Philadelphia Residents May Get Cable Television Provider Competition
Apr. 29 (The Philadelphia Inquirer/KRTBN)--Negotiations aimed at giving Philadelphia residents a choice in cable-TV service for the first time could be wrapped up within a few weeks, according to representatives of the city and cable provider RCN Corp. of Princeton.
Joseph James, the city's deputy commissioner of public property, said his department hopes to sign an agreement with RCN by mid-May and win approval from the mayor and City Council before Council takes its summer recess in late June.
If Council does not act by then, James said, he hopes it would approve an agreement by year end.
"We are coming close to closure on several issues," said James. "We are meeting very frequently, every two weeks, and it is progressing at a pace we are both comfortable with."
RCN, backed in part by Microsoft Corp. co-founder Paul Allen, strings its own fiber-optic and coaxial cable network to each customer's home, an expensive, time-consuming and initially unprofitable venture. The company focuses on
densely populated areas in and around major cities.
RCN already offers dialup Internet service to some parts of the Philadelphia region. It has signed franchise agreements to provide cable-TV service in several Philadelphia suburbs, and it also plans to expand into southern New Jersey once it reaches an agreement with Philadelphia.
"We continue to make progress in negotiations on a very complex agreement with the city," said Scott Burnside, RCN's senior vice president of regulatory affairs. "We hope it will be completed in the next 30 days."
If the city does finally sign with RCN, it would end the cable monopolies held by Comcast Corp. and Time Warner Wade Cable and their predecessors since the city first got cable in 1986.Time Warner and Comcast did not return calls asking
for comment.
Details of the draft agreement between RCN and the city are not public and won't be until after the mayor signs off and the city presents its proposal to Council. So it is unclear whether RCN will wire the entire city or just specific
neighborhoods, and how long RCN will take to roll out its services.
James said the issue is among his department's legislative priorities this session.
Just a few months ago, discussions between RCN and the city were stalled, partly by the transition to a new administration.
RCN says it has been trying for more than two years to enter the Philadelphia market, a process it began during the administration of former Mayor Edward Rendell.
When asked if Council could approve the RCN deal by the end of its session in June, Councilman Michael Nutter said, "That would seem to be a tight timetable." But he added, "Anything is possible."
The council does not meet again until September.
"This is not like changing the direction of a street, or a new parking regulation," said Nutter. "If the negotiations are complicated, then what is sent over will be complicated."
Nutter said it was hard to predict how Council would react to breaking the cable-TV monopoly in the city, especially one held by hometown company Comcast.
Philadelphia, he said, tends to support its home teams.
"The potential entry by RCN into the Philadelphia marketplace -- I'm sure it will catch the attention of many people," said Nutter. "We haven't had a new cable entity in Philly since cable TV happened. The only thing that has
happened in cable in Philly is the number of operators has shrunk."
One possible hitch in the timetable is the proposal for a new baseball stadium for the Phillies. That issue could absorb much of the mayor's and Council's attention.
Ultimately, however, the city doesn't have much choice but to sign with RCN, because the federal Telecommunications Act of 1996 eliminated exclusive cable and local-phone franchises. Congress crafted the law to inspire new companies to enter those markets.
RCN wires cities to sell alternative cable, phone and Internet service to the masses, aiming to dip into the growing pot of cash consumers are spending on those services.
So in addition to bringing competition to the city's cable-TV market, it also would offer residents another choice for local phone and high-speed Internet service -- putting it in competition with two of the city's most powerful companies, Comcast and Bell Atlantic Corp.
The Telecom Act intended to bring competition that in turn would lead to lower prices, improved services and innovation.
For most of the country's residential consumers, including Philadelphia's, that competition has barely been seen. Satellite TV firms such as EchoStar and DirecTV have given cable companies some competition and helped slow price
increases, while a few firms have challenged the regional Bell operating companies for residential local phone services.
RCN, however, is one of the most aggressive -- and feared -- new competitors in the industry.
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