Cities view options as Adelphia slows payments, services. (Up Front).

The drama playing out at Adelphia Communications Corp. has reached Los Angeles, where the beleaguered cable giant has fallen weeks behind on its franchise fee payment to at least two cities.

As of last week, Adelphia had yet to pay Los Angeles $1.5 million and Beverly Hills $100,000 to cover franchise fees for the first three months of 2002. Both payments were due no later than 30 days after the quarter ended March 31.

In addition, Adelphia officials acknowledged during a meeting of the Los Angeles City Council's Information Technology and General Services Committee that they had suspended upgrades in three franchise areas. Those upgrades would allow customers to get high-speed modem connections and premium services like DSL (digital subscriber lines) and digital television.

Adelphia officials said the company is in compliance with its franchise contracts, adding that it will not pull back on services and that the halt in construction would be temporary. "As soon as we can we will go forward to finish the deployment," said Bill Rosendahi, vice president of political affairs for Adelphia.

Coudersport, Pa.-based Adelphia was delisted May 14 after losing 82 percent of its share value following the disclosure that the company guaranteed $2.3 billion in loans to off-balance partnerships controlled by the family of founder John Rigas. Rigas stepped down as chairman and chief executive earlier this month and the company has put numerous assets on the block, including its Southern California franchises, to help get out from more than $14 billion in debt.

Fred Cunningham, director of public affairs for the city of Beverly Hills, said Adelphia is not in compliance with its franchise agreement in that city. Besides the late payment, Cunningham said Adelphia has failed to meet federal guidelines that require 90 percent of customer calls to be answered within 30 seconds.

Adelphia's franchise contract with Beverly Hills expires next month and Cunningham said the city likely would opt for a temporary extension rather than a renewal until Adelphia's financial problems are sorted out.

Cable companies typically pay cities 5 percent of the fees collected from customers for the right to the franchise. In Los Angeles, that comes to about $6 million annually for Adelphia.

"Based on what's been described to me, we have a late payment and some failure to upgrade equipment and services. That sounds like a breach," said Los Angeles City Councilman Jack Weiss, who stopped short of recommending that Adelphia's franchise agreements not be renewed when they expire in July.

Adelphia is not obligated to provide premium services, but it's one of the factors taken into consideration by municipalities when they review franchise applications. Liza Lowery, general manager of the Los Angeles Information Technology Agency, said Adelphia has lagged other local cable providers in introducing high-speed modem lines.