Cities Face Static in Cable TV Dealings

When Comcast hiked cable TV rates in Newport Beach two years ago, Bob Brooks got so mad he signed a petition demanding that the city investigate.

The rage returned last week when his cable bill jumped another $2. But this time, Brooks kept quiet.

“What’s the point?” huffed Brooks, a retired real estate broker. “Every damn month it goes up. A little here. A little there. The city says there’s nothing they can do.”

Costa Mesa attorney William Marticorena hears that gripe constantly, not from subscribers but from the dozens of Southern California cities he represents in cable TV negotiations.

Unlike large cities such as Los Angeles, which has the legal budget to fight cable conglomerates, small and mid-size municipalities are complaining that the limited clout they enjoy over cable companies has eroded to almost nothing, and they say prices are creeping higher as a result.

“There’s a helplessness. Cities feel it. Subscribers feel it,” Marticorena said. “There’s nothing you can do. You can turn it off, that’s about it.”

Marticorena began battling cable companies two decades ago, after a disillusioning brush with Hollywood made him abandon dreams of a career in entertainment law. In that time, he says he has learned only two truths: Cable bills always go up, even if service doesn’t improve, and cities can do little to stop it.

Marticorena blames two main culprits: Washington, including the federal deregulation of the cable and other telecommunications industries in 1996; and the recent frenzy of corporate acquisitions that has consolidated cable television into the hands of a small group of cable superpowers.

Cities simply are being out-muscled by the legal and financial power of cable giants such as Time Warner, Century, Cox Communications and Tele-Communications Inc., all of whom have lobbyists in Washington and teams of lawyers at their disposal, Marticorena said.

When franchises are sold--triggering a 120-day period before the transfer is automatically approved--the cable companies often overwhelm municipalities with thick legal briefs and financial reports that require outside legal and technical experts to decipher, Marticorena said.

Cable industry officials counter by saying that cities come to the negotiating table with equal footing and no financial risk at stake. In addition, the companies say they have invested billions of dollars in upgrading their cable operations, often without prompting because it is in their best interest to do so.

“Agreements are sometimes difficult to come to,” said Michael Luftman, Time Warner’s vice president of corporate communications. “Usually both sides play a role in that.”

Time Warner and other cable giants are eager to install the new high-tech cable systems so they can establish a solid foothold in the highly competitive--and lucrative--Internet and telephone markets, he said.

“I don’t see how it’s to anyone’s advantage to delay the process,” Luftman said.

The recent wave of cable mergers and buyouts is forcing cities throughout Southern California to revisit the complex, often politically volatile issues surrounding cable TV. Local governments have the right to review the sale of their cable franchise.

On top of this, many of the original cable contracts signed 10 to 15 years ago have expired or are on the verge of expiring, offering cities a chance to negotiate for a modern cable system and better customer service.

But those opportunities aren’t bearing as much fruit as expected. First, most of the charges on monthly cable bills are off-limits, thanks to Congress’ decision to deregulate the industry and bar price controls on everything but the most bare-bones cable service.

And when cable contracts do expire, the negotiations seem to drag on and on.

When Garden Grove’s cable contract with Time Warner ran out 18 months ago, the two sides hit a stalemate and the city finally extended the old agreement for three years. Villa Park did the same when its contract expired with Century in 1996. Both cities want a new system capable of high-speed Internet access. Both are still without it.

“There’s not much we can do but continue to negotiate,” said Villa Park City Manager Fred Maley.

Cities are finding there aren’t too many options. Marticorena said it’s extremely difficult for a city to kick out an existing cable company.

Cable companies create delays because they realize a new contract with a city will require system upgrades and more elaborate services, all of which will cut into profits, he said.

Redondo Beach, after years of complaints from subscribers, has been combing over its cable contract with Century to look for an out.

“Customer service issues have not been resolved--their phone service in terms of responding to complaints is terrible,” said Maggie Healy, the city’s cable liaison. “We can’t say: ‘You’re doing a lousy job of responding to people’s complaints and we don’t think you should raise rates.’ Our counsel tried that with the FCC, and we were turned down.”

But other cities are using takeovers as their only opportunities to strike a better deal with cable companies.

When AT&T; recently asked the city of Portland, Ore., to approve its acquisition of the city’s cable provider--Tele-Communications Inc.--the city demanded a major concession. AT&T; would have to abandon its exclusive right to provide high-speed Internet service over the cable lines, and open the system to America Online and other Internet provides.

AT&T; sued. And lost. That decision was a catalyst in an ongoing, bitter feud at Los Angeles City Hall over how to divvy up one of the nation’s most lucrative markets for Internet services. There, exclusive rights over cable lines are also the issue.

The Portland ruling, which AT&T; has appealed, also supported a contention by many cities that the sale of their cable company opens the door to revisiting the cable franchise agreement. This would allow cities to make sure their cable company delivered the services promised, and add provisions that are in the public interest, such as open Internet access.

Most city officials agree that cable quality, channel selection and service have been greatly improved compared to the previous decade, when cable was new and subscribers were forced to deal with frequent outages and unreachable customer service personnel.

“Customers are the cornerstone of our business,” said Richard Waterman, Cox’s vice president of government affairs in Orange County.

The improved quality is one of many reasons complaints about cable bills have dwindled to almost nothing, said Torrance’s cable television administrator, Michael D. Smith. The healthy economy also is a factor, since cable bills don’t empty wallets as much.

“I also think there’s apathy. You complain enough and things don’t change, then you stop complaining,” Smith said.

Times staff writer Megan Garvey contributed to this story.