Lexington and Time Warner Cable have reached a 10-year franchise agreement that includes stronger customer service protections, city officials announced Thursday.
Higher-speed Internet and a lower-cost Internet service for some residents could follow, if a deal to sell Time Warner Cable is completed.
The agreement includes longer business hours on weekdays and weekends at the company's Palumbo Drive office, a new provision that allows people to mail equipment such as modems to the cable operator, and stiffer fines if the cable company violates key consumer protections.
Under the previous agreement, Time Warner Cable faced a penalty of $100 a day for non-compliance. Under the new agreement, it could be penalized $500 a day. The city also will have a cable compliance officer who will monitor the new customer service protections, city officials said.
During the past 20 years, the city never fined a cable company for violating the terms of its franchise agreement.
Mayor Jim Gray said the city worked hard to get residents the best deal after hearing repeated complaints about cable service.
"Time Warner has a major customer service problem in Lexington," he said. "People are standing in long customer service lines and complaining to the city. By the hundreds."
He said there were many things that the city couldn't control through its negotiations, such as pricing, what channels are offered and billing problems.
"There are legal limits on what we can ask for, which is troubling and problematic, but that's the law," Gray said. "In the end, we were able to extract major concessions on customer service."
The city's previous 20-year franchise agreement expired in 2012. The city opted to go with a 10-year franchise agreement because of the changing cable market, Gray said.
Last month, the Urban County Council took the unusual step of putting two resolutions on its agenda to deny the transfer of ownership of Time Warner Cable to Comcast as a way to get more concessions from the cable giant. Comcast is seeking federal approval to buy Time Warner Cable and plans to spin off some of Time Warner Cable's systems, including Lexington's, to Charter Communications.
Time Warner Cable became Lexington's cable provider after it purchased Insight in 2012, Lexington's previous provider.
Under the city's old franchise agreement, it had to approve the transfer of ownership or merger of the local cable provider. If the city did not approve the transfer, it's likely that the city and the cable company would have ended up in federal court.
On Thursday, the council removed the resolutions that would deny the Time Warner Cable-Comcast deal. The council gave first reading to a resolution that would set forth a 10-year franchise agreement.
In addition to the franchise agreement, the council will have to approve a separate settlement that includes additional details of the deal brokered by the city and the cable company.
The merger of Time Warner Cable and Comcast, and the related deal with Charter, is being reviewed by two federal agencies. It's not clear when the federal government will make a decision.
Scott Shapiro, a senior advisor to Gray, said Charter had agreed to honor Time Warner Cable's agreement.
In addition, Charter has agreed to additional provisions such as providing a low-cost Internet option for the poor. Details of that service — including income guidelines — have not been worked out.
A low-cost Internet option for the city's poorest residents was something the city wanted to help bridge the digital divide, Gray said.
"We know that kids need access to the Internet to do their homework," he said. "People need to get on the Internet to apply for jobs."
In addition, Charter has agreed to increase Internet speeds within two years of taking over cable operations, Shapiro said.
The council still must approve many moving parts of the deal. But it's likely that customers will see changes in customer service by the first of January, city officials said Thursday.