Oceanic subscribers
to get $1.92 refund

The cable TV company took in
too much for franchise fees

The state has ordered Time Warner Entertainment to issue Oahu cable television subscribers refunds totaling nearly half a million dollars in overcollected franchise fees.

Time Warner overbilled subscribers $483,759 from Jan. 1, 1995, to Dec. 31, 2002, according to a report that the Department of Commerce and Consumer Affairs commissioned from Merina & Co. and Public Knowledge Inc.

"The review wasn't from any complaints," said Christine Hirasa, the department's public information officer. "DCCA initiated the report back in 1999 to ensure that there was fairness in the marketplace."

The department ordered Time Warner Entertainment to issue a credit to about 262,000 Oceanic Time Warner Cable subscribers. The $1.92 adjustment, which will be reflected in upcoming subscriber cable bills, will take place between May 2 and June 2.

The report found that the overcollected amount was largely a result of Time Warner Entertainment's internal accounting practices, Hirasa said.

"They were using different accounting practices at the time and have since readjusted how they account for franchise fees," she said.

The report found that the amount Time Warner Entertainment collected in franchise fees from its subscribers differed from the amounts that it remitted to Olelo Community Television, PBS Hawaii and the state.

The need for a subscriber refund is based on a timing issue rather than an accounting error, said Russell Saiki, vice president of finance for Time Warner Entertainment in Hawaii.

The cable operator prepays annual franchise fees based on what it anticipates its customer load will be, he said.

"The fee is set up as a percentage of the customer bill so it's a moving target; you aren't dealing with a static subscriber number," Saiki said.

"Maybe with pure luck we'd come out to the penny."

During the same time, Time Warner Entertainment overpaid Olelo Community Television by $139,297 and PBS Hawaii by $46,378, according to the Merina report. The company also underpaid the state by $3,718, the report stated.

Time Warner Entertainment's profitability has not been affected by the state order, Saiki said.