Save Access

from: MultiChannel News

Tennessee Franchising Bill Aims To Extend Broadband Services
Local Governments Could Also Subsidize Deployment If Private Sector Passes
By Linda Haugsted -- Multichannel News, 4/11/2008 1:10:00 PM

Legislators in Tennessee have been presented a new version of a state franchising bill with a unique scheme to provide an incentive to new providers to extend broadband services.

The bill language, which has been the subject of negotiations among effected industries, contains broad build-out language. Large telephone companies that become video providers must deliver that service to 30% of their existing service area within 3 1/2 years. But those companies can decrease the number of homes which get video if they deploy broadband services to areas that don't currently have such services, or areas that are determined to be undeserved.

Under the formula in the bill, a provider will get credit on a 4-to-1 basis for connecting a home to broadband services for the first time. In other words, a house getting service for the first time would count as four homes when computing the 30% build-out formula.

According to the current version of the bill, local governments may also subsidize broadband deployment, if the Tennessee Regulatory Authority determines that there is no interest in the private sector to build plant locally.

This is the second time the state has taken up the issue of state franchising. The proposal in 2007 was withdrawn by its sponsors in the face of heavy opposition from a coalition formed between cable operators and local governmental groups. This time, however, lawmakers drew cable and telephone forces together for negotiations on a bill before proposing this latest draft.

“The cable industry, including Comcast (Corp.) and Charter (Communications Inc.), stood firm to make to make sure that our members were treated fairly and that AT&T and other companies were not granted advantages in the law,” said Stacey Briggs, executive director of the Tennessee Cable Telecommunications Association. AT&T is the most vocal backer of the bill.

Under the current draft, incumbent cable providers can opt to continue under their local agreements or to file for state authority.

The bill assigns franchising authority to the TRA, which would approve 10-year franchises. That agency would also have the power to order credits from providers, in response to complaints from consumers. Local governments retain authority over the local rights-of-way, and will receive 5% of gross revenues as franchise fee payments from all providers.

But the TCTA may seek an amendment to the bill that could lead to opposition from rural electric cooperatives and municipal electric companies over the bill. The TCTA would like to close what it perceives to be rate-setting loophole which has caused Tennessee operators to pay among the highest pole attachment rates in the country, Briggs noted.

The Federal Communications Commission sets the rate formula for attachment fees paid by cable providers for using the poles of investor-owned utilities. But rural electric cooperatives and municipal electric companies are exempted from using this rate formula, and most of Tennessee is served by those kinds of utilities.

As a result, the average pole attachment rate for a Tennessee operator to use a rural electric co-op’s pole is $10.81 per pole per year, while the average paid to a municipal electric company is $13.91 per pole per year. By comparison, the national average pole attachment rate is $6.23, Briggs said.

The state franchising bill must go through multiple committees before it can be subject of a House floor vote.