Franchisees normally build in penalties for cable companies who fail to deliver upgrades on time.
Typically, a municipality will make franchise renewal dependant on several factors. Things like putting in an INET (institutional network), availability of high speed Internet access, but most importantly a requirement to upgrade to supply a certain number of channels by a certain date. Of course, the channel number leads to the specification of the upgrade bandwidth such as 550 MHz, 750 MHz, etc. Newest angle on this is placing a requirement for digital services in the renewal also.
On paper, these franchising authorities can write in massive penalties for missing upgrade dates, or missing certain service availability dates. In reality, cable companies rarely actually ever pay penalties and if they do they are small slaps on the wrist compared to huge fines. Why? Because while the penalties are written in plain English in the main body of the renewal requirements, there are always loopholes written into the contracts by the lawyers. These include construction phase reviews where the cableco can revise its schedule based on certain "uncontrollable events" so the schedule slips without penalty, or the cableco can show materials shortage in the industry that affects their ability to finish on time, or hold up of construction permits by the very city that awarded the franchise (in which case the cable company is pardoned for the delay) and on and on, and so it goes.
There are so many ways to avoid the penalties, in fact, that very few companies ever pay them, except in cases of gross negligence or ineptitude in building the upgrade. |
