By Clarence Cromwell
Pacific Bell's plan to rewire the South Bay with fiber-optic cables doesn't include paying franchise fees to the city.
Pacific Bell and eight local cities began negotiating more than a year ago over the details of replacing the utility's old copper-wire network with fiber-optic cables, which can carry phone calls, computer services and cable television to every customer. With passage of the Telecommunications Act, Pacific Bell announced plans to become an open video service provider.
Pacific Bell Corporate Communications Manager Craig Watts said the company wants to compete with TCI for cable customers, but that Pac Bell shouldn't have to pay the 5 percent franchise fees cable carriers pay to cities because it's a different type of carrier.
The difference, according to Watts, is that the system will be accessible to virtually anyone, as phone systems are now. Telephone companies don't have to pay franchise fees to cities they serve. Although Pacific Bell would control television entertainment channels and compete with cable providers, it would also have to leave open some channels for public access.
Watts said the company doesn't want to harm local cities, however. "It's a valid issue.We've proposed means so that cities don't suffer monetarily from us coming in to compete with the local cable company."
One plan would temporarily allow Pacific Bell to pay cities 5 percent of its profits.
"It depends on what the federal government decides in the next few months," Watts said. "We're helping the FCC define the rules around the open video classification."
City Manager Harry Peacock said wording of the Telecommunications Act will require Pacific Bell to pay a franchise fee. He expects Pacific Bell to sign an agreement with the city by May.
The Federal Communications Commission is expected to set the ground rules for open video systems in about six months.
"It's not just more freedom," Watts said. "What the federal government is trying to do is increase competition at a local level."
Watts said construction on the new network, including fiber-optic transmission lines and digital switching equipment, will begin this year.
Pacific Bell already provides 400 customers with 50 channels of video programming in a San Jose-area test of its new technology.
This article appeared in the Saratoga News, March 13, 1996.
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