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<br />Rf:FLI<:CTIONS ON THI<: CABL.I<:
<br />Comments by Ron Ferrill, Councilman 9/26/06
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<br />Mr. Mayor, I hope that you, the other Council members, those present in the chambers, and those viewing
<br />on TV, will indulge me while I reflect on the Cable
<br />Perhaps I will let the subject go after these rcmark~ "
<br />I am speaking only for myself - not for the Council and. not for the City. . .
<br />As I find myself in this post court ruling period. I still believe Ihal acqumng and operatmg the Cahle
<br />business would have been a viable action for the city
<br />I say this for a number of reasons - . . . . .
<br />. Revenue - Our financial analysis indicated a $2-$4 million annual revenue possibility. 1 believe thiS
<br />was confirmed in one of the hearings, when the city was represented by 2 attorneys and
<br />Adelphiaffime Wamer/Comcast by 16-18 attorneys - something I believe they wouldn't do for a
<br />marginal revenue stream .
<br />. Control ofrate structure - With a locally operated system, any proposed rate mcrease would be
<br />subject to review by/feedback from subscribers. With a franchised or,eration, under current laws and
<br />regulations, the local jurisdiction or subscribers have no say. We don t even have a local person to
<br />talk to. One of my concerns is that we will see a rate increase by Corneast soon.
<br />. Reliable service - A locally operated system would be maintained within t~e city by lo~al people
<br />(some even your neighbors). The good electric system reliability and ~ervlce we expene~ would be
<br />a reasonable expectation for the cable system. With a franchise operatton. we would contmue to
<br />experience slow response after talking to a person in Pittsburgh, or wherever .
<br />. Another concern I have relates the lack of presence by Corncast since they took over from Ad~lphla
<br />August 1. Their only presence is a dinky sign on the Adelphia ?uilding. Adelphi.a s.igns are.stlll up
<br />and service trucks are still identified a<; Adelphia. My concern 1S that Comcast wdlJudge thiS ~arket
<br />too small, in relation to lheir large subscriber base. to merit upgrades or maybe cut back on selVlces
<br />offered.
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<br />As we went along in the process, a number of questions or concerns were raised -
<br />. Government shouldn't be in the cable business, but rather it should be the domain of priv~te
<br />enterprise - Cities have a long history providing utilities - electric, water, waste treatment, sohd
<br />waste management. natural gas, and more recently telephone service and cableJinte~.et service: As a
<br />matter of fact, Ihere are more than 1,000 government jurisdictions in the USA provldmg cableJmtemet
<br />service
<br />. Martinsville City does not have the expertise to operate a cable/internet system - That is correct;
<br />therefore we wer~ in communications with 3 management firms ~1th expertise in operating these
<br />types of systems, lhese firms have demonstrated success. Most recently, a seven jurisdiction
<br />cooperative in the Charlotte area is starting up with a management firm arrangement.
<br />. Martinsville Ci~. shouldn't bu)' a system that would be obsolete soon due to rapidly cha~ging
<br />t<<hnology - The current Adelphia system is technologically sound. but because technology IS
<br />indeed changing. 311 cable operators (even the big boys - Time Warner, Comeast, Cox) must
<br />continually invesl considerable capital to keep on the cutting edge. In our financial mo~e1,. we
<br />provided considerable investment each year to remain competitive, and still there was slgmficant net
<br />revenue to be reaJized
<br />
<br />. Martinsville City doesn't have tbe funds to make sucb a big investmftlt to purc~He _ Even the
<br />judge alluded to this. The truth is that we had arrangements in place with a bonding organization to
<br />secure necessary bond funding 10 cover the purchase cost. This would have been done with no
<br />liability to the city
<br />. Martinsville City should use local attorneys for any legal assistance - This was a somewhat
<br />complex situation with Adelphia in bankruptcy, requiring legal assistance from anorneys with
<br />experience/expertise in bankruptcy law. Also, il wasjudgcd important to have a legal firm with a
<br />presence in New York City. the location of the bankruptcy court. No attomey in the Martinsville-
<br />Henry County area has this experience/expertise and NYC presence.
<br />. Martinsville City should not spend $300,000+ in expenses to try to acquire the cable business _
<br />In the economic climate in the city, sources of new revenue must be identified _ cable was such a
<br />situation. With the anticipated net revenue expected ($2-4 million per year) and an assessment that
<br />we had a 50-6QO/o chance of success, pursuing the purchase seemed prudent, even with the projected
<br />expenses associated with the effort. If we were to secure the business with its revenue stream, there
<br />would be a rapid recovery of expenses. What we did with the cable is similar with the $400.000 we
<br />give to the Economic Development Corp each year, where we anticipate or at least hope that new
<br />employment and capital investment will be realized. Just as [believed that we needed to pursue the
<br />cable purchase. I strongly believe in supporting the regional economic development efforts.
<br />. Martinsville Cil}. should have been more open about tbe proc~ seeking citizen input _ While
<br />we did otTer some information sessions and publicity, we were guided by legal advice that we limit
<br />information exposure to avoid jeopardizing our negotiating position with AdelphialTime-Wamer/
<br />Corncast - as it relates to cost per subscriber. As it turned out, the judge used a $3,81 O/subscriber
<br />figure (arbitrary number used in Adelphia sale agreement- not a sale price). Of interest, a cable
<br />system in San Francisco just sold for $1,200 per subscriber. As I reflect on the turn of events, I
<br />believe we could, and should, have been more open. More openness probably wouldn't have affected
<br />the outcome, but I always prefer to be open in public affairs.
<br />And finally,
<br />. Martinsville Council went in to this 'Venture with little or no allalysis and tben took actions with
<br />little or DO study - Anyone who says this doesn't know me. 1 am an analytical, detail person in most
<br />things I do. Very rarely do J make decisions based on gut feelings or from the heart. Probably the
<br />best decision I've made from the heart was marrying Elaine. I like 10 thoroughly analyze the facts and
<br />consider the options. before making a decision or taking action. This was indeed the case with the
<br />cable venture
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<br />So whal is done is done, and .....c'n: moving on from the cable. The reality is still with us that we han' a
<br />revenue shortfall due to the closing of the landfill and the high cost of wholesale electricity that
<br />eliminated the practicality of revenue from resale. This budget year we moved $2 million from the fund
<br />balance (j.e, savings) to ease the amount of the electric rale increase and tax & fee increases. We can't
<br />continue dipping into savings: so we must look for reductions in expenses and reductions in services. I
<br />believe we are looking at light times for 2-3 years - until our economic development efforts payoff.
<br />We're already seeing good things - recently, two new businesses in the BB&T building and the
<br />transformation of the CommonwealLh Cenler facility. We as a community need to pull together -looking
<br />for better ways. There is no lime for harpoon throwing - criticizing for the sake of crilicizing. It's O.K.
<br />to say ""that's not a good idea" (and I can take it), but don't stop there - offer a better idea. We can turn
<br />things around - in fact we will turn things around.
<br />Thank you for allowing me (0 share my thoughts
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