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from: Athens Banner-Herald

Georgia Cable Reform Bill Would Give Service Oversight to State

From Athens Banner-Herald, February 4, 2007
By Don Nelson

Legislation designed to establish a statewide cable and video franchise system would allow telecommunications companies like BellSouth a quicker and less restrictive way to provide television services in the state’s cities and counties, the bill’s proponents say.

The bill’s main sponsor says House Bill 277 will bring more competition to the cable service market, lowering prices and improving customer service. Critics of the bill, however, think that customer service will decline, that public access programming will be harmed and that new video service providers will be given an unfair advantage over cable companies with existing franchise agreements.

The bill does not regulate most of the rates cable companies charge customers for programming, nor do current franchise agreements. A local franchise authority does regulate the basic cable service, or the lowest level of cable service a customer can buy.

At the behest of AT&T/BellSouth, who got similar bills passed last year in North Carolina and South Carolina, Rep. Jeff Lewis, R-White, introduced HB 277, the Consumer Choice for Television Act, to the House last week.

Lewis said that under the current franchising system in Georgia, a cable provider has to negotiate with each city and county government, of which there are 688, for a franchise agreement. The proposed bill would create a single statewide franchise authority through which a company could apply and then serve any community.

That change would allow cable and video service providers a cheaper and quicker process for providing service to Georgia consumers and would encourage competition, Lewis said.

“(Competition) generally brings better customer service and lower prices,” Lewis said.

Paul Chambers, Northeast Georgia district manager for BellSouth, echoed Lewis’ contention.

“The reason we are supportive of this statewide legislation is to spur competition from cable TV service,” Chambers said. “Competition leads to lower prices and usually better service.”

Chambers cites a February 2004 General Accounting Office report that concludes cable competition in certain markets lowers customer costs. In some cases customers pay 15 percent less in competitive markets than ones in which one cable provider exists, the GAO report says.

Chambers said that negotiating an agreement with a single local franchise authority could take from 12 to 18 months. Getting BellSouth video services in all 688 franchise authorities in Georgia could take 10 to 15 years, he said and cost millions in legal fees.

By bypassing that time-consuming and costly process, BellSouth can offer more attractive rates, Chambers said. Currently, AT&T offers video service in 10 major cities in 11 states that offer a statewide franchising authority.

Sandi Turner, the Athens-Clarke County public information director who also is in charge of the county’s cable franchise with Charter Communications, said the proposed bill’s intention to generate more competition in the cable industry is good, but that the legislation itself falls short regarding customer service as well as public access channels.

“In my role of taking complaints (about Charter), most of the people I talk to want choice,” Turner said. “We would all love to see competition.”

Turner, who now has the authority to make Charter satisfy customer concerns or pay a penalty, said the new bill would keep her in the role of accepting complaints, but would turn enforcement over to the Governor’s Office of Consumer Affairs.

Turner said complaint topics against Charter range from service technicians missing appointments to customers being unable to talk with a Charter representative on the phone. When Charter recently changed its channel lineup, Turner said her office phones “lit up like a Christmas tree.”

“The (service providers) would have to meet certain standards (under the proposed bill), but there is no remedy if they fail,” Turner said. “The bill (calls for) complaints coming to my office, but there’s nothing I could do about it.”

Clint Mueller, director of public policy with the Association County Commissioners of Georgia, said many of the association’s members share Turner’s concerns.

“When a customer calls the county government now, there is leverage to get something done because of the penalties under the local franchise,” Mueller said. “(Under HB 277) those penalties are removed from local control and given to the state office, and the county then has to transfer (unsatisfied) complaints to the Governor’s Office of Consumer Affairs, which may or may not handle it.”

Lewis said he doesn’t see the complaint issue as much of a problem and that a central agency for fielding complaints will be more effective in determining if a video provider has a pattern of bad service.

“If there’s a pattern, that’s when we can address the issue,” Lewis said. “There have always been complaints, and we won’t make those disappear; we just hope competition will make companies address them better.”

Another concern Turner and Mueller cited involves the public, educational and government public access channels that current franchise agreements require cable companies to provide. In Athens, the government, Clarke County Board of Education and University of Georgia all have programming on Charter channels.

HB 277 outlines more stringent programming requirements and places limitations on a county being able to get an exclusive channel in a cable system’s lineup, Mueller said.

The bill calls for 15 hours of nonduplicating original programming a month for each channel. Mueller said that means scrolling messages, or bulletin board information, would not count as non-duplicating programming.

“That will make it tougher for counties and cities to maintain these public access channels,” Mueller said.

The legislation does allow existing public access channels to continue through 2012, even if the channels don’t meet the bill’s programming requirements.

Cable companies also will be able to combine programming from several counties and cities and decide when the programs will run, Mueller said.

Currently, Charter Communications charges each subscriber a 25 cent fee for the PEG channels, and that funding goes to the county to purchase equipment for programming production, Turner said.

Turner is afraid that after 2012, the funding will disappear under provisions in HB 227.

Lewis and Chambers said the competition encouraged by the new bill will mean even more exposure for PEG channels.

“BellSouth has every intention of carrying those PEG channels as well,” Chamber said. “If a customer wants to watch the county commission meetings, we’ll have it.”

Chambers said the AT&T/ BellSouth technology also will allow the company to offer more channels than a cable company does now.

Under the new bill, telecommunications companies like BellSouth, which could offer its Internet protocol television to customers by upgrading its existing phone network, would not have to provide its services to all the community based on density guidelines. That portion of the legislation bothers cable companies with existing franchise agreements, and county franchising authorities are worried as well.

Nancy Horne, president of the Cable Television Association of Georgia, said the new bill is unfair to existing cable companies who had to build out and pay for cable lines in a community based on density.

“The way the new law is written would allow new entrants to come in and select certain neighborhoods,” Horne said. “There is a chance not everyone will reap the benefit of competition based on the current language in the bill.”

Horne pointed out that existing cable franchises already had to abide by terms of the franchise and currently serve most of a community’s residents.

The lack of build out requirements also could hurt customers, Mueller said, not only because new video providers could avoid putting in service to certain areas, but also because current cable franchisers eventually could drop nonprofitable areas.

If the new bill passes as is, all cable companies with existing franchise agreements could on July 1 opt out of those agreements and sign on with the state, avoiding the local build out requirements and enabling them to discontinue service to certain areas, said cable franchising consultant John Howell with the Howell Group in North Carolina.

Horne said cable companies would not do that since they already spent the money on installing the cable lines and establishing service.

The market itself should control decisions to build out, said Lewis, who said he puts more faith in market-driven forces over government regulation.

Howell consults local municipalities on cable franchises and has been advising Athens-Clarke County on the new cable legislation. He thinks the Georgia law should mimic the laws passed last year in North Carolina and South Carolina, where existing cable agreements cannot be abandoned until a community’s cable server actually has local competition from a company like BellSouth.

Howell, who has been a cable operator and worked with BellSouth’s video television operation in Atlanta, thinks the proposed Georgia law also oversