The company awarded the District's cable television franchise said yesterday that it cannot live up to the agreement it signed less than four months ago and asked the District for substantial cutbacks in its obligations, including one that requires it to wire all homes in the city.
Officials of District Cablevision Inc. (DCI) said that for the system to be economically viable, the city will have to allow the firm to delay payments to it, to provide fewer cable channels than promised, charge higher initial rates and put off wiring in neighborhoods requiring underground cable, such as in downtown areas.
The proposed concessions, including an indefinite delay in a two-way institutional network and fewer public-access channels, are worth $32 million and are necessary to get financing to build the system, company officials said.
The City Council can vote to revise the agreement with DCI or it can revoke the agreement and seek a new franchisee if the company fails to fulfill the conditions of the current contract.
Richard Maulsby, director of the D.C. Office of Cable Television, and City Council member Betty Ann Kane (D-At large), chairman of the cable television committee, expressed frustration and disgust at DCI's inability to come up with the necessary financing to build the system and its failure to meet most of the deadlines and conditions of the contract required thus far.
"I cannot believe how irresponsible this company has been," Kane said after Maulsby gave a status report at a committee hearing. Kane added that she had "no confidence" in DCI's ability to operate the system.
But both Kane and Maulsby said they will continue to try to work out problems with DCI. Starting over again would mean the loss of more than a year's work, and Maulsby said that "nobody wants to go through that."
The firm's letter officially requesting the modifications to the franchise agreement was given to Maulsby in the middle of his presentation, although it was due earlier.
Kane said that was typical of what the city had gone through in the past months trying to deal with the company.
Maulsby, who had discussed the proposed modifications with the company before, said he is inclined to recommend adoption of most of the requested changes to the City Council, with two significant exceptions, which he called "major roadblocks" to getting a revised agreement.
One would free DCI of its obligation to wire all homes in the District, instead limiting the firm's capital costs to an average of $500 per unit.
The current agreement requires that construction of the system start in all eight wards in the city and that all homes be wired in four years.
The company now proposes starting to wire homes that can use above-ground cable, which costs considerably less than underground wiring.
Wards 7 and 8 would be in "good shape" under this plan, Maulsby said, and the wiring delays would come in Wards 1, 2, 5, 6 and parts of Ward 3. It was unclear what the impact would be in Ward 4.
The firm would use underground wiring only until it got to the $500-per-unit average construction cost, and would then offer alternatives, mainly satellite dishes, to the remaining households, officials said.
Maulsby said more than half of the city requires underground cable and that the cost limit would deny cable to a large segment of the population. That is "totally unacceptable," he said.
The other major objection Maulsby had was to the indefinite delay of the two-way institutional channel to be used for data-processing among businesses and government agencies.
"It is impossible for DCI to build the cable system under the current agreement," said DCI President Robert L. Johnson in a telephone interview.
The company realized the negotiated agreement was "not marketable" only when it started discussing financing with banks and investment companies after the contract was signed, he said.
DCI has made "no progress" in getting the $80 million financing it needs to build the system, has a total of $52,000 cash on hand, owes large sums of money, and will be unable to pay a $250,000 franchise award fee due to the city on June 30, Maulsby said.
"I would not underestimate the seriousness of the matter," he said.
DCI also proposed changing the initial basic rate from the $1.95 in the agreement to $3.95 a month and providing one other tier of service at $12.95, rather than two other tiers at $8.95 and $11.95.
But Maulsby said that federal legislation approved last year deregulated cable television rates, anyway.
Johnson said the company will charge whatever price the market will bear.
The firm's request included reducing the number of channels from 78 to 60.
Kane scheduled a public meeting on the issue for July 2.