Issue date: January 12, 2000
By DON KAZAK
The turnout was huge and the vote was overwhelming. As a result, Cable Co-op, operating since 1986 as the local cable company, will make way for telecommunications giant AT&T.
Cable Co-op subscribers approved the sale by a 4-1 margin in mail ballots collected in December. Results of the vote were announced January 4.
Local ownership loyalists mustered 1,300 votes against the AT&T sale, usually enough to easily win a Cable Co-op election. But this election had what may have been record participation, as 6,555 subscribers out of 29,691 cast ballots.
The AT&T sale was approved by 5,255 subscribers, or 80.2 percent of those voting.
"It's a big vote of confidence," said Andrew Johnson, executive director of communications of AT&T Broadband & Internet Services in Northern California.
"The membership has spoken loudly and clearly," said John Kelley, Cable Co-op board president.
"There's not much you can do about it," said Arthur Snyder, a member of Keep Community Cable, a group opposed to the sale. "Maybe AT&T will be better, but TCI (bought by AT&T) has a history of ignoring franchise agreements."
Ron Kirkeeng, Cable Co-op CEO and general manager, said he was about to send a letter to the Palo Alto City Council to begin the process of transferring the franchise. The council is the lead agency in the franchise process, acting for Menlo Park, Atherton, East Palo Alto, Stanford and Santa Clara and San Mateo counties.
Transfer of the franchise is a straightforward process that is expected to be completed within three months. The only reason the city could deny the transfer is if the new operator didn't have the financial resources or technical expertise to run a cable system.
A much more complicated process is renewing the franchise, which expires March 24, 2001. That is more deliberative process, with negotiations and give-and-take between the cable operator and franchising authority.
Palo Alto has already formed a 30-person task force, with members from all of the participating cities and counties. The task force will conduct a needs assessment process that will identify the community's telecommunications needs.
"We have a year's worth of work" on the renewal process, including public hearings, said Carl Yeats, Palo Alto's director of administrative services.
The Cable Co-op board voted 13-1 on September 7 to sell the system to AT&T for $53 million. In addition, AT&T will provide $17 million to form Silicon Valley Community Communications, which will provide local origination programming, and will also upgrade the system to hybrid fiber-coaxial system within three years.
Proceeds of the sale will be used to retire the company's $33 million bank debt due July 31. The looming due date on the bank debt, and threat of default, was a prime reason the Cable Co-op board was interested in selling to AT&T.
But board member Tom Passell, who voted against the sale, and members of Keep Community Cable argued against the sale, saying the community would lose local control of the cable system. Sale opponents said the bank debt could be refinanced to avoid default. But that wouldn't have produced any money to upgrade the outmoded coaxial system. AT&T will spend $10 million to $12 million on the upgrade, which will result in more channels and faster Internet services.
Subscriber approval of the sale was good news at 3200 Park Blvd., home of the Cable Co-op. "The employees are ecstatic," Mr. Kirkeeng said. "Morale is very high."