by Norm Winick

Whether they characterize them as misrepresentations or as outright lies, every cable system operator referred to in recent AT&T Broadband campaign materials says they have seriously distorted the truth.

The group, ''Citizens for Responsible Municipal Finance,'' (CRMF) funded by $40,000 from AT&T and chaired by Jeanne Coleman, the cable system's manager in Peoria, organized officially on October 27th and issued a press release announcing its creation; it included the first series of distortions.

They listed a series of myths to be debunked, including several claims no one had ever made. AT&T said that proponents claim ''there is currently no high speed Internet in the city,'' and that ''there is only one T-1 line serving Galesburg.'' These claims were never made. High speed access is available from Gallatin river Communications and allegedly even from AT&T Broadband.

But these distortions were only the beginning of the firm's campaign of disinformation. According to campaign disclosure records obtained from the Knox County Clerk's office, the same day they organized and received $40,683.64 from AT&T Broadband, they spent it with Hirons and Company Advertising in Bloomington, Ind. for various services.

On October 28th, most households in Galesburg received a large postcard opposing the referendum, blasting on one side, ''Don't risk $12.5 million of our hard-earned money. Based on the $2,904 budgeted for postage and the 33-cent stamp on each piece, they probably mailed 8,800 pieces.

On the other side of the card was the start of the mass deception campaign. They cited examples of other communities where they claim municipal cable systems have been failures. For example, ''In Glasgow, Ky., the city-run communications system has lost more than $1.3 million.'' William J. ''Billy'' Ray, who runs the system, says, ''that's not true.'' ''AT&T cable hired a guy from Denver to look at municipal systems and they came up with that. It's just not true. We did spend $4 million in 1988 to build a broadband network. For the first seven years, the cable system showed a paper loss but that's only because the people of Glasgow wanted it to operate on a non-profit basis. We have about 6,000 homes hooked up and they're paying $16 for 54 channels of cable. That's probably $20 a month less than you're paying. It's a lot less than what we were paying here. Over the 12 years we've been operating, we figure we've saved our citizens over $17 million in cable charges alone.''

In addition to their low rates, Ray says his residents are very happy with their municipal cable system. ''We offer high-speed Internet access for $12.95 a month plus a $9.95 cable modem rental. That's about half of what most private companies charge.''

CRMF's mailing also claimed that ''In Paragould, Ark., property taxes had to be increased to cover debt incurred by the city-run communications system.'' Rhonda Davis, the chief financial officer for Paragould's system, says that ''just isn't true.'' ''Despite a massive campaign effort by Cablevision, the people voted to build a system and to issue bonds to finance the construction. They also authorized using property taxes, up to 6.5 mils, to help pay off the bonds. We built the system and made a decision to keep our rates low. We offered 50 channels for $12.50 a month. We had a choice of increasing our rates or using the taxing authority we had been granted. For four years, we did assess property taxes a little. In the year we did it the most, it was less than half of what we had been approved to levy. At that, the average home paid about $3 a month extra in property taxes but they saved over $10-15 a month in cable charges from what they had been paying. We received no complaints at all. We have no property tax assessment any more and we even had the money, $2.3 million, to buy out the private firm, Cablevision, which wanted out of some isolated markets like ours.''

Davis says that her residents are very happy with their municipal system. ''A local committee decides which channels we'll offer. I make all the costs available to them and they go from there. We now offer 58 channels for $16.95 a month.''

The one caveat Davis did offer is that it's easier to make money as a monopoly. ''When there were two competing systems, you have to be much more alert to marketing and pricing.''

Steve Settlemyer, the city attorney in Morganton, N.C., says that AT&T's claim that ''In Morgantown (sic), N.C., average electric bills rose 6 percent because the city-owned system could not pay for itself'' is ''an unadulterated lie!' ''They did not rise. I don't know where they got that information. They've been using that same lie all over the country and I've gotten calls about it from all over.''

''We have had an electric rate increase but that's because we're part of a group of cities that bought a nuclear generating plant. It has nothing whatsoever to do with cable. They've misrepresented the financial information. They've used us as an example which is just plain wrong. It never happened that we raised electric rates because of cable.''

''People are exceedingly happy with our municipally-owned cable TV system. Nearby cities are always asking if we would serve them but we've stayed in town so far.''

''Cable television does break even. If our rates weren't intentionally kept to a minimum, it would make big money. We offer 70 channels for $24.95 a month. The city council sets a break-even rate schedule. Our customers are also voters and taxpayers and water and electric customers. We have to keep them happy.''

In Morganton, about half the population of Galesburg, the franchise of TCI was not renewed -- one of the fist such denials in the country. ''We requested proposals from other cable operators to come in and we also had the city prepare a proposal to operate it itself. We got no other bidders except the city so we accepted our own bid and did not renew TCI's franchise. TCI sued and Morganton prevailed all the way through the U.S. Supreme Court.''

Along the way, TCI also got petitions signed to force a local referendum on the issue. ''It's estimated they spent half a million dollars to get it defeated. They even caricatured city officials in full page newspaper ads. Opponents of TCI spent about $3,000. The voters approved the municipal system about three or four to one.''

Settlemyer says the residents were never inconvenienced. ''We built our system before TCI pulled out. This has been a great success here. Our system, based on the market value of $3,000 per subscriber, would be worth about $18 million; we built it for $4 million. The quality is so much better.'' Morgantown employs six people, including two installers, to operate its cable system.

