Cox Communications in line with 1995 deal, New Orleans City Council says

Cox Communications has "substantially complied" with the terms of the 1995 franchise agreement authorizing it to provide cable television service in New Orleans, the City Council has ruled. The action, approved 7-0 at the council's meeting last week, does not lock the council into renewing Cox's franchise when the current agreement expires at the end of the year, but it was a necessary precondition for such a renewal. In fact, there has never been much doubt that the city would renew its agreement with Cox. When the council in April issued a request for proposals from potential cable providers, only Cox responded, meaning the city has had limited bargaining power. Federal laws and Federal Communications Commission decisions also have sharply curtailed the city's negotiating ability. Even if other companies were seeking permission to provide cable to local customers, said William Aaron, a legal adviser to the council on telecommunications issues, council members could not arbitrarily refuse to renew the Cox franchise. The council could do that only on the basis of certain limited criteria, such as that the company has not lived up to the terms of the 1995 agreement. Cox has had a nonexclusive franchise to operate in Orleans Parish since 1981, meaning that other companies also can apply to provide cable services, though none has done so. The franchise was renewed in 1995. Cox pays the city a 5 percent franchise fee on its cable revenue, amounting to about $3.4 million per year, but federal law prohibits the city from charging a similar fee on Cox's revenue from Internet or telephone services, Aaron said. Unlike in 1995, Aaron and fellow legal adviser Basile Uddo added, the city now cannot ask for much from Cox beyond the 5 percent fee. In 1995, the council required Cox to pay the city $1 million per year to support groups that produce programs for the cable system's public access channels. The company also was ordered to pay the city $500,000 to equip studios for producing community-access programs. The city had to provide a $200,000 matching payment. Under the current rules, the cost of access programs will have to come out of the city's 5 percent fee, the council's advisers said. However, they said, the council has made clear to Cox that it considers maintaining the channels that carry educational, governmental and community-produced programs to be vital. "The council will do everything possible to keep the access channels," Councilwoman Cynthia Hedge-Morrell said. Aaron and Uddo said they believe Cox "has gotten the message" and that the franchise renewal to be presented by December will provide for continuing the access channels. In its response to the city's April request for proposals, Cox noted that it provides five such channels, which are managed by New Orleans Access Television, a nonprofit entity. Subscribers are charged $1.07 monthly to cover the $1 million annual cost of supporting the channels. Cox said it "will continue to provide an outlet for noncommercial PEG (public, educational and governmental) programming." However, it said, "in light of the lack of information demonstrating the community's interest in the channels," it was unable at that time to say "what that outlet might consist of." Despite the finding of overall "substantial compliance," the council and Cox still disagree over whether the company has complied with a few relatively minor provisions of the 1995 agreement, Aaron said. One involves less than $400,000 in payments that the city says Cox owes; the company contests that claim. Another issue concerns whether Cox complied with a provision concerning establishment of an I-net closed-circuit broadband system connecting public buildings. Cox said the city never told it to start work on such a system. The council contends that Cox was supposed to take action on its own. Either way, the city never pressed Cox on the issue, but the Landrieu administration appears to have more interest in creating such a system than its predecessors did. The council hired engineering consultants to review Cox's technology and make sure it has met all the technical demands in the 1995 agreement. The review found that Cox's system is "first-rate," Aaron said. Federal law prohibits the council from negotiating with Cox about the rates it charges its customers. The federal government now has sole authority to regulate the rates.