Cox Communications’ near monopoly in the Rhode Island cable market grew a little thicker earlier this year when it announced it would take over the area now being served by MediaOne. Cox has gobbled up 10 of the 12 cable licenses in the state and when the MediaOne deal is finalized will account for approximately 95 percent of the 298,000 cable customers in Rhode Island.
The cable giant’s rapid growth has not gone unnoticed. The state’s Division of Public Utilities and Carriers has been keeping a close eye on Cox, including pressuring the company to change rules for public access users and hiring a consultant to review how cable is run in the state. Meanwhile, a Senate subcommittee recently held one of three planned meetings to look at the cable industry in Rhode Island.
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“We’re not focusing on one specific area. We want to look at (cable’s) broader spectrum,” said Sen. Thomas R. Coderre, D-Pawtucket, chair of the Senate’s commission on cable.
The pending transfer of MediaOne’s license to Cox will mean the cable company will add another 15,500 customers – from the towns of Westerly, Charles-town, Hopkinton and Richmond – to its current total of 265,000.
When cable first entered the state in the 1960s there were 12 cable franchises, each run by a separate company. After the MediaOne deal, there will be only three: Cox, Full Channel and Block Island Cable. Full Channel has 12,222 customers while Block Island has between 400 and 500 customers.
Aside from seeing Cox dominate the market, lawmakers realize the dramatic evolution of the services provided by cable and its importance to the public and want to get up to speed on what critics have called cable-friendly guidelines for cable.
Concerns raised at the May 24 Senate commission ranged from cable rates, public access deficiencies, how cable’s new Internet service falls within Rhode Island’s old rules and why Rhode Island is not getting paid franchise fees that other states have enjoyed.
Coderre said the subcommittee was called following several “controversial bills” proposed last session, which ranged from requiring cable companies to offer discounts to seniors and the disabled to limiting the length of a cable company’s license to 20 years. Today, such licenses have no expiration date.
The two-hour commission hearing was designed to let the key players in the cable arena educate legislators about how cable got where it has in the state and what direction it is heading. Two more hearings will be held, including one scheduled for today (Monday, June 7).
While the Senate meeting was designed to get a general view of the cable industry, Cox representatives were busy three days later answering nitty-gritty questions before the division, which, along with public access users, is looking for changes in Cox’s public access rules.
This all comes a couple of weeks after a consultant hired by the division to examine cable television public access returned a report detailing a number of concerns about Cox’s public access policies.
In outlining Cox’s public access, the firm of Horton & August, P.C., pointed out several concerns it had found, some of which have been expressed by public access users and the DPU&C in the past.
Rhode Island does not require cable operators to pay a franchise fee to operate, contrary to standard practice throughout the country. The report, filed by William August, stated that the state’s policy raises “the questions whether and at what price imposition of such franchise fees could benefit public, educational and governmental access.”
Cox’s allocation of local access channels “appears to be at a somewhat low level.”
The cable company’s attempt to promote public access is inadequate.
During a site visit in October of the Cox’s Lincoln studio August found the studio was not operational. Cox’s officials said the reason was they were in the process of buying new equipment.
Cox’s rules for public access users are “overly restrictive and not adequately designed to encourage public use of public access facilities.”
Mary Lou Palumbo, community programming manager at Cox, said that in some cases Cox has not been providing the services that it would like, but said the company has made a commitment to public access. She pointed to the recent purchase of new equipment, additional training for people interested in public access and a campaign to promote public access.
“When we acquired some studios they were sub-standard(and) some employees did not make public access a priority, but that has changed. Cox is changing that,” Palumbo said, during the division’s hearing.
Cox, the division and public access advocates have met on several occasions to hammer out a new set of rules to be followed by those using equipment at the nine public access studios maintained by Cox.
Leading up to the hearing at the division, lawyers for Cox questioned the division’s approach to the negotiations on the rules.
“We regard this as a bad faith approach. Cox has substantially modified the rules in 12 ways,” said Cox’s attorney John R. Gowell of Peabody & Arnold of Providence.
Leo Wold, a special assistant to the Attorney General’s office, which is representing the division’s advocacy section in the case, said while changes have been made he has just been pushing for other issues important to public access users.
Wold said some of those issues standing in the way of an agreement include requests by public access users that shows not be limited to either 30 to 60 minutes, that shows be played back during holidays and shows be played during the week more regularly.
John Spirito, the hearing officer for the division, recommended that the two sides meet again and try to create one document they can agree on. If that cannot be accomplished the decision would fall onto Spirito’s shoulders.
While many critics see any changes to Cox’s rules as a victory, there is one hurdle that remains.
The report by the consultant hired by the division pointed to perhaps the most peculiar facet of Rhode Island’s cable regulations, which prevents the state from collecting a franchise free from cable providers, which is regularly done in states throughout the country.
Using figures provided by Cox, August estimated that the cable company has gross annual revenues of $111.3 million per year in Rhode Island.
“If the state as franchising authority were to impose the maximum permissible franchise feeit could collect $5,565,000 per year, which greatly exceeds Cox’s current public access budget of $1,417,000 per year,” August stated.
In most states the franchise fee, allowed by federal laws, funds public access.
During the Senate hearing, John Wolfe, vice president of public and governmental affairs for Cox, said if Cox was to pay the franchise fee, the amount will be divided among and charged to customers.
He added that Rhode Island has fared well in terms of how much Cox invests in public access, considering the state has nine studios compared to similar size markets that only have two studios. To Wolfe’s defense, those on the side of public access have also suggested that it would not be a bad idea to trim down the number of studios and invest resources in those studios being used.
“Our commitment is to keep Rhode Island on the cutting edge in telecommunications,” Wolfe said.
Wold of the A.G.’s office was asked why Rhode Island was the exception in the nation in offering a license that doesn’t expire and doesn’t call for a franchise fee.
“When cable first entered Rhode Island there was a great desire to let the companies prosper and develop, so they did not (create) a franchise fee,” said Wold.
