Time Warner Fights Back Near K.C.

Merriam, Kansas-a suburb of Kansas City-may be the place where tensions between incumbent cable operators and overbuilders finally erupt.

The community of 12,000 recently put off action on cable franchises for Everest Connections and Digital Access Inc., after Time Warner Cable complained that the newcomers received preferential treatment.

The City Council has delayed a vote on the new franchises until Dec. 18 to give members time to review the situation, said Quinn Bennion, Merriam's acting city administrator. But the existing deals are expected to be approved, he said.

In a Nov. 27 letter-delivered less than an hour before the council was set to vote-Time Warner detailed 10 requirements in its franchise that it claimed were not imposed on Everest or Digital Access.

It said the newcomers would not have to pay franchise fees for online services, nor would their advertising revenues be included in franchise-fee calculations.

Other bypassed provisions include a mandate that the city receive copies of any rate schedules or filings to the Federal Communications Commission; the allocation of channels for use by the city and the local school district; and insurance and bonding requirements.

If the franchises are approved, Time Warner warned it would consider "alternative means by which competitive neutrality can be achieved."

That prompted a heated response from Everest, which last week accused Time Warner of resorting to "egregious and blatant misrepresentations" and urged the council "not to succumb to such empty threats."

"We took [Time Warner's franchise] agreement and changed very little," said Mike Roddy, Everest president and chief operating officer. "There's nothing materially different. Time Warner is doing everything it can to hinder competition."

Bennion said the council was surprised Time Warner waited until the last minute to raise its issues, as negotiations with Everest and Digital Access had been going on for months.

The city had also offered to revise Time Warner's franchise to make it identical to the deals negotiated with the two industry start-ups, Bennion said.

Time Warner director of public affairs Marc Farrar said the reason the MSO waited to voice its concerns was because the franchises being considered were not the same proposals as at the start of the process-deals the city originally ignored.

"The document being heard last week was certainly not the document floated months ago," Farrar said.

The MSO was also not impressed by the city's offer to amend its existing deal. "And what about the investment we've already made?" asked Carol Rothwell, Time Warner vice president of public affairs.

Rothwell confirmed that Time Warner is considering legal action if the city awards the existing franchises to Digital Access and Everest.

"We don't want to be anticompetitive, but we also don't want to see a competitor have an unequal advantage," he said.