County hears appeal on cable franchise fees

Denny Lawrence, general manager for Coast Communications, a cable television and internet provider for the North Beach area, has asked the county to reconsider raising franchise fees.

The rate change from 3 percent to 5 percent is proposed in a contract renewal. Lawrence earlier this month told county commissioners that Coast Communications is small and “family-owned” and said the profit margins are “razor thin.”

“The franchise fees are a direct pass-through to our customers, so we’re not technically raising the rates, but when the customers see their bills, they see it as a rate increase,” Lawrence said. “We are mainly a retirement community, and these folks watch every single penny, as most of us do.”

While Coast Communications has to run wire throughout the county to provide service, its competition, satellite service providers, do not require the same infrastructure. Coast Communications also pays the PUD for the right to connect lines to the utility’s poles. So as Coast Communications must make adjustments and pass increases onto its customers, its direct competition in the area is free of those same costs, he said.

If the company raises its rates to pay for the county’s rate increases, Lawrence warns that Coast Communications will lose customers in the process, and that would offset the gains to the county. “We are going to lose more than 2 percent of our customer base by raising it by 2 percent,” Lawrence said. “If we’re going to lose revenue, then in turn you’re going to lose revenue. I think you’re going to receive less money from us … it’s a lose-lose situation.”

The company already has been dealing with a frustrated customer base following the business decision to drop Root Sports after Root, which carries Mariners games, raised its rates. Lawrence said Coast Communications was faced with a decision to lose customers because of a rate hike, or to potentially lose customers because of a lack of Mariners games.

“It’s tough on our customers. And it’s tough on our office staff — they answer a lot of questions and they get beat up a bit,” Lawrence said.

During the media information session following the county commissioners’ afternoon meeting, both commissioners Frank Gordon and Wes Cormier said they would like to see a similar rate structure for all of the cable companies. “The contracts come in at different times,” Cormier said, explaining why the rates differed. “I’m open to the idea of bringing them all down to 3 percent, rather than bringing them all up to 5 percent.”

Commissioner Vickie Raines, who left early for a family issue, did not attend the media information session. No action was taken regarding the rates during either of the meetings.