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Time Warner and Jackson, Miss., Reach Impasse

Time Warner Cable and the city of Jackson, Miss., have
reached an impasse after three years of talks on a new franchise for the MSO's local,
43,000-subscriber system.

The result was a recent 4-2 vote by the Jackson City
Council to reject a formal 12-year franchise proposal submitted by Capitol Cablevision, a
Time Warner subsidiary.

However, the City Council left open the possibility for
informal negotiations to continue.

Talks stalled after the city demanded that 20 percent of
the contracts involved in a $50 million upgrade of the system go to local minority
businesses. Moreover, it wants ownership of an institutional network (I-net) linking 18
municipal buildings, along with 16 PEG-access (public, educational and government)

Capitol, which has been operating under extensions since
its franchise expired earlier this year, has asked Mayor Harvey Johnson Jr. to take charge
of the negotiations.

Meanwhile, Time Warner has launched an advertising campaign
aimed at alerting its customers to 'what we're being asked to do that they will
ultimately have to pay for.'

'We regret being put in the position to take our
renewal efforts public, but demands and stonewalling have gotten out of hand,' said
Capitol president Steve McMahon, in a prepared statement.

City officials did not return repeated calls for comment.

Apart from wanting 20 percent of Time Warner's
contracts for minority businesses, the city also wants a list detailing which area
businesses would be eligible, said Frances Smith, Capitol's public-affairs officer.

'The hidden agenda is that the contracts are supposed
to go to friends of the City Council,' Smith said.

Moreover, the city wants the company to build, then turn
over, an I-net, but it does not want the cost to appear as a separate line item on
customer bills.

Smith said Time Warner is willing to build the network and
to allow the city unrestricted use. However, the operator refuses to turn the network over
to the city, which Time Warner believes wants to use it for commercial purposes.

'We feel like they're going to sell time on it --
like they're going to turn it into a business for themselves,' she said.

In its proposal, the city also wants 16 PEG-access channels
-- six analog and 10 additional digital channels when Time Warner activates its digital

Smith said Capitol's ad campaign, which produced
hundreds of telephone calls to the mayor's office, is designed to explain why
Jackson's system has not been rebuilt to offer the same number of channels being
delivered to surrounding communities.

'We're not going to start the upgrade until we
have a renewed franchise,' Smith said. 'It's ridiculous. We have a great
proposal on the table. But whatever we do, it's not enough. It's more, more,
more, and none of it for our customers.'

However, Smith said the city's rejection of
Capitol's proposal was the result of bad advice from local officials who believe that
the city's demands are 'common.'

'They still can't understand that what they did
will trigger the administrative-hearing process contained in the 1984 Cable Act, which
means that this could end up in court,' she said. 'We're going to do
whatever it takes. And we're confident that -- with our proposal -- we'll win in