Sale of RCN’s assets approved by BPU

Officials hope for improved service from Patriot Media.

By: David Campbell
   The state Board of Public Utilities on Wednesday approved the sale of cable provider RCN’s central New Jersey assets to venture capital firm Spectrum Equity Investors for $245 million.
   Patriot Media and Communications of Connecticut, the company financed by Spectrum, have pledged to assume all of RCN’s obligations for rebuilding the region’s aging cable infrastructure, BPU spokeswoman Gloria Montealegre said Thursday.
   RCN was ordered to undertake the rebuild in order to improve services to 31 communities in central New Jersey, including Princeton Borough, Princeton Township and Montgomery Township.
   Under the deal, the rebuild is to provide a minimum bandwidth capacity of 750 MHz for two-way high-speed cable modem service, high-quality digital cable channels and compact-disc-quality music channels. Patriot Media must complete the rebuild by Dec. 31, 2004, Ms. Montealegre said.
   The closing on the deal is expected by the end of the month.
   Princeton Township Councilman and former Joint Princeton Cable Television Committee Chairman Bernard Miller said Thursday that more important than the BPU’s decision on new ownership is Princeton’s refranchising agreement with RCN.
   "We’re still waiting for the BPU to approve our new franchise," Mr. Miller said.
   Negotiations are under way with the BPU’s Office of Cable Television over terms and conditions imposed by Princeton under which penalties could be levied on the cable provider if it fails to meet the rebuild schedule, the township committeeman said.
   The new franchise, which is predicated on the completion of the rebuild, calls for deficiencies under the current franchise to be addressed and for rates for basic service to be brought in line with those of nearby communities.
   In addition, financial penalties have been proposed by Princeton to hold the cable provider to its promises under any refranchise agreement.
   However, the BPU has said that under state administrative code, the authority to impose penalties lies with the utilities board and not municipalities, which are empowered only to make recommendations, Mr. Miller said.
   "The bottom line is that I’m pleased to see Patriot Media and Steve Simmons take over the central New Jersey cable system," the committeeman said. "But I would like to see the new franchise put in place as soon as possible in the form we negotiated with RCN and Patriot."
   No date has been set for settlement of the refranchising agreement, Mr. Miller said.
   Mr. Simmons, a veteran cable entrepreneur and Patriot Media’s CEO, was unavailable for comment Thursday. But he said in an interview in August that he plans to "aggressively complete" the rebuilding of the system.
   Also, the Patriot Media CEO has said he plans to improve customer service by providing local service centers rather than the single, centralized, national office maintained by RCN.
   Mr. Simmons made his fortune and reputation upgrading poor cable systems and selling them for a profit.
   The Montgomery Township Committee approved its refranchisement agreement with RCN in December, extending the franchise for another 15 years.
   When informed of the BPU’s approval of the sale, Montgomery Township Mayor Louise Wilson said, "Hallelujah," adding, "I think that this clears the way for better service to Montgomery residents and businesses. I feel very good about the BPU approving this deal."
   Montgomery’s refranchise proposal is still pending before the BPU, Mayor Wilson said.
   In a related matter, a settlement between RCN and the BPU was reached Wednesday stemming from the troubled cable provider’s failure to provide discovery in a timely fashion during a BPU investigation of customer complaints over the rebuild, Ms. Montealegre said.
   Under the settlement, RCN must provide $1.2 million in in-kind one-time credits to customers affected by deficient service. Customers in Princeton and Montgomery are eligible for the credits, the BPU spokeswoman said.
   A spokeswoman for RCN was unavailable for comment Thursday.