Harlan, Iowa is another city used by the CRMF as a bad example of municipal cable. ''In Harlan, Iowa, construction costs were more than 200 percent of the amount estimated, plus gas customers will lose $40,000 for the next ten years subsidizing the system.'' Jerry Quick, General Manager of Harlan Municipal Utilities, says that isn't true. ''The original cost estimate for the Cable Utility portion of our project was $1,323,500. The low bid contract as per the system specifications was $1,448,143. The final cost came in at $1,756,076 or 17 percent over the contract. The reason for the overage was due to the fact that the system was projected to have 400 customers installed during the first year while over 1,000 were hooked up. This is an indication of the tremendous support we received from the community.''

The gas portion of the CRMF claim is also wrong, according to Quick. ''The inter-utility loan from the gas utility to the Telecommunications Utility was a part of the original financing plan to fund its formation. The gas utility was on solid financial ground then as it is now and natural gas rates had just been lowered 6.5 percent. The loan will be paid back in ten years and sooner if possible.''

The final city the CRMF used as an example of a system having trouble was Cedar Falls, Iowa. They claim, ''After two years of operation in Cedar Falls, Iowa, revenue from the city system was nearly $1 million below projections!''

''It sounds like a falsehood to me,'' says Dave Schilling, Communications Supervisor Of Operations for the municipal system in Cedar Falls. ''I don't know where they got that. It's more like we projected 3,000 customers and we're at 7,000 customers. We were even a little more expensive than AT&T at one time and still picked up customers. The system is making money. We're standing on our own two feet.''

Cedar Falls offers 66 channels for $24.95 a month. Schilling says they have a good reputation for service. ''When we first started it, AT&T claimed to have 7,000 customers; we now have 7,000 customers.''

One additional claim on the CRMF mailer is that ''voters in Rock Falls and Princeton, Ill. have voted down risky proposals.''

The claim in Rock Falls has an element of truth. City Clerk Bob Smeltzer says they did have a rushed referendum on the issue of creating a municipal cable television system. ''It wasn't risky, though. We already owned our own electric utility and they already had $3 million in the bank of the $6 million needed to build the system. AT&T campaigned against it like mad. They had big ads and mailings. They promised lots of increased services.''

In a low turnout primary election, the referendum was defeated 545-670.

Schilling says that AT&T Broadband is yet to deliver on those services they promised. ''The only thing that's happened since they were victorious on the referendum is that our prices have gone up.''

The situation is Princeton is even more distorted by CRMF. Clyde Wray, the City Clerk, says that the question on the ballot was actually about the city going into the local telephone business to compete with GTE. ''At that time, March 20, 1998, a referendum was not required for a city to go into the cable business.''

Wray says that GTE ''spent huge money to defeat the referendum. They had lots of full page ads. They scared people. They promised the voters lots of upgrades.'' Princeton voters soundly rejected the municipal telephone service referendum. GTE has yet to provide the promised upgrades. ''I have been told that they have installed some fiber but as far as I know nothing's being done with it. We don't have DSL service or anything.''

In addition to the mailing and $3,000 budgeted for newspaper ads, the CRMF is spending $16,864 on push polls to change people's minds on the referendum. Galesburg residents who have received the calls have been outraged by the distortions. One said, ''they claimed our water rates were going to go up and that each household would be assessed $1,000.''

One caller identified himself as being from the firm IMS. A supervisor would give out no additional information. There is such a firm in Redmond, Wash. which advertises that they do push-polls on their website. Krishna Fells, CEO of IMS, responded ''We do not do push-polling and do not have AT&T as a client.''

In any case, someone is doing the polling, condemned by the trade group for legitimate polling firms, The American Association for Public Opinion Research. In a statement from Eleanor Singer, chair of their standards committee, push-polls are ''Šnot polls at all. They are a form of political telemarketingŠ The intent is not to measure public opinion but to manipulate it -- to push voters. The intent is to disseminate campaign propaganda under the guise of a legitimate public opinion poll. Such polls spread false or misleading information. They violate the AAPOR code of ethics by intentionally lying to or misleading respondents. They corrupt the electoral processŠ''

Misleading information doesn't all come from CRMF. In a response to a question, John Guiste of the City of Galesburg said that the ''City Manager has experience running a cable system from one of his previous positions.'' That's not quite true. City Manager Gary Goddard says that Oberlin, Ohio has a Cable TV co-op and that the City manager there sits on the board. ''The relationship is very intense because the city owns the fiber-optic distribution system and network. We just didn't run the programming end of it. We were intimately involved with the system.''

Goddard also reacted to the propaganda from CRMF. ''From some of the stuff I've seen, it appears that they are not being entirely forthright with their statements. There's no relationship between water rates and cable, none at all.''

Large cable firms have had some success in stopping municipal cable projects. In Texas, after Austin had planned for spending $300 million on a system, the legislature banned municipal cable television systems. In Illinois, a last-minute law now requires a referendum before cities can compete. In other places, such as Provo, Utah, systems are well under way to fruition.

If the examples AT&T/CRMF uses are the best they can come up with of allegedly failed municipal cable systems, the downside risk for Galesburg residents seems to be minimal.

Uploaded to The Zephyr Online November 1, 2000

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