The D.C. Public Service Commission, removing the latest stumbling block to getting construction started on a cable television system for the District, set a special discount rate yesterday for the cable franchisee to pay the Chesapeake & Potomac Telephone Co. for use of its telephone lines and conduits as part of the system.
District Cablevision Limited Partnership, the company awarded the 15-year cable franchise, will have to pay C&P $1,584 per mile per year for the conduits, according to yesterday's PSC decision. The rate, to apply for three years, is less than a quarter of the $6,600 a mile rate AT&T pays and the rate C&P had said it should charge the company.
The PSC said the lower rate would make the cable television system economically viable and put it in operation as quickly as possible without forcing telephone customers to subsidize cable TV.
C&P signed an agreement with District Cablevision last year to build, own and maintain the lines used by the cable system. The rate to be charged for use of the lines was to be negotiated, but the two could not agree and the case went to the PSC for resolution.
"This was the last hurdle that had to be established," said Richard Maulsby, director of the D.C. Office of Cable Television, adding that there should be no problem in getting construction of the system started by the June deadline set by the city. Under the planned schedule, cable TV is supposed to be available to some District residents by September.
D.C. City Council member Betty Ann Kane (D-At Large), head of the council's Committee on Cable Television, said she was pleased that the three-year rate is "reasonable and removes a major barrier to be able to go ahead" with building the cable system.
A rate still must be set for the remaining 12 years of the cable franchise, and Kane said District Cablevision and C&P should negotiate that issue between themselves now.
C&P spokesman Web Chamberlin said the company would "abide by the ruling" and that the firm recognizes the rationale on the part of the PSC for providing a special lower rate for the cable system than is applied to other customers to get the new system going. C&P had proposed the current rate established for renting its lines to other users and did not believe it had the authority, without PSC permission, to negotiate a lower rate with one customer, Chamberlin said.
"We know we have to live with this for three years," he said, but also noted that the future rate remains to be determined. He said the lower three-year rental rate would reduce profits that C&P could have used to moderate rates for telephone customers.
District Cablevision had proposed a rental rate range of between $202 and $2,011 per mile per year.
"On preliminary analysis, we are pleased that the commission has set a three-year rate within the reasonable range DCLP proposed," said Tyrone Brown, an attorney for the firm. But Robert L. Johnson, District Cablevision president, said the firm still wanted to review the fine print of the PSC decision before making further comment.
While the rate established by the PSC ruling is far less than that proposed by C&P, cable office director Maulsby said that C&P already was making a profit on its participation in building the cable system for District Cablevision and that the rental charges on its conduits "is gravy for them."
The District's attempts to get cable television have encountered problem after problem. Shortly after being awarded the franchise last year, District Cablevision officials told the city that the firm could not make the system economically viable under the terms of the contract it had signed with the city.
As a result, the City Council had voted to grant the company millions of dollars in concessions in the franchise agreement, making it contingent on the company submitting a citywide construction schedule and reaching agreement with C&P on the cost of building the system.
C&P's participation was considered important because it already had existing conduit lines and experience in underground wiring.