KY - Enron, Andersen fallout not behind ‘adjustments' in Mediacom cable bills

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A longtime error in the billing of Mediacom business customers was uncovered during a local, internal audit and is not connected to the cable giant's decision in April to replace Arthur Andersen as its accountant, according to a company spokesman.

Letters sent to business customers throughout the cable provider's service area, which includes most towns in the southern Pennyrile, cited the error as the reason some customers will see a substantial rate increase with their August bills.

"We have discovered that your business is being charged the residential service rate rather than the appropriate business rate," according to the letters, signed by Arnold P. Cool, who was not further identified by title or position. "To correct this error, we will be adjusting your billing to the business rate."

The letters come about three months after Mediacom announced it had appointed the accounting firm of PriceWaterhouseCoopers, LLC, as its new independent auditor, replacing Arthur Andersen. The Andersen firm has been implicated in recent financial scandals involving Enron, WorldCom and others.

But the corporate–level change in the New York–based cable giant's accounting practices was not behind the much more limited audit that uncovered the error, said Randy Hollis, government relations specialist for Meciacom.

"This audit was at the local level. It was internal," Hollis said.

Hollis said some of the business customers may have been paying the lower residential rates for years.

That's exactly what happened to Denise Williams, who owns and operates Golden Threads in Trenton.

The letter Williams received said she would be billed an additional $11.65 a month for a total cable bill of $56.65.

"I don't understand why this is going up," Williams said. "I called the number they listed on the letter, but they told me I couldn't talk to this Arnold Cool guy. All they did was give me an address and said I could write him a letter."

For one thing, Williams said she wanted to know why the same cable service should cost more in her business than it does in her home.

"I asked, ‘What am I getting for that 12 bucks a month?" she said.

Hollis said charging residential and commercial customers different rates is a common practice among cable providers. The higher commercial rates are based on building occupancy, "seating capacity" and cost of programming, he said, adding that some premium channels are not available to business customers.

Collecting less than the usual commercial rate from Williams and other area customers (Mayor John Walton of Elkton said that city received a similar letter from Mediacom about a week ago.) has not seemed to hurt the cable giant, which posted record profits in the first quarter of this year, according to a company news release.

Through March, the company's pro forma revenues increased by 8.8 percent, to $219.5 million, and pro forma operating cash flow increased by 18.2 percent, to $88.1 million, compared to similar results in 2001.

During that time, the company bought AT&T Broadband and converted that system, as well as its own Internet service, Excite@Home, to Mediacom Online. However, cable television service to about 1.6 million customers in 23 states still makes up nearly 90 percent of the business.

Kentucky New Era

-- Anonymous, July 06, 2002


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