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Excellent overview and response to local media coverage of video franchises

from: Sentry

Vigue: Letter writer uses ‘inaccuracies’ to make case

Editor:

I read with interest the response by Annie Kerry to an interview that I gave to the Sentry two weeks ago regarding the current Federal Telecommunications legislation, HR 5252 [also known as the Advanced Telecommunications Opportunity Reform (ATOR) bill]. The arguments given by Annie Kerry are remarkably similar to those given by telecom industry lobbying groups and public relations firms in other parts of the country. They complain that cities and towns across the country are somehow preventing Verizon, AT&T, SBC and other Telecommunications companies from providing low cost, competitive video service to residents. Let’s take a look at the facts:

The South Portland Franchise Ordinance, Maine State law and the laws of all other states require that cable and video service franchises be “non-exclusive” which means any company can come into town and start providing video to the home as long as they agree to meet the “needs of the community.” Community needs are normally arrived at through a needs assessment and franchising process. This does not need to be a difficult or drawn out process.

Federal laws that have been in place for more than 30 years have recognized municipal sovereignty over the PROW [public right-of-way] (our streets). Satellite companies are exempt from this requirement because they do not use our streets. Telco’s also want to be exempt when providing video service to the home, but unlike satellite companies, Telcos use the PROW to sell their services. As a point of clarification, phone and power services to the home are considered in the law to be essential services and therefore in Maine as in most States are subject to regulation by the Public Utilities Commission.

Video service providers like cable companies and any new video service provider are not regulated by the PUC. The only regulations they are currently obliged to follow are the Federal Cable Act and the local franchise agreement with the municipality.

The contract or “franchise” that a town grants to video service providers allows them to use the streets or PROW for commercial profit in exchange for paying a rental or “franchise fee” and by meeting identified local community needs, such as the construction of a data network to connect schools, libraries and other buildings. South Portland, Portland and many other Maine towns have such a data network, made possible by the terms of our current franchise. In South Portland, we also have four identified “return paths” around the city from which Channel 2 or 3 can originate their signal. Individual community needs such as these would not be possible under HR5252.

The courts and the Cable Act have long recognized “that municipalities are best able to determine a community’s cable-related needs and interests. The city council’s knowledge of the community gives it an institutional advantage in identifying the community’s cable needs and interests. It would be inappropriate for a federal court to second-guess the city in its identification of such needs and interests.”(United States Court of Appeals, Fifth Circuit. No. 96-60427. CITY OF DALLAS, TEXAS; City of Laredo, Texas, Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION; United States of America, Respondents. July 31, 1997)

HR5252 would change this law and many others like it by strictly limiting what the individual community needs and interests are. Change is necessary, but it has to be intelligent change.

Regarding competition, we are in agreement: it lowers prices. The governor also recognized this early in his administration and created the Broadband Access Infrastructure Board which met for over a year, took testimony from every stakeholder in Maine including telecom interests, the PUC, the public, business groups and municipalities. They studied every possible scenario for improving broadband access in Maine and the result became the ConnectME initiative that the governor signed into law in June of this year. It is important to note that the elimination of franchising was discussed in these meetings but was not considered a significant obstacle to broadband deployment and therefore was not included in the legislation.

If anything, local franchising promotes broadband in rural areas! As proof of this, one has only to look at our neighboring towns of Standish, Buxton, Hollis, Limington, Limerick and Waterboro. Over 500 miles of fiber connect every municipal building, library and school in the six town region, making high speed internet available to every home along the way, all made possible by their franchise agreements. Presto, broadband in rural Maine!

To clarify another point, franchise fees, although allowed to be shown on subscribers bills, are not a tax or fee as Annie Kerry stated, but as the courts have ruled: “franchise fees imposed on the cable operator are part of a cable operator’s expense of doing business. There is no plausible basis to conclude that cable operators are acting as collection agents on behalf of franchising authorities” (towns). (UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT, in the case of UNION CATV, INC.,v. CITY OF STURGIS, KENTUCKY referencing Federal Law H.R. REP. NO. 98-934, at 24, reprinted in 1984 U.S.C.C.A.N. at 4661)

Also, studies have shown that cable subscribers in municipalities that do not collect a “franchise fee” or rent for the use of the PROW pay the same amount on their monthly cable bill as those in towns that do collect a franchise fee.

Annie Kerry was also incorrect in stating that HR 5252 keeps local franchise systems in place. Instead, it provides for a “national franchise” system under which all communities are treated the same regardless of their individual needs. She is correct in that several recent provisions have been added to the bill to help protect municipal interests. This was only accomplished by last minute testimony from the National League of Cities, the U.S. Mayors Conference and others. However, it should also be noted that the six previous bills sponsored by the telecom industry that lead up to this bill had no such provisions. HR5252 also does not contain a provision for “net neutrality” that Senator Snowe had tried to include nor does it include build out provisions for rural states like Maine. When the country needed electricity in rural areas we had the “rural electrification program”, when we needed phone service in rural areas we required phone companies to provide “universal service” and customers paid for these expansions over time. “Build out” requirements in franchise agreements simply require the provider to make their services available to all residents over an agreed period of time as part of a long term investment in the community. If a company prefers short-term profits, should we accommodate them?
The National League of Cities released this statement recently in opposition to HR5252:

“HR5252 is a sweeping Telecommunications Reform bill that drastically changes the landscape of communications in our country. The cumulative impact of the bill’s preemption of state and local governments runs counter to our federal system and applies a federally-mandated command-control model approach to traditionally state and local issues. The changes it contains will dissolve the long-standing partnership between federal, state and local governments in shaping the nation’s communications policies.”

Also of concern is the fact that a single national franchising scheme no matter how good it looks today will be open to future legislative changes that may serve the Telco’s bottom line ahead of consumer interests. The industry’s record of spending on lobbyists and campaign contributions to enact federal and state telecommunications legislation favorable to their interests in the last year alone are staggering and that information is readily available on several watchdog web sites. How much easier it would be for them to change one national franchise or 50 state franchises to suit their needs than to have to change thousands across the country that currently meet individual community needs!

What the telcos really want is to change the laws so they don’t have to meet those needs or be subject to any local consumer protection regulations.

By the way, don’t hold your breath waiting for Verizon to sign up anytime soon. In August of this year, their union announced that Verizon is seeking a buyer for their entire New England operations and will be concentrating their video services to the home in more populated (lucrative) areas of the country.

The bottom line is this: with a bottle of “white-out” and 15 minutes of their time, Verizon, AT&T or any other video service provider could begin operations in South Portland. All they have to do is agree to terms comparable with the Franchise Agreement that is currently in place with Time Warner Cable. But they don’t want to, they want a free ride with no local controls. We agree that competition brings prices down, we welcome competition, we encourage competition, but not unfair competition, and not at the expense of our citizens.

Finally, I would like to extend an invitation to Annie Kerry or her representatives to continue this discussion with me at SPC-TV on a live or taped program to further inform our citizens about this important legislation.

Tony Vigue,
Manager, South Portland
Community Television