NAPLES — Cable TV and internet provider Spectrum has yet to provide a “substantive” response to nine Cumberland County towns’ demands for payment of more than $142,000 in fees owed to them.
Spectrum underpaid Cape Elizabeth, Casco, Cumberland, Gray, Harrison, Naples, New Gloucester, Windham and Yarmouth in 2017 and 2018, according to an audit conducted by Bradly Law, a Minnesota law firm specializing in telecommunications and cable franchise laws. The audit began in 2019 and the results were released last month.
Cable services such as Spectrum pay annual “franchise fees” to municipalities to run cable lines through public property, as per federal law. But the nine towns, which rely on the payments to fund public access TV services, such as Lakes Region TV and Cape Elizabeth TV, were underpaid anywhere from $1,136 in Casco to $31,435 in Cumberland over the the two calendar years reviewed in the audit.
Cumulatively, the towns were underpaid over $142,000, but with interest and fees, the grand total comes to $166,000, according to the report.
The audit came out of a 13-town effort facilitated by the Greater Portland Council of Governments last year. The communities banded together to share the costs related to cable franchise renegotiations with Spectrum, which is owned by Charter Communications of Stamford, Connecticut. The audit was suggested by Bradly Law, and nine of the 13 communities opted to pay $2,000 each to participate.
“The idea of a franchise fee audit is to determine compliance … and it appears Charter has not been compliant with the nine communities of the original audit,” said Tony Plante, the council’s director of municipal collaboration.
“We don’t believe that there’s anything malicious or dishonest behind it. We think (it’s) most likely the result of these franchises changing hands several times. Each company has its own system of migrating systems,” said Plante, a former longtime town manager in Windham.
Charter spokeswoman Lara Pritchard did not respond to a request for comment.
The communities’ cable franchises have changed hands several times in the last couple of decades, first when Time Warner Cable acquired Adelphia Communications in 2006 and again in 2016 when Charter Communications acquired Time Warner Cable.
Plante said GPCOG provided the nine towns with payment demand letters to send to Charter, but that any communications with the cable company must be conducted by the towns.
Cape Elizabeth Town Manager Matthew Sturgis said his town usually receives about $150,000 in franchise fees every year, so the missing $27,421 over three fiscal years “didn’t really pop any red flags.”
“As long as (annual fees) stay close to that, we don’t really have much of a reason to think that it’s much of a deviation. Everything seemed on its face legit, seemed like the accurate amount that we were receiving,” he said.
Naples and Yarmouth town managers said they sent letters to Charter, but have not received an adequate response.
Yarmouth Town Manager Nathan Tupper said he received a letter asking for more information but nothing “substantive” from Charter. Yarmouth is owed about $25,000.
Tupper said the missing fees don’t “affect our budget directly.” The fees go directly into the town’s TV reserve fund, he said, and now they are less able to purchase equipment.
Yarmouth receives about $125,000 in annual franchise fees.
John Hawley, the Naples town manager, said that the town will send another demand letter if they do not receive a response. The $36,000 or so that Naples receives in franchise fees annually is used to fund Lakes Region TV and its related costs. The town is owed nearly $16,000.
Plante said that Falmouth and Westbrook, which are part of the contract renegotiations cohort, have since opted in to the audit, but the results are not yet available.
While the audit only covered 2017 and 2018, Plante said that they have “no reason to think that there weren’t also errors going into 2019 and 2020,” but do not currently have plans for any additional audits
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