David-Goliath cable fight looms

David Levesque
Cox Communications will likely be selling cable service early next month to communities in East Bay, the last remaining Rhode Island outlet - aside from Block Island - not served by the cable giant.

For Cox, East Bay represents the first area in Rhode Island where it will go head to head with a competitor, Full Channel Cable TV. In the past, Cox has grown in the state by taking over most of its 10 cable service areas by buying out or swapping customers with other companies.

Not so with Full Channel. This independent cable provider, which has served Barrington, Bristol and Warren for 18 years, is doing everything possible to keep Cox from moving into its territory.

Experts in the industry say East Bay is not big enough for both companies.

Full Channel, owned by John Donofrio, has filed several appeals to the state and the courts to block Cox, including a "motion of stay" with Rhode Island Superior Court filed last week.

Full Channel cites a series of technicalities, including Cox's use of an out-of-state attorney to apply for proper licenses, as well as what they consider special treatment extended to Cox by the Division of Public Utilities and Carriers, the state agency that regulates cable. More

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David-Goliath cable fight looms

David Levesque
Posted 12/7/01
Cox Communications will likely be selling cable service early next month to communities in East Bay, the last remaining Rhode Island outlet - aside from Block Island - not served by the cable giant.

For Cox, East Bay represents the first area in Rhode Island where it will go head to head with a competitor, Full Channel Cable TV. In the past, Cox has grown in the state by taking over most of its 10 cable service areas by buying out or swapping customers with other companies.

Not so with Full Channel. This independent cable provider, which has served Barrington, Bristol and Warren for 18 years, is doing everything possible to keep Cox from moving into its territory.

Experts in the industry say East Bay is not big enough for both companies.

Full Channel, owned by John Donofrio, has filed several appeals to the state and the courts to block Cox, including a "motion of stay" with Rhode Island Superior Court filed last week.

Full Channel cites a series of technicalities, including Cox's use of an out-of-state attorney to apply for proper licenses, as well as what they consider special treatment extended to Cox by the Division of Public Utilities and Carriers, the state agency that regulates cable.

"Competition is good, no doubt about that. But, the state has done every conceivable thing to tilt the playing field in Cox's favor. It's not fair," said Mike Davis, Full Channel's system manager.

Davis says Cox has been able to set up shop in service areas without jumping various hoops that Full Channel has had to do over the years. He said the Atlanta-based Cox doesn't need help. Cox is the nation's fifth largest company, with more than six million customers in 20 states. Full Channel has 11,400 customers in East Bay.

State officials deny giving special preference to Cox.

"The division has always felt that competition is in the best interest of the state. The division would like to see both companies prosper and see subscribers benefit," said Terry Mercer, spokesman for the Division of Public Utilities and Carriers.

The division is now considering Cox's application for a certificate of operations, the third and final certificate needed by Cox to provide cable service in East Bay. The division has already granted Cox a construction certificate and compliance certificate.

A decision on the final certificate must be made by Jan. 15 - 60 days after the application was filed. A hearing on the certificate of operation will be held on Dec. 10 at 10 a.m. at the division's office on Jefferson Boulevard in Warwick.

Mercer said the division has not found problems with Cox's application, at least not any to hold up the application process.

One of Full Channel's contentions is that the division is waiving franchising requirements, like not requiring Cox to set up an "I-Net." The state's cable guidelines call for the separate I-Net cable network be built to link schools, municipal buildings and other major community institutions.

Cox has avoided installing an I-Net because it's no longer necessary with today's technology to have a separate cable to provide different services to those public buildings.

"Because technology has changed they can fulfill the intent of the rules and, possibly, do it better with current capabilities," said Mercer.

Davis said that, along with failing to provide the I-Net, Cox has not lived up to its obligations to provide a certain number of public access channels. He noted that last year Cox was fined for closing one of its public access studios before the state gave them the OK to do so.

Cox officials called Full Channel's claims "desperate."

John Wolfe, Cox's vice president of government and public affairs, said any cable company, including Full Channel, had a chance to expand in the state, but didn't.

"Back in the mid-1990s Cox's presence in Rhode Island was the same as the other companies. We decided to invest over $300 million in a statewide broadband, fiber optic network. We made that commitment to Rhode Island," said Wolfe.

Wolfe said he doesn't know of any other cable company that covers virtually an entire state. But, because of Rhode Island's size it would be difficult for three or four companies to exist in the state and be profitable while provide cutting-edge technology.

Wolfe added that Cox's competition is not limited to other cable provider. Satellite television providers are getting stronger by the day.

A committee now considering making changes to the state's 20-year-old cable guidelines is expected to discuss, among other things, ways to encourage competition in the state.

An 11-member committee was set up by the Division of Public Utilities and Carriers to look at the issue, as well as some of the out-dated technology requirements.

Sen. Daniel DaPonte, an East Providence Democrat, said it's important that Cox's 96 percent share of the market not have an adverse impact on consumers.

He expects the idea of eliminating the 12 service areas might come into debate. DaPonte said it's important to keep the service areas, if the state is to attract alternative cable companies. A potential rival to Cox has a better chance breaking into a service area, opposed to the entire state, he said.

"We don't want the state to be structured as an all-or-nothing deal for other companies," he said. "As policymakers all we can do is remove barriers of competition. We can't force companies to come in."

Davis said it's unlikely other companies will pit themselves against Cox, especially when Cox dominates the state. He said he is not aware of any two cable companies that survive sharing such a small area like East Bay.

"I think people will find that you need a benchmark with a small company like us to compare with a huge box company like Cox," he said.

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