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Many Testify on Oceanic Time Warner Cable License Renewal

“A 20-year free pass is a bad idea.”

November 14, 2013
Susan Halas - Contributing Writer ( , Maui Weekly

An audience of about 70 Mauians attended a state Department of Commerce and Consumer Affairs (DCCA) public hearing on Maui's Oceanic Time Warner (OTW) Cable license renewal application. The company is just finishing a 15-year agreement, technically termed a "non-exclusive franchise," which is scheduled to end Dec. 31. The new contract, if granted, would run for an additional 20 years.

About 50 residents signed up to testify at the meeting held at Maui Waena Intermediate School on Wednesday, Nov. 6. It was the final session in a series of four. Others meetings were held earlier in Molokai, Lana'i and West Maui to obtain public input on the renewal request.

Though the 53-page renewal application covers all facets of the cable company's operations in Maui County, most of the testimony at Maui Waena was directed at Public-Educational-Governmental (PEG) operations, including Akaku: Maui Community Television, that air on three separate cable channels.

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John Bartolome held up a photograph of an antique little computer and said, “This is what we had 20 years ago.”

Virtually every person who spoke stressed the benefits of the PEG activities and voiced strong support for Akaku and the hands-on training it provides to people of all ages. They repeatedly urged increased funding for its activities and programs.

Many questioned if a 20-year extension couched in vague language really assured the continued health and vitality of the public access portion OTW's operation here.

They thought that in the fast-changing technical environment, a static, long-term agreement with no opportunity for further negotiation and little likelihood of competition was not acceptable.

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John Bartolome held up a photograph of an antique little computer as he spoke. "This is what we had 20 years ago," he said, pointing to a PC from the early years. In his opinion, "a 20-year free pass is a bad idea."

Echoing this sentiment was Frank De Rego Jr., who said, "Akaku provides valuable services and training. It deserves an increase in resources."

Consumer Peter King hit an applause line when he fretted aloud about "paying the same for less."

"If the number of channels goes down and the speed goes down, does the bill go down?" King asked. "This contract needs teeth. It has no hard numbers."

County Councilmember Don Couch, who began his career at Akaku in 1994 and presently serves as vice chairman of its board, was among those who spoke. Couch urged that, at minimum, it should be made a requirement that someone from Maui be on the negotiating team when the matter comes before the DCCA on a yet undisclosed date.

He also advocated that any favorable precedents achieved in contract negotiations in other markets should be automatically applied to whatever contract is in place for Maui.

"The agreement is supposed to be in the consumers' interest, not in the provider's," Couch said.

Many who testified were students and adults who received production training through Akaku, such as Ann Paquin, former CPA turned "new producer." She said that in her former capacity she was a systems evaluator. She rated Akaku as "superior. It supports Maui in a big way," she said.

Also speaking was Ian Camit, a 17-year-old Kihei Charter School student, who described the important role that public-access training played in his life and the lives of his classmates.

Hitting a similar note, Mike Albert, a member of the media faculty at the University of Hawai'i Maui College, stressed "so much comes in from the outside" that it's important to provide content that originates here and reflects what is unique and original about Maui.

Though the bulk of the testimony was devoted to continued support for public access, there were also a number of OTW customers who had reservations and complaints about customer service. These included long waits on the phone, hard-to-understand bills and cable installers who never seemed to show up on time or at the right location.

Those attending the meeting representing the company were OTW President Bob Barlow from O'ahu, Maui General Manager Rick Colletto and Attorney Brian Kang of Watanbe-Ing in Honolulu. The application was submitted by Kang over the signature of Barlow and is available for public inspection at the company headquarters on Ma'a Street in Wailuku.

The application was submitted to the DCCA in August. Responses to questions and additional clarifications were submitted in September. The document covers the entire Maui operation, of which PEG is just a small portion. But what little it does say about the future of PEG offers few specifics or hard numbers. The company only proposes that the existing limits remain in place and other modifications, if any, be initiated by the DCCA itself.

The existing contract calls for PEG operations to be funded by a 3 percent assessment of base cable fees (not all revenues). The current language also requires $3 per customer per year to be paid to PEG for capital and equipment costs.

Colletto said the company presently has approximately 53,000 subscribers.

The application says little about future percentages; it only proposes that they will not exceed the previously set caps. It does not set out the formula for calculating the percentage, nor does it explain what constitutes the "base" rate. Cable offers many options, and presently, revenue streams from upgrades are not included in the calculations.

According to Colletto, in recent years, public access funding has averaged approximately $1.1 to $1.2 million per year for operations. Jay April, president and CEO of Akaku, said that of that amount, 25 percent goes directly to other educational users.

Colletto also said that capital funding has been an average of approximately $160,000 per year.

The company's current annual gross revenues are approximately $68 million.

The application makes no mention of any projected increases over the term of the contract. It sets no benchmarks for future funding increases or how they could be initiated. There are no interim dates within the projected 20 year life of the agreement to reopen negotiations, nor is there any further public review scheduled during that period.

Asked to comment the next day on the document as it relates to PEG, Colletto responded, "PEG is only a small fraction of what we do. We are monitored by DCCA and FCC; we have been doing it for the past 15 years." This, he felt, was sufficient oversight.

When asked about the many comments by those who testified that the company enjoys a monopoly position, and that fact combined with a 20-year contract would give them very little incentive for making improvements, Colletto replied, "Though there may not be other cable companies on Maui, OTW faces competition from Direct TV, Dish, Netflix and a variety of existing and emerging platforms such as Hulu and Internet TV."

The cable executive stressed the major investment that his company has made in Maui and emphasized that the technology is constantly changing.

"As it changes," Colletto said, "we continue to innovate with new and expanded services. We provide a service that people are willing to pay for. To be successful, they have to want to continue to pay for it."

Colletto repeatedly pointed out that OTW had complied with all particulars of the former agreement and was a major local employer. Maui's OTW, he said, has currently has a full time staff of 92 employees plus contract workers and vendors.

Asked about his reaction to the Nov. 6 meeting, Akaku's April said he was pleased with the turnout and the diversity of comments. He noted that while the current agreement ends on Dec. 31, typically it may extend a little longer, as was the case for cable contracts on Hawai'i Island and O'ahu.

The public testimony, he said, was the last stop before decisions are made at the DCCA. April said Akaku has petitioned the DCCA to intervene at this stage.

"We think there should be somebody from Maui at the negotiating table," said April. The final meetings where the actual decisions are made are not open to the public, he continued. "We don't think it should be that way," he said.

April was not sure when the actual meetings would be held; he also could not predict if the request to intervene would be granted.

"It's possible we may get it," said April. "We don't know the answer. It hasn't happen in the past. It would be unusual, but appropriate."

Among the terms that Akaku would like to see incorporated into any future agreement with OTW are:

Continued funding at increased levels;

Equal or matched benefits here that TW provides in other markets;

Increased affordable high-speed Internet and cable in Maui County;

Improved signal quality and standardized format;

Increased distribution for public access in all formats;

More Wi-Fi, added video on-demand.

The deadline for written public comment is Friday, Nov. 15, at 4:30 p.m.



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