404 Coolidge Street

Chapel Hill, NC 27516

(919) 929-1670

April 10, 2000

Mayor Rosemary Waldorf and Town Council

Town of Chapel Hill

306 North Columbia Street

Chapel Hill, NC 27516

Dear Mayor Waldorf and Council Members,

Summary: Please preserve an inexpensive basic cable TV service level, probably by reopening talks with Time Warner about our current franchise.

Time Warner Cable (TW) and the WTVD-ABC-Disney consortium are arguing like two children over who must eat more broccoli. Though I really don't care who wins this dispute, it has one probable consequence that, when coupled with other recent TW actions, does justify some action by the Town Council to help the Chapel Hill cable TV consumer.

In the mid 1990's, I had the pleasure to serve with Cal Horton, Ralph Karpinos, Greg Feller, and Minneapolis-based communications attorney Adrian Herbst, on the committee that negotiated the current cable TV franchise with TW. One goal for these negotiations was to seek a low-cost, basic level of service that included only the FCC-required local over-the-air stations and the local access stations, such as the one that broadcasts our town council meetings. Such a basic service would help low-income people purchase cable TV service, and would minimize the "buy-through" expense. The buy-through provision of the 1996 Telecommunications Act requires that only basic service be a prerequisite for purchasing higher levels of service.

We actually did something right back then! Exhibit E of the new franchise shows that there were only 13 channels in basic service, nine local over-the-air channels and four local access channels, one each for the Town, UNC, the school system, and the general public. The cost was only seven dollars per month per subscriber. Since then, repeatedly TW has inserted new channels into the basic level of service, charging the subscriber for the additional programming. Today my basic service contains 23 channels, including the original 13 plus two national superstations, a real estate ad channel, two shopping channels, BET, TV Guide, Sci-Fi, C-SPAN, and the Fox news channel. Finally, the proposal to resolve the broccoli dispute (my term) contains a requirement that TW add one or two Disney-owned channels to basic service.

Capowski petition, page 2

A negotiation issue was the length of the franchise. TW justified a 20-year term with the plea that this period allows them to receive a return on their investment in rebuilding the then obsolete and technically inadequate system. However, in this fast-changing field, one cannot predict the future accurately, so we agreed to a paragraph in the franchise that either the Town or TW could initiate talks to amend the franchise at any time, though no more frequently than once per year. I do not believe that there have been any requests to reopen franchise talks since the Town Council adopted the new franchise.

I ask you to preserve a low-cost, minimal basic level of cable TV service for Chapel Hill subscribers, using new franchise talks or some other tool that you might find more useful. While our franchise is non-exclusive and thus encourages competition for the consumer dollar, competition has not occurred, and therefore, our local government alone as the franchising agent has the ability and I believe, the responsibility to protect the consumer.

Thank you in advance for considering this matter. Should you wish, I would be willing to help in any manner you see fit.

With my best regards,

Joseph J. Capowski