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Erik Burgess, Published October 02 2013

Caught in the crossfire: Cable One's fight with Turner showcases lack of Fargo options

FARGO – Jerry Mickish is tired of being caught in the crossfire when it comes to what he can and can’t watch on the tube.

That happened again on Tuesday, when negotiations between Cable One, the only residential cable provider in Fargo, and Turner Broadcasting broke down.

For Cable One customers like Mickish, it means the loss of CNN, Turner Classic Movies, TruTV, TNT, Boomerang and TBS.

TBS began coverage of Major League Baseball’s postseason on Tuesday. Mickish isn’t an avid baseball fan, but he wants his TV channels back just the same.

“It’s frustrating from a consumer standpoint because we have no control over it,” he said. “I just think the whole thing could be handled a lot better.”

When issues arise with Cable One in Fargo, residents invariably ask why the state’s largest city doesn’t have more cable providers such as Midcontinent Communications, which serves Moorhead and West Fargo.

“It’s just hard probably for most people to understand why West Fargo and Moorhead have options when we don’t,” said Fargo resident Mike Samek.

“A monopoly isn’t good for anyone,” said Fargo resident Russ Eicholtz, “and I don’t think a little friendly competition is going to hurt too much.”

No monopoly

But the notion that Cable One has a “monopoly” with Fargo is not true, city and Midcontinent officials say.

Federal laws require that a cable franchise “build out” to serve the entire city within a reasonable period of time, usually a few years. With Fargo’s 44 square miles and lack of density, it’s a project that isn’t financially in the cards for Midcontinent, said Tom Simmons, the company’s vice president of public policy.

Simmons said Midcontinent does not have immediate plans to bring cable service to Fargo. The company does provide Internet service in the city.

“There is no such thing as an exclusive franchise agreement,” Simmons said. “There are no regulatory hurdles that have been put before us by the city of Fargo or any other regulatory body for that matter. It’s just purely a business decision.”

Simmons wouldn’t guess at how much expanding cable service in Fargo would cost, but said it would be in the tens of millions of dollars.

City Commissioner Mike Williams said the city has tried to work out a plan that would help Midcontinent expand.

“They did it in three years in Moorhead, and they said they’d never try to do it that fast again because it didn’t go very well,” Williams said. “So we said we’ll give them longer than that, but there is a limit to how long you can give them.”

The build-out requirement is meant to prevent cable companies from “cherry picking” and only providing service to more-affluent neighborhoods, Williams said.

The cable provider also must pay the city a franchise fee to use the city’s right of way. In Fargo, that fee is up to 5 percent of the company’s gross revenue, according to city ordinance.

FCC rules require these fees because they help fund cable access, which helps distribute government information, Williams said.

He said if consumers want more options, they should lobby Midcontinent or other cable providers, not the city.

“We can’t make them come, but we’re trying to make it as attractive as we can,” Williams said.

Contract tiffs pervasive

Disputes between content providers and cable distributors have been “more contentious” across the country over the last 12 to 18 months, said Vijay Jayant, an analyst with International Strategy and Investment Group in New York.

Cable One was in a similar dispute with AMC earlier this year.

Jayant said contract disputes are more frequent because the cost to create quality TV content is steadily increasing.

“Many, many instances of contentious relationships and, generally speaking, nobody dropped these channels permanently,” Jayant said. “It’s always been a period of pain for everybody, and consumers obviously get the brunt of it.”

He pointed to several recent examples, including disputes between DISH Network and Disney, CBS and Time Warner Cable, DirecTV and Viacom and DISH and AMC.

“They [content providers] want to get paid fairly for it given what they’re paying for it, and sometimes the cost increase is not sustainable, and you’re seeing contentious fights,” Jayant said.

Sometimes programming costs for distributors like Cable One increase at more than twice the rate they can pass on to customers, Jayant said.

Cable One General Manager Scott Geston said Tuesday it’s unknown how long the Turner outage will last.

Cable One, which serves 730,000 customers in 19 states, stated in a news release that it will automatically credit its customers for the missing channels.

In these contractual disputes, the content providers usually win, Jayant said.

“Because people are watching their content. Cable One is just a distributor,” Jayant said.

Fargo resident Mickish does have another option. His apartment offers cable from 702 Communications.

“This sucks," Mickish said. "I’m actually thinking of seriously changing.”

Readers can reach Forum reporter Erik Burgess at (701) 241-5518