The rapidly changing communications industry took another step into the future Tuesday when the Naperville City Council gave a cable television franchise to a telephone company.
A cable television industry group responded by threatening to file a lawsuit.
But with unanimous backing from City Council members, Ameritech Corp. officials said they would invest millions of dollars to build a two-way video network for Naperville.
The 15-year franchise agreement with Ameritech New Media Enterprises Inc. would make Naperville one of a small number of communities nationwide where viewers can choose from competing cable television providers. Until now, Jones Intercable has had a monopoly in Naperville.
As technological advances continue to blur the distinctions between the computer, the television and the telephone, the communications marketplace is taking on the appearance of an economic battleground. At stake is control of an industry whose final shape nobody can yet predict–other than to say it probably will be lucrative for those who survive the competition.
Cable television operators, who traditionally have held local monopolies, have been bracing for the competitive onslaught for years.
“We are not interested in keeping Ameritech out, and we are not interested in delaying the inevitable,” said Gary Maher, president of the 200-member Cable Television and Communications Association of Illinois. “Our concern is with fairness and equity.”
Maher said that although he has not had a chance to review Ameritech’s franchise agreement in detail, he said his initial understanding is that it violates a 1992 state law that prohibits municipalities from granting cable franchise agreements that are more favorable or less burdensome than existing franchise agreements.
Specifically, Maher said, the new agreement does not require Ameritech to pay as much money for the right to televise local-access programming as Jones Intercable must pay.
“We will sue Naperville,” Maher said, if a detailed analysis of the agreement bears out his concerns.
But officials from Ameritech and Naperville countered that although Ameritech possibly would pay less for local programming, other parts of the agreement are more burdensome. For example, Ameritech will provide fiber-optic connections for Naperville high schools, North Central College, and the Naperville location of the College of DuPage. On the whole, Naperville and Ameritech officials said, the two agreements are equitable.
David Sander, Naperville’s community relations coordinator, said the city has no interest in giving Ameritech a competitive edge. He said the city only wants to create more choices for Naperville residents.
The cable association, of which Jones is a member, has filed a lawsuit against a franchise agreement that Ameritech made with Glendale Heights in August. That agreement, the first in the state, also pits Ameritech as a competitor against a local cable monopoly. The lawsuit is pending.
Under the new Naperville agreement, Ameritech officials said, some residents could be connected by late this summer. Eventually, Ameritech officials said, the service will include around-the-clock customer service, cable-based grocery shopping, travel planning and other services.
Dan Lloyd, administrative director of Naperville Community Television, or NCTV, raised concerns during Tuesday’s council meeting.
Lloyd warned that the Ameritech agreement would provide less funding for studio equipment and facilities. It also could prompt Jones Intercable to try to nullify its existing agreement, which is up for renewal in 1999, to seek similar public access arrangements, he said.
“You will be severely limiting NCTV’s ability to provide Naperville with quality public access programming,” Lloyd told the council.
Council members said they would work to assure that NCTV receives the funding it needs to continue operating.
Ameritech will pay an additional 5 percent of its revenues to the city as its franchise fee.
Ameritech New Media hopes to begin building its cable system in the next several weeks, with homes on the north end of the city expected to be targeted first, according to Fred Fouse, general manager of operations. Cable service to the first homes is expected to be available in late summer, and the entire system should take about 18 months to complete.
Ameritech expects to start out with 70 to 90 channels. If the system is digitized as planned, that number could increase to 550.
Ameritech spokeswoman Donna Garofano said the company also plans to offer a two-hour window for service calls and home delivery of cable converters. Cable rates probably will not be finalized until 30 days before the company goes to market, but they will be competitive with current fees, she said.
Ameritech New Media has 10 cable TV agreements in its five-state area of Illinois, Ohio, Wisconsin, Michigan and Indiana. Discussions are under way with more than 30 other communities.
Tribune free-lance reporter Shirley Siluk Gregory contributed to this article.
