The Cupertino Courier

TCI strikes a creative deal with Cupertino

By Pam Marino

What could have been a $105,000 fine and a public relations nightmare for TCI Cable became a dream come true, but at nearly twice the cost.

Under a franchise agreement struck with the city two years ago, TCI was to install a state-of-the-art fiber-optic cable system by May 6 of this year or face fines of up to $500 a day. The company let the city know last fall it needed an extension to Dec. 31, which could have cost up to $105,000 in fines.

Instead, the company recently agreed to donate $205,000 worth of television equipment to the city for a special studio in the proposed expanded library. The studio will link the library with City Hall and the Senior Center and give residents access to a television-production facility.

At a Feb. 2 City Council meeting, councilmembers voted unanimously to accept the donation and grant the deadline extension.

And they even agreed to name the new television studio after TCI. Both sides are hailing the deal as a positive public-private partnership that will benefit residents with a better-quality cable system and a high-tech television production facility in the new library.

Several months ago, however, TCI wasn't even planning on installing the state-of-the-art fiber-optic system, which will provide residents with more compact digital cable channels and faster Internet connections. Originally the company asked the city if it could install a less powerful system, as well as have its deadline extended. But members of Cupertino's Telecommunications Commission, which is made up mostly of residents, successfully convinced TCI to install the fiber-optic system.

City staff members were preparing to recommend to the council that TCI be granted an extension to Dec. 31 to build the new system until Councilman John Statton read the franchise agreement.

"I became involved when, after reading the franchise agreement, I noticed there were some penalties for delay of construction," Statton said in an interview last week. He asked for a meeting between the city and TCI to ask why the city should grant the extension without assessing the company.

Discussions led to the agreement on the studio in the expanded library, which is still in the design phase.

"We feel like this is a win-win for TCI and the community," Statton said. Not only do residents get the new studio, but "we get an upgraded cable system that is absolutely first-class by January of 1999."

Councilman Wally Dean, who joined with Statton in the meetings with TCI, said it is in the city's best interests to negotiate with the company, rather than demand payment of penalties.

"Our concern is we're starting to see a lot of satellite antennas going up" around the city, Dean said. "[TCI's] success benefits the community's success."

TCI spokesman Andrew Johnson downplayed the possible penalties the company was facing.

"We can always speculate about 'coulda, woulda, shouldas,' " he said last week. "From TCI's perspective there's two ways you can go. You can go with guns blazing, or you can go in a partnership."

He said what could have been a "very contentious encounter" was instead a "public-private partnership that benefits the entire community."

The new TV studio "will really be a showcase," he said.

Johnson said the new fiber-optic cable system will eliminate the A/B switch box that some residents currently have. All residents will be able to receive more compact digital cable channels, which means more can be sent through the cable than the traditional analog channels. The company will also eventually be able to offer its @Home Internet service, which a few Bay Area communities already have. Johnson said the cable Internet connection is much faster than telephone connections; as an example, he said, downloading a picture of the Mona Lisa might take as long as eight minutes over a telephone line, but through cable it would only take eight seconds.

The new system may affect prices, Johnson said. "Obviously, if you increase channel capacity, that's going to increase cost. ... As there is more product available there will be price impacts," he said.

He said TCI will always offer basic cable, as well as an expanded basic package. Other products such as premium channels, digital channels and the Internet service will be available for customers to add on. TCI will also continue to provide discounted service to some low-income families, as required by a franchise agreement with the city.

Johnson said TCI is currently in the process of setting its new prices for 1998. Under federal guidelines, the company must first submit the proposed prices to the city, which he said will happen in the first week of March.

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