable competition.

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And despite congressional efforts to phase out regulation of cable rates and encourage competition, a January FCC report said cable rates are rising nearly four times faster than inflation.

Cable operators argue that the rate increases are the result of dramatic hikes in programming costs, and FCC spokesman Morgan Broman said the huge contracts being paid to professional sports athletes seem to be having a big effect on those costs.

“The decision of rates is a business decision,” Century General Manager Stephen J. Frantela told The Times last week. “We’re a for-profit business, and we’re not ashamed of that.”

But after fielding dozens of complaints from subscribers since making that statement, Frantela said Friday that his remarks sent the wrong message.

“I know that’s what I said, but that’s not what I meant to say,” Frantela said. “We’re sorry that the city and our customers are angry with us. We have not done a very good job explaining why we’re having a rate increase.”

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Though still unprepared to explain the details behind the rate increase, Frantela said the proposed hike is due to a number of factors, including increased programming costs and the fact that the company added nine new channels to its lineup last June.

Frantela would not comment on whether the company will consider rescinding its rate increase in light of the complaints.

On top of the rate hike, Century officials further angered the city last week by filing a petition with the FCC seeking to rescind the city’s oversight of the company’s basic rates.

Although Century does not compete for subscribers with any other cable company, the company says it is operating under what FCC regulations define as “effective competition.”

According to the federal agency, “effective competition” exists when two cable companies operate in the same franchise area, regardless of whether they compete for the same subscribers. The theory is that either company could run its cable lines into the other company’s service area if it so desired.

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In its petition, Century further argues that it meets the FCC’s effective competition test in two other ways: Both Century and digital satellite television are available to at least 50% of the city’s homes and apartments, and the smaller cable provider in the city--Avenue TV Cable--serves more than 15% of city households.

City officials acknowledge that FCC precedent is in the company’s favor. If successful, the company would be exempt from city rate oversight.

“You and I can argue for the rest of our lives whether that makes any sense at all,” said FCC attorney Steve Broeckaert. “It’s a standard, and if they meet the standard, we are required by law to regulate them.”

But to city leaders and subscribers, the rules don’t make sense, since a homeowner has no choice of cable companies and satellite providers do not offer programming from most local and regional network affiliates.

“The FCC bent seems to be in favor of the cable companies,” Ventura City Atty. Bob Boehm says. “It’s pretty obvious to all us folks in our community that there is no competition.”

And so the city finds itself stuck with little legal footing to challenge the cable company, but plenty of resolve.

Although city officials are keeping talk of their legal strategy behind closed doors, the city appears to be positioning itself for a protracted and complex legal battle.

“You got that right,” Tingstrom said. “I think this is big enough for us to go forward with and make it a major issue. This is unfair to the citizens of our city, and by God, we’re going to fight it.”

At a rate of $195 per hour, the City Council last September hired the Washington D.C.-based legal firm of Miller and Van Eaton to lead the city through the franchise renewal process. The firm is also being retained to advise the city on the rate-setting and effective-competition matters.

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Thus far, the city has paid the firm $9,200, officials said.

Councilman Sandy Smith said it is money well spent.

“The key to this will be getting the FCC to realize that what we have really is a monopoly,” Smith said. “There are no ands, ifs or buts about it. So you have to go. You have to fight. The prospect of saving the citizens of this community millions of dollars is something we should do as a City Council.”

So enraged have many of Century’s subscribers become over the company’s actions that City Hall has set up a special complaint hotline. Plus, hundreds of letters have poured in, all of which will be forwarded to the FCC.

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Many residents want City Hall to cut Century’s plug when the current franchise agreement expires. But it’s not that easy, officials say, because franchise renewals are all but automatic. According to city legal reviews, just two cities in the country have succeeded in not renewing a cable franchise.

That’s for good reason, the FCC’s Broman said.

Namely, it costs cable companies hundreds of thousands of dollars to carve into city streets and lay cable lines and other infrastructure that serve homes and apartments. It is the equivalent of about $1,100 for every home served, analysts say. If a cable provider is booted, it must be compensated for the cost of the infrastructure, Broman said.

“It can be done,” Broman said, “but the law is heavily with the incumbent operator.”

Meanwhile, the cable drama at City Hall has been nothing but good for business over at Direct Buyer’s Service, a local distributor of satellite dishes.

“Century Cable has provided more customers to us in the last two months than all the other cable companies combined,” said DBS representative John Franklin. “Century has been a real boon for us.”

Usually, customers call, visit and shop around before buying a dish, Franklin said.

“Now it’s people who have already decided they’re not going to buy cable,” he said. “Now the only question is what kind of satellite system they want to buy.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Basic Service Cable TV Rates

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City Provider Price Channels Camarillo GTE $10.95 26 TCI (east city) $12.30 23 TCI (west city) $9.85 28 Fillmore TCI $13.30 21 Moorpark TCI $13.75 23 Ojai TCI $10.81 18 Oxnard GTE $10.95 22 Jones Intercable $11.07 26 Port Hueneme GTE $10.95 27 Jones Intercable $11.07 26 Santa Paula TCI $13.30 22 Simi Valley Comcast $27.95 45 Thousand Oaks Falcon $22.45 22 GTE $10.95 26 TCI $10.51 22 Ventura Avenue $22.00 41 Century $31.50 39 UNINCORPORATED AREAS North coast Avenue $23.50 41 Near Camarillo TCI $9.85 28 Santa Rosa Valley TCI $13.30 23 Near Fillmore TCI $13.30 21 Oak Park TCI $11.30 22 Near Ojai TCI $10.81 18 Near Santa Paula TCI $13.30 22 Near Thousand Oaks TCI $10.51 22

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Source: Cable companies, cities, county