Ongoing Negotiations

Ongoing Negotiations

The Board of Supervisors is exploring the possibility of adding a new utility to the list of county services. The high-profile bankruptcy of Adelphia Communications, Loudoun's sole cable franchise, has forced the company to sell its nationwide system. While a partnership between Time Warner and Comcast is leading the pack of buyers, Loudoun County has cited a clause in the Adelphia franchise contract that would award them first consideration to buy the cable infrastructure within county borders.

"In the cable ordinance and cable agreement it is spelled out that whenever a franchise changes ownership, the county has the right to choose to buy first," said Jim Barnes, the lead cable franchise negotiator for the county.

One of the documents that Barnes is referencing, the Loudoun County Cable Ordinance, states in section 805.05 that, "In the event that a grantee makes a determination to sell or transfer its system, in whole or in part, the grantee shall offer the county an opportunity to purchase the system at fair-market value."

Barnes said Adelphia has yet to raise that point during the recent negotiations. By filing for Chapter 11 in the U.S. Bankruptcy Court, Adelphia claims that the provisions of the ordinance are no longer applicable.

"We are asking Adelphia to make an offer," said Barnes. "They feel they don't have to do that because bankruptcy trumps the agreement."

WHILE THE COUNTY is fighting for a chance to purchase the local cable system, transaction agreements have been made between Adelphia and a partnership of Time Warner and Comcast. According to a press release from Adelphia, a definitive agreement has already been reached between Time Warner and Comcast to acquire the U.S. assets of Adelphia for $12.7 billion in cash and 16 percent of the common stock of Time Warner Cable Inc., a subsidiary of Time Warner. Under the proposal, Time Warner and Comcast, who are paying $9.2 billion and $3.5 billion respectively, will carve up the nationwide Adelphia cable systems to best suit their individual geographic area. Along with the bankruptcy procedure, the deal requires an approval from the Federal Communication Commission, the Justice Department and where required, the local franchising authorities. Accordingly, the Loudoun County Board of Supervisors will vote on the franchise transfer Dec. 6.

Although Adelphia filed Chapter 11, Loudoun negotiators are not satisfied with Adelphia's dismissal of section 805.05 of the cable ordinance.

"The county's stance is that this is a change in ownership," said Scott Bashore, director of Loudoun County's Broadband Services. "The big things we are looking at is 'Legally, can we do [purchase] it?' and another is 'Does it make sense fiscally?'"

Should Loudoun have the opportunity to buy the local cable system from Adelphia, it would cost an estimated $73 million. If this occurs, there would be the option of contracting the infrastructure out to a service provider or creating a new department that would offer the service as a public utility. While some speculate that the desire to have the cable ordinance recognized is nothing more than a negotiation tactic to receive a more lucrative franchise contract for the county, Barnes believes that it is more than that.

"From talking with the board members individually, I think we are seriously looking into it," he said.

THE RECENT NEGOTIATIONS with Adelphia are for a renewal of the franchise agreement. The current agreement, which expired Nov. 16 was extended to Feb. 14 to allow more time for negotiations. According to Lorie Flading, cable and television administration specialist public information officer for the county, the past agreement earned Loudoun County roughly $1 million annually or 5 percent of the franchise growth rate. The hope is that the new agreement being constructed will also apply to the next franchise owner once the sale of Adelphia is complete. Unlike the transfer from Benchmark Communications to Adelphia seven years ago, requiring a new franchise agreement due to the length of the transaction, negotiators like Barnes are hoping that won't happen.

"Whatever we are negotiating with Adelphia, we hope that Comcast will have to meet those terms," he said.

The current negotiations for a new franchise agreement must be resolved by Dec. 8, which is the deadline for a decision on the Adelphia transfer to Comcast/Time-Warner. The vote by the Board of Supervisors will take place Tuesday, Dec. 6.

REGARDLESS OF WHO acquires Adelphia's cable system in the county, residents will soon see an increase in service providers. Along with the strong possibility of Comcast taking over Adelphia, Verizon is also knocking on the door. Verizon, who already provides data services, is looking to bolster its presence in the county with the introduction of cable and other services. While companies do not need a franchise agreement to provide data services, Verizon's desire to provide cable has brought them to the table to negotiate a contract.

For Loudouners who have suffered through the services of an ailing Adelphia, the introduction of two new cable and Internet service providers will prove to be beneficial. Scheduled to start cable services early next year, Barnes believes that this could not have come at a better time.

"In a way it's good timing," he said. "This makes sure that everyone has the same requirements."

The big topics that are being discussed with Verizon is network reach throughout the county. As Bashore said, "The agreement is for Loudoun County, not just the dense areas of Loudoun."