City To Move Against RCN On Fees Owed, Expanding Service

Posted by Mitchell - February 9, 2004 (entry 145)

Posted Thursday, February 05, 2004, 3:56 p.m.

(Chicago) -- City officials said Thursday they would take action next week against cable television provider RCN Corp. after the company defaulted on fees it owed to the city's local cable access network.

RCN did not pay $215,000 to CAN TV last month as part of an agreement with the city to expand the company's cable service to cable Area 2, according to city Consumer Services Commissioner Caroline Shoenberger.

The company also defaulted on a $19,000 payment owed to the city last month, she said.

Area 2 is a stretch of the North and West Sides, including South Lawndale, Logan Square, Albany Park and Jefferson Park.

During a City Hall news conference, Shoenberger said a resolution would be introduced at next week's Chicago Cable Commission meeting to send a violation notice to RCN for failing to live up to the company's franchise agreement with the city. Shoenberger is also a member of the Cable Commission.

A franchise agreement with the city required RCN to set out 676 miles of cable in that region over a five-year period, according to Shoenberger.

Last year, the company set out only three miles and initially proposed to lay another three miles of cable this year, but recently rescinded that proposal.

"RCN has not lived up to its obligations to the city, the people of Chicago, or to public access cable station CAN TV and we intend to hold them accountable," Shoenberger said. "In failing to comply with the provisions of the franchise agreement RCN has deprived the public of competition and the ability to choose among cable providers."

RCN officials could not be reached for comment.

RCN already serves a stretch of the lakefront from Rogers Park to Oakland, and under its agreement, is supposed to gradually expand service to much of the rest of the city, Shoenberger said.

But last year, franchise agreements for cable Areas 3 and 4 - stretches of the Northwest, West and South Sides - were suspended and RCN is now seeking to be relieved of its agreement to expand the agreement in Area 2, according to Shoenberger.

Because RCN has not expanded its operations in areas 2, 3 and 4 as originally agreed, those areas are dominated by Comcast Cable, depriving residents in those areas of any competition, according to Shoenberger.

If the matter is not resolved, Shoenberger said the agreement with RCN Allows for damages of up to $750 for each day the violation continues and for the city to rescind part or all of a $3.35 million RCN bond and letter of credit.

This is the second time in two years that RCN has defaulted on payments due to CAN TV, Shoenberger said. RCN failed to make a $645,000 payment due to CAN TV in January 2002, but eventually paid the debt after the City Council threatened to start fining the company.

Ald. Isaac Carothers (29th) said he was willing to take action to terminate the city's contract with RCN if they do not live up to their agreement and offer the same deal to another cable company.

Ald. Bernard Stone (50th), said the company has had financial difficulties for several years, but added that the company still had an obligation to live up to its contract. "They were supposed to build a certain amount of cable per year.They haven't done a thing," Stone said.

"If they want to be let out of their contract for (Areas) 2, 3 and 4, then they should apply to be let out of their contract and they have to pay a penalty to be let out of their contract," Stone added.

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