The city has no authority to regulate Comcast cable rates after a 2011 Federal Communications Commission ruling in the company’s favor.
Objecting to Comcast’s decision to start charging for the digital receivers it handed out for free two years ago, a few Eagan residents last week accepted an invitation to vent about the cable giant before the City Council.
Residents began contacting the city after receiving a Comcast letter informing them they will have to pay $2 a month per TV for the adaptors that Comcast gave them at no cost two years ago. Anyone who wants to continue the digital channels they have sampled for free will pay $25 a year for one adaptor and $50 a year for two.
Some worry that Comcast will pull the same kind of switch again with basic cable subscribers who will be required in mid-March to bring free adaptors into their homes to continue basic service. Up to now they have not needed special equipment for basic channels. But Comcast’s conversion to all-digital signals requires all subscribers to have an adaptor of some kind.
“The city is concerned that once the free [adaptors] are deployed, Comcast will once again unilaterally impose a service fee for the [adaptors] resulting in yet another significant price increase,” said Moss and Barnett attorney Brian Grogan, who advises Eagan on cable issues.
After hearing comments from residents and asking their own questions of Michael Logan, Comcast’s director of government affairs for the Twin Cities, council members decided to send a letter to the Federal Communications Commission and to members of Congress who represent the city expressing displeasure with the city’s lack of control over Comcast rates as well as Comcast’s strained customer relations, unclear price policies and poorly worded communications.
Further, the city will stress that the FCC’s vision that competition by Dish Network and Direct TV would hold down rates for consumers has not happened.
“The reason cities are involved in this at all is because this is the only company in the state that is granted the right to use every single right of way to put in wires to provide service that is substantially deregulated,” Grogan said. “Comcast could triple its rates tomorrow, and there is nothing anybody could do about it. There isn’t anybody else that uses the public rights of way in this same manner.”
Until 2011, Eagan had the authority to regulate cable television rates because Comcast was the only cable franchise operator in the city.
In 2007, Comcast petitioned the FCC to take away Eagan’s regulatory authority, arguing that it had “effective competition” from Dish Network and Direct TV because about 16 percent of Eagan residents subscribed to those services.
If at least 15 percent of a market has competitors, the FCC prefers to allow the competitive marketplace to set rate levels so, although Eagan and Burnsville opposed Comcast’s petition, the FCC ended Eagan’s authority over rates in 2011.
That ruling gives Comcast the right to set its own rates for service, converters, remotes, installation and service charges. Comcast raised prices in general in January and followed with notices about the adaptor boxes.
It’s clear, Mayor Mike Maguire said, that rates have not been held down by marketplace competition. The outcome of the FCC ruling to lift the city’s regulation “is exactly what we were worried about,” Maguire said.
The mayor also faulted Comcast for not clearly explaining its new policy on adaptor boxes. It shouldn’t take most of a City Council meeting to cut through a billing question, he said. After hours of discussion, Maguire said he was still somewhat confused.
Logan said that there had been confusion about the recent mailing from the company and that Comcast is working to improve its communication with customers.
He said the adaptor boxes now required for even basic cable will be free to customers for now. He did not promise that there would never be a fee.
Council Member Cyndee Fields said “some residents are feeling they have been handed a bill of goods” by Comcast and that is why some switch to Dish Network.
Resident Dan Dorgan said he called Comcast to object to the adaptor fee and express his view that Comcast had gone back on its agreement to give the boxes to people at no cost. The company simply replied that it has the right to levy the charge, Dorgan said. He urged the city to use its power to grant cable franchises to gain some leverage for better customer service from Comcast.
Grogan said the city does have authority to insist on customer service standards next time it approves a franchise for Comcast.
Other cities are also taking an interest in Comcast rates because of the new adaptor box charges, Grogan said.
“Comcast really controls the entire Twin Cities marketplace, and consumer concerns are coming in from all over the metro area,” Grogan said. “Eagan is not the only city out there that is reviewing this issue.”
Other cities also are looking into Comcast’s charge of a $5.99 “convenience fee” to make a payment over the phone.