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Cable bill sails in legislature
Despite opposition from mayors

By Cristen Kis

PUBLISHED: November 22, 2006

DEARBORN/DEARBORN HEIGHTS - Customers with cable subscriptions through Comcast or WOW! may soon have another choice — AT&T. But that additional option could come with a multi-million dollar price tag for local governments.

The average customer looks for quality of service and competitive prices when choosing a cable provider. But despite what a business advertises, promises aren't enough. That's why local governments have written contracts with cable companies — to ensure residents the best product for a fair price.

AT&T, however, wants to override local contracts — which were established more than 25 years ago — in favor of a statewide franchise agreement that would have negative effects on local governments. Even though local officials oppose such an agreement, it seems the majority of state representatives think such a contract is necessary.

Recently, the Michigan House of Representatives overwhelmingly passed a cable and video franchise bill — 80 to 21— much to the dismay of local leaders.

"I don't think it's a good piece of legislation and I do not support it," said Dearborn Heights Mayor Dan Paletko. "I am not pleased with the vote and I'm disappointed that State Rep. Andy Dillon chose to support it."

However, Dillon said that while he supported the proposal to create a statewide franchise, he feels the bill still needs some work before it can be passed.

"I think there are a lot of concerns that need to be addressed," Dillon said. "But the longer we wait, the more likely it becomes that the bill will be kicked back. We need to make Michigan more inviting by offering new technology to consumers and encouraging investment in our job market. I believe this bill will help us do that."

State Rep. Gino Polidori, who represents Dearborn's 15th District, voted against the bill. As a former fire chief and city councilman, Polidori said he is city-oriented.

"I understand problems and how they affect the city," he said. "The city cannot afford to lose revenue right now."

Cities stand to lose $47 to $57 million annually if the bill passes, but in addition to that, local leaders are worried about what the bill's passing would mean for residents.

Among the concerns are: a decrease in the level of customer service, loss of service to existing customers, unprotected public right-of-ways, loss of free cable subscriptions in schools and city buildings, and the elimination of public, education and government (PEG) channels.

But the bill is out of the hands of local officials and into those of state senators who have the option of passing it as written, rewriting the bill, or taking no action before the end of the year.

If senators don't act on the bill, it will "die" and the process will begin again in January in the House of Representatives with newly-elected representatives and senators voting. Currently the legislature is operating in lame-duck sessions, which means some lawmakers will not serve another term come January, but are still voting on issues.

"In a lame-duck session, anything can happen. Why does this have to be pushed out the door now?" Polidori said. "This bill should go back to the committee."

If senators agree with the House of Representatives and pass the bill, Gov. Jennifer Granholm has the option of vetoing it, but that's unlikely, Polidori said.

"It would be tough for the governor to veto a bill so strongly supported by a partisan legislature," he said. "It would be a gutsy move on her part."

Whatever happens in the state government, the cable and video franchise bill is not going away, said Bill Irving, an attorney in Dearborn's legal department and board member of PROTEC, the Michigan Coalition to Protect Public Rights-of-Ways. Dearborn Mayor Michael Guido was one of the founding members of PROTEC.

Like Dearborn and Dearborn Heights, many cities throughout Michigan offer competing cable providers, which have negotiated contracts with local governments — as currently required by state law. Other cities are "hungry for competition," Irving said.

AT&T wants to offer that competition, but without local contracts. They have held the position that negotiating contracts city-by-city would be too time consuming and costly, Irving said.

Dearborn has offered to negotiate a contract with AT&T, one that could be approved in two weeks. After the approval, AT&T could offer service in Dearborn within 30 days, but they have refused the city's offer, Irving said.

"They want special rules and conditions," he said.

AT&T maintains that a statewide franchise agreement will lower rates and increase competition. Irving said AT&T has spent time and money lobbying for the bill and their message was delivered to state representatives who passed the bill by a wide margin.

"For too long, the cable monopoly has held consumers captive, leaving them with high prices and unacceptable customer service," said Linda Teeter, executive director of Michigan Citizen Action. "Removing local barriers to competition will create a free and open market place where consumers will be the big winners (with) lower prices and better service."

Consumer groups such as the Michigan Citizen Action, the Ministerial Alliance Against the Digital Divide and Consumers for Innovative Technology support the bill. However, local leaders see things differently.

"This legislation would slash revenues to communities and could end community access television as we know it," Guido said.

The bill, as written, would only provide 1 percent support to PEG channels — channels that currently air school board and city council meetings. That minimal percent would also only go toward equipment and could not be used to pay employees.

AT&T would also require PEG channels to be streamed to the Internet. The company would then pick up the program and run it on television stations — but only if cities purchased Internet bandwidth.

With additional financial burdens falling on cities that are already suffering through tough economic times, PEG channels could be eliminated.

"Local communities still want, and demand, local access cable programming," Guido said. "Residents want to know what is going on in their communities, schools and nonprofits.

"Without local access cable programming, this very important media outlet would leave communities with little to no means of communicating to area residents."

Under current contracts, 30 city buildings in Dearborn and all Dearborn public schools receive cable programming for free — a common agreement in other cities, Irving said. Under the proposed franchise, cities and schools would have to pay for all cable subscriptions.

"Cable has always been a community partnership," Irving said. "We don't get that at all from AT&T."

If the bill passes, local governments will also lose control over public right-of-ways, which means cities would have no control over what happens to streets or the right-of-ways in front of homes. AT&T would be free to install large equipment boxes in front of sidewalks or next to driveways.

"They could slap down wires anywhere," Polidori said.

The bill also does not require full build-out in all communities. Build-out guarantees that all residents receive access to service. However, the bill only requires providers to serve 25 percent of low-income households within three years.

AT&T told investors that it will cover 90 percent of high-value customers — those who spend more than $160 a month — but only 5 percent of low-value customers — those who spend less than $100 a month.

A loss of service isn't likely in Dearborn since the city is so densely populated, Irving said, but it would change how cable problems are addressed.

Under existing contracts, customers can call city officials who then cut through red tape with the cable companies to get issues resolved quickly. With the proposed agreement, cities would not be able to do that and customers would have to call Lansing for service.

"It's a shame that this bill leaves thousands of residents with no protection by requiring them to leave messages on a phone service line to be fielded by an agency with little experience in handling these issues, rather than contacting their local government and getting the issue resolved quickly," said Vicki Barnett, Michigan Municipal League President and Farmington Hills Mayor.

Paletko agreed, and said that he was also concerned that residents would see a reduction in the amount of protection and service currently provided.

"I periodically get complaints from people who say the cable in the back of their home is hanging or loose, and right now we're able to take care of that on a limited scale," Paletko said. "But under national or statewide control, it would be left to the telecommunications companies to resolve the problem."

Local leaders hope the senate either lets the bill "die" or amends it to protect local governments, Irving said. The senate will resume next week.

In the long run, the statewide franchise agreement could become obsolete if a federal agreement is passed.

"Congress has talked about a national franchise agreement," Irving said.

Additionally, U.S. Congressman John Dingell, who represents Dearborn's 15th District, is the chairman of the House Committee on Energy and Commerce has been supportive of local governments, Irving said.

"(Dingell) has been a strong advocate of local government and making sure we aren't going to lose out," Irving said.

Staff writer Sean Delaney contributed to this report.