CHICK'S CABLE TV FIX CONTROLLER RAISES STATIC OVER SERVICE.

Byline: Beth Barrett Staff Writer

Los Angeles city officials have allowed cable television companies to get away with providing consumers poor quality service with out-of-date technology even as they fell years behind in their franchise fee payments, an audit by Controller Laura Chick reported Thursday.

Chick, who has spearheaded reform of city contracting practices, said cable TV operators have gotten their contracts extended for years without adequate scrutiny of their performance. Contracts for the franchises - which date back to 1987 - should be renegotiated immediately, she said.

The city's Information and Technology Agency, targeted for criticism of its overall performance in a broader recent audit, was accused of failing to be ``vigilant'' in collecting fees - worth more than $20 million dollars annually to the city based on 5 percent of operators' gross revenue - in a timely manner.

``I think that the audit paints a picture of the city putting cable companies on remote control,'' Chick said at a City Hall press conference.

``That's how we're managing our cable franchises, from remote control. There's very little up-to-date, active management of these franchises. We have an example here of government being asleep at the switch.''

She said the ITA's own auditing of its franchise fee collections is lagging by two to three years, even though audits of the final eight years of the franchise agreements resulted in the recovery of about $7.7 million.

``To not be checking is missing out on money, there's no question about it.''

ITA General Manager Thera Bradshaw agreed renegotiating the cable contracts could potentially benefit the city with additional revenue as well as make sure that consumers get improved services at better prices.

``You can negotiate anything,'' Bradshaw said. ``There's a balance, not just about revenue for the city, but what's right for the consumer. The two things we hear most in the Consumer Services Division is about the quality of the service - picture quality - and the cost. Those discussions could be engaged.''

She said that since 2003 the city has done community outreach and made other efforts in preparation for new negotiations. The Chief Legislative Analyst's Office currently is reviewing qualifications for a negotiating team. The timeline, however, is somewhat complicated by the pending national acquisition of bankrupt Adelphia Communications Corp. by Time Warner Cable and Comcast Cable.

The ITA also has moved forward with an audit of 2004 franchise fee payments.

Deane Leavenworth, president of Los Angeles Cable Operators Association, said the city's cable operators filed the necessary documents and notices six years ago, three years before the agreements' expiration, with the ITA. Instead, the city requested and the operators agreed to two extensions, which are to expire in August.

If negotiations don't start, provisions would allow the franchises to continue under the existing terms.

``We are ready, willing and able to negotiate whenever, wherever and with whomever the city chooses,'' said Leavenworth, also Time Warner Cable's vice president of corporate relations.

He said individual operators are responsible for paying their franchise fees to the city, adding Time Warner pays in a timely manner and stands by its figures.

The audit didn't break out specific cable companies' performances, but rather used ``random sampling.''

``If you ask me how much potentially do these cable companies owe the city, I can't tell you. ITA couldn't tell us,'' Chick said. ``That's no way to do business in 2005 - especially for a department and an industry that's high tech and cutting edge. We're supposed to be a Digital Coast city.''

The cable television franchise critique was conducted as part of a broader audit of the ITA, which last month found fault with the agency's contracting procedures. In that report, Chick said the ITA failed to follow accepted business procedures in a number of ways that could cost the city, and criticized the agency for not adopting changes recommended a couple of years ago.

Chick said the city's 14 cable franchise contracts should be substantively revisited every three to five years. Under the current terms, about $12 million reverts to the general fund, while about $8 million goes to departmental operations.

``There have been incredible changes in cable television, for instance video on demand, high definition television, Internet high-speed service, digital telephone service,'' she said.

At the same time, the cable companies face stiff competition from satellite firms, which Chick said the city needs to recognize in addressing the issue, including whether incentives to keep cable customers are appropriate.

She said at some point franchise fee collections might better be handled by the Office of Finance, as part of the city's centralization of its collections operation.

``We're supposed to lead the way, not be 18 years behind the caboose.''

Beth Barrett, [phone]

beth.barrett(at)dailynews.com

How to fix L.A.'s cable television service:

--Update cable television franchise agreements every three to five years to reflect changes in technology and customer service standards.

--Improve oversight through annual reviews of franchise fee payments and eventually consider centralization of collections with the Office of Finance.

--Encourage, possibly with incentives, subscriptions to cable in the face of increased competition from satellite companies, which do not pay the city fees.

--Maintain requirements for public, educational and governmental access channels, which are now part of franchise agreements.

- SOURCE: City Controller's Office

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How to fix L.A. cable television service (see text)