NC: Franchise Law Helping … Cable Incumbents

Posted on February 18, 2008 - 3:03pm.

from: MultiChannel News

N.C. Franchise Law Helping … Cable Incumbents
AT&T, Other Competitors Have Yet To Apply For Statewide Application
By Linda Haugsted -- Multichannel News, 2/16/2008 9:29:00 AM

A bill designed to aid competitive video providers in North Carolina has actually deregulated many incumbent operators, while no new competitors have applied to serve the state, according to data compiled by a municipal consultant.

Not seeking a franchise yet: AT&T, strongest backer of the North Carolina Video Service Competition Act, which took effect Jan. 1, 2007.

Instead, the secretary of state has awarded 111 franchises, including ones to Time Warner Cable, Cebridge Communications and Charter Communications.

Only one small telephone company, which was already providing competitive services, has sought a statewide franchise, according to consultant Action Audits, which compiled the data.

An AT&T representative told Multichannel News it has launched U-verse in Atlanta, the biggest metropolis in the former BellSouth territories, and has pledged $350 million in regional network upgrades, including in North Carolina. No launch date was given for North Carolina, though.

The report said video prices have not decreased, though cable-rate reduction remains a key benefit touted to state legislatures in favor of statewide franchises.

The law instituted a video sales tax to replace locally collected franchise fees. The report asserts that funding, which was projected to be $28,000 per state-franchised community, actually averages $6,000.

Cities that had used some franchise fee cash for public, education and government channels now tend to funnel the money into other city services, said Catharine Rice, an associate with Action Audits.

The report jibes with data collected in Texas, the first state to adopt state franchising; and, more recently, Michigan.

Local authorities also complain state agencies give conflicting advice when communities have a complaint.

Mecklenberg County opposed a state franchise application by Time Warner Cable, in one example.

Doris Boris, cable communications administrator for the county, said the law was supposed to bar statewide franchises for providers with active local franchises. Yet the county and Time Warner were negotiating a new pact when the operator applied for a state franchise.

While Mecklenberg’s complaints bounced between the secretary of state and the attorney general, Time Warner got the franchise, Boris said.

“We’re in limbo land,” she said.

Local governments, angry over actions like PEG channel shifts after the bill took effect, said they have been advised to sue for enforcement of state law. Boris said that’s financially infeasible, adding municipalities don’t know what their course of action would be.

Instead, local officials are taking their complaints to a revenue loss study committee in the legislature, in hopes the video competition bill can be amended to benefit cities.