Common Council President James W. Pitts accused Adelphia Cable on Thursday evening of basing part of its impending rate increase on costs anticipated for its $100 million waterfront development project, which it has put off for at least a year.
"My feeling is that if there is a delay in the project, there should be a delay in the rate increase," Pitts said during a public hearing sponsored by the Council's Committee on Telecommunications. Only a small handful of interested residents attended. The city can't veto the rate increase. The last one was 18 months ago.
Thomas Haywood, general manager of Adelphia, explained why the company this month will be sending out bills reflecting a rate increase of about 10 percent, leaving intact only its $9.50 monthly "broadcast service" category. Haywood cited cost increases of 40 percent for labor, 60 percent for power and 60 percent for capital expenditures.
"Our profit margins have shrunk, and we need capital expenditures to operate (and expand) the cable network," he said. "We are a highly leveraged company," he added, referring to heavy borrowing for expansion. He said staffing has risen 16 percent this year.
"You're hiring people as part of the Inner Harbor project?" Pitts asked.
"We're adding more workers to support our services," Haywood replied. "Is it part of the (development) deal? I don't know."
"Are your existing labor costs being attributed to some of the people who are being hired now (for the waterfront expansion) and who are being added in now to justify a rate increase?" Pitts demanded. "There is this tremendous PR game going on, to blame this Council for holding up the project. But you say there's no deal yet."
Haywood said he isn't involved in the development project and referred questions to Ed Hartman, vice president for development. He added that the rate increase will take effect in all 32 states where Adelphia operates.
"It has nothing to do with the Inner Harbor development," Haywood said. "That's a separate deal. The Rigas family is confident it will go through. Meanwhile, I have to operate on a daily basis."
"Why was it delayed?" Pitts asked.
"I don't know."
"I'm very concerned about this rate increase, relative to the Inner Harbor," Pitts said. "Why would you ask for a rate increase now? Your figures have no sense of reality to me. I believe we should review this rate increase by the regulatory process."
Urging Adelphia to create a median cable package between the $9.50 broadcast service and the $35.50 "basic service" plan were Council Members Rosemarie LoTempio, Marc Coppola, Richard Fontana, Beverly Gray, Barbara Miller-Williams and Charley H. Fisher III.
"Somewhere in between there has to be a happy medium that I can afford," Fontana said. "In the $15 to $25 range for a package of 30 channels."
"We looked at it," Haywood said, "but deals we worked out with programmers require us to have as many viewers as possible, because of their advertisers. And it's easier for us to add channels (for a package) than to trap out or scramble some stations out" to create a smaller package.
Under questioning by Williams, Haywood acknowledged that Adelphia has done nothing to inform senior citizens that they can get a 20 percent discount if they are 65 or older and earn less than $12,000 a year.
Asked whether Adelphia would lower the age to 62 for the senior citizen discount, and eliminate the income limit, Haywood said no.
"We are in the entertainment business," he said. "We are not a utility, so we do have competition."