After residents learned that Comcast, Spokane's only cable company, plans to pass a tax increase imposed by the city onto its own customers, some are saying it's time to call it quits with cable. This will be at least the third year in a row Comcast customers' rates have risen; the company has charged about two dollars more per month to cable subscribers each year since 2003. But it's a different cable increase that has most Spokane cable customers upset -- and one that has the city of Spokane fielding dozens of calls. In fact, council members have received more complaints about increased cable rates than they have about the cuts in fire, police and city staffing due to the $18 million budget shortfall.

Just before Christmas, in the wake of the city's record budget cut, the city council voted to cancel a 5 percent tax credit to Comcast, which would have offset a separate 6 percent utility tax the company pays. Effective March 1, Comcast's fees to the city will now be 11 percent of its gross receipts from cable television services.

Steve Kipp, executive communications officer for Comcast Cable, calls that "spin." The city's claim that it simply rescinded Comcast's tax credit, he says, is just a stratagem to cover up a huge tax increase: "There was no tax credit. What they did was raise the utility tax 5 percent."

As expected, Comcast is transferring this tax to its customers. Subscribers with the "expanded basic" package (about 65 channels) will see more than $2 tacked onto their bills, in addition to Comcast's yearly increase; those with bigger cable packages will pay even more. The average cable subscriber will end up forking over about $6 every month just in taxes and fees.

"If you look at Avista's bill, they pass their taxes on as well," Kipp says. "You want to be upfront with customers -- and really, to not pass that [tax increase] on to them would be, in a sense, hiding that tax."

Marlene Feist, public information officer for the city, says the reason the city has seen such backlash about the cable rate increase is because Comcast spent more than $10,000 on an aggressive public campaign opposing any vote to rescind the company's tax credit, or as Comcast puts it, to raise their utility tax.

"Ads can be so persuasive," Feist says. "And those were running a lot. You can see what concentrated campaigns can do."

Still, Feist says it's all in the name of business. "They had to do what they had to do. [Comcast's] been a good business partner. I would expect our relationship to continue on that level."

Part of Feist's diplomacy has to do with the fact that she's the city liaison to the Spokane Regional Cable Advisory Board, which is now working to renew Comcast's contract, due in August. But she does admit that she's not sure how, if at all, this recent scuffle will affect contract negotiations. "From the city's perspective, our goal here is to work with all the companies here who do business," she says. "The critical thing to remember is there is a price point for [Comcast] to remain competitive and [for] what people are willing to pay. How much it will affect negotiations, we don't know yet."

Just a day after the council voted to rescind Comcast's tax credit, the city mailed the company a technical assessment of Comcast's system, a two-year desk audit, a community needs assessment, a model franchise agreement and a request for proposal -- all of which will lay the groundwork for the new contract.

Feist says the city requires a formal reply by March 25, though she expects informal dialogue to begin much earlier. Part of what the city found in the two-year desk audit of Comcast is that the company owes the city about $41,000.

"They will argue that amount. It will come down to their definition of gross revenue vs. ours," Feist says. The amount wasn't big enough to warrant further investigation. "It didn't trigger, in our view, a systemic problem."

Feist is sure Comcast will argue over the $41,000 because the company is already involved in a long dispute with the city over another bill. According to the current contract, Comcast must reimburse the city for consultations and expenses regarding the contract. So far the city has forked over about $100,000 -- and Comcast refuses to pay it back.

"That's still a point of disagreement between the city and Comcast -- it's ongoing," Feist says.

"We have some questions about it, and we'll go back and forth," says Walter Neary, another spokesman for Comcast.

The new contract between Comcast and the city has to be approved by the City Council, and some of the members are less than pleased with the company's public campaign to influence the council's vote. Neary says he expects the council to be civil and fair. "I'm a city council member in Lakewood, [Wash.], and when I hear from a citizen or business, I respect their point of view. We're dealing with professionals here -- these people ran for office."

Feist agrees that the contract negotiations will stay polite.

"They had a job to do and they did it, and we're just trying to seek the best contract we can for the citizens. We still think we have a strong case."

Publication date: 1/06/04

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