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from: Columbus Dispatch

Channel-surfers may get a break
Bill simplifying franchise fee may cut costs

Wednesday, April 18, 2007 3:32 AM
By Alan Johnson
THE COLUMBUS DISPATCH

Ohio consumers could benefit from more choices, greater competition and lower prices because of what appears to be an undeclared truce in a long-standing turf battle between telephone and cable companies.

The combatants, communications companies AT&T and Time Warner, appear to have found neutral ground on Senate Bill 117, proposed state legislation aimed at stimulating competition by easing the franchise process.

The key change in the bill sponsored by state Sen. Jeff Jacobson, R-Vandalia, is switching to a single, statewide franchise fee for all providers of what commonly is called cable-TV service. That would take the place of the fractured, community-by-community process that has been in place for more than two decades.

AT&T is enthusiastically backing Jacobson's bill; Time Warner and other cable companies are neutral. The Ohio Municipal League finds some provisions troubling, including allowing video providers to terminate service to any area with 30 days' notice.

Nevertheless, there appears to be legislative support for the bill, fueled by complaints about cable charges that, according to the Federal Communications Commission, have risen by 93 percent in the past decade.

In testimony yesterday before the Senate Energy and Public Utilities Committee, AT&T Ohio President Connie Browning said the "next generation of regulation is needed if next-generation video is to succeed."

"Let consumers choose whether they want a cable company, a phone company or another provider to be their source for video entertainment. It should be up to them," Browning said.

AT&T, formerly SBC and, before that, Ameritech, employs 10,000 people in Ohio and is the leading U.S. provider of local and long-distance voice services.

But like the cable companies, which now offer Internet and telephone service, AT&T and other phone companies want to get in the other guy's business: video.

The company has made a multibillion-dollar investment in high-speed fiber optics across Ohio and the 12 other states it serves. In some cities, including Indianapolis, Houston and San Francisco, the company is offering a video service call U-verse. Browning said the company plans to make the service available to 19 million households by the end of next year.

The problem, from AT&T's point of view, is an archaic franchising process that amounts to a near-monopoly for Time Warner and other cable companies. AT&T has begun negotiating its own video agreements but has managed to nail down just 12 in 18 months, including Dublin, Grove City, Hilliard and New Albany.

The negotiations are time-consuming and could take decades to complete, AT&T attorney Andy Emerson told the committee. In addition, he said, some cities make franchise demands that are "absolutely unreasonable" and are "holding negotiations hostage."

Enter Jacobson with a bill backed by AT&T, which argues that it will generate millions in economic development, provide thousands of jobs and give consumers more video choices at lower prices.

Eleven other states have approved similar laws, including Indiana and Michigan, both served by AT&T.

Through all of the cable bashing, the Ohio Cable Telecommunications Association is keeping a stiff upper lip and not opposing the bill.

Jonathon McGee, executive director of the association, said cable companies are neutral on the legislation, in part because it would allow them to have the same streamlined franchise process as competitors.

"It treats all wireline video providers equally. That's been a concern. Any bill cannot put one wireline provider at a competitive advantage over another.

"Competition is not just coming," McGee said. "It's already here."

Officials representing Ohio's cities, villages and townships, while not unalterably opposed, are troubled by some things in Jacobson's legislation.

John Mahoney of the Ohio Municipal League said changing the franchise fee, "which has worked pretty well for decades," might be a difficult job to hand over to the state government.

In addition, Mahoney said, municipalities are "deeply concerned" about public right of way for new video-service installations.

"We need to maintain control over that," he said.

Finally, the bill contains requirements for communities to provide local programming channels that might not be feasible, he said.

ajohnson@dispatch.com