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Higher Comcast fees for Colorado Springs customers on the line Tuesday in City Council vote

June 25, 2017 Updated: June 27, 2017 at 7:41 am
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Cable television giant Comcast Corp. is launching its 1-gigabit-per-second internet service across Colorado. (AP Photo/Gene J. Puskar, File)

A controversial ordinance will, if passed, net the city of Colorado Springs millions of dollars from cable providers in town, increasing costs to individual cable television subscribers.

Where that estimated $3 million extra would be spent remains unclear.

The ordinance, which would increase franchise fees that Comcast, CenturyLink and Falcon Broadband pay to the city, will go before the City Council on Tuesday.

Council President Richard Skorman and Deputy Chief of Staff Bret Waters say the proposed increase would bring Comcast's current franchise fees, $1.53 a month per customer, up to a flat 5 percent of the company's gross cable revenues. That's what virtually every other Colorado governmental entity has charged for years.

Area residents voiced sharp criticism at public hearings about potential bill increases and a lack of coverage where they live, especially in the Cedar Heights area.

Councilman Don Knight opposes the increase, saying the concerned citizens make compelling arguments.

"I think we're just being greedy, because it's all coming out of the taxpayer wallets," he said.

Companies pay the city a franchise fee to use its rights of way.

Knight said the current $1.53 fee appears as an additional item on every one of his Comcast bills. He said he's concerned the increases will be passed on to him and other subscribers.

"The end target of the extra revenue in the city's coffer is the taxpayers' wallets," he said. "It's no different from a tax, other than the taxpayers haven't voted for it."

Leslie Oliver, Comcast's Colorado spokeswoman, said the increase would be passed on to customers, just as the company always has dealt with those fees.

The percentage-to-dollar comparison is nearly 1-to-1, Knight said. If the increased fees are passed on to cable customers, they will see an additional $3.47 tacked on to each bill for a total of $5 a month.

Waters said, "This is not a tax. Legally, it's not a tax."

Rather, it's a fee companies pay as a "cost of doing business" for using the public rights of way, he said. And the companies are within their rights to increase their customers' bills.

Skorman said he hopes the changing cable industry will absorb the costs instead as a customer incentive.

"That's really their option," to pass the fee to customers, he said. "But we hope they don't. And I think as the cable world gets more and more competitive, they may decide that they don't have to raise rates accordingly."

The city currently collects about $1.2 million a year in franchise fees from Comcast, Century Link and Falcon, Waters said.

He estimates $1 million comes from Comcast, $200,000 from Century Link and $15,000 from Falcon.

That revenue is spent on the city's public access channels and information technology department, along with an intergovernmental agreement with the Southern Colorado Educational Television Consortium, which provides television channels for the University of Colorado at Colorado Springs and local school districts.

If the ordinance is passed, the franchise fees will increase in 90 days to a flat 3.5 percent of Comcast's gross cable revenue. After a year, the fee will rise to 4.5 percent and after another year will cap at 5 percent, the maximum the city is allowed to charge.

The city's current cable contracts stipulate that any franchise fee increases for one company will apply to them all, Knight said.

Whether to increase franchise fees and what to do with the extra cash should be separate conversations, Waters said. If the council approves the increase, it will have months to discuss what to do with the money before the 2018 budget is finalized.

"I absolutely can't say exactly where the money is going to go at the moment," Skorman said. "But a pretty good portion of it might go to parks and park maintenance, who are struggling right now."

Some of the money could go to the city's emergency services or even fund a position to ensure cable companies live up to their customer service commitments, Skorman said.

As for the lack of coverage in Cedar Heights, that issue might not be resolved for a while. Comcast has said Cedar Heights is too far from its nearest distribution point, Knight said. The company and residents have been unable to agree how to affordably extend service to the area.

Under the new ordinance, Comcast also would provide two closed-circuit, high-definition channels for the city's Fire Department to use for training, as well as "robust and very clear customer service standards" to address complaint procedures, responsiveness and treatment of property, among other things, Waters said.

The City Council will meet at 1 p.m. Tuesday at City Hall, 107 N. Nevada Ave. The meetings are open to the public and can be viewed online at www.coloradosprings.gov.

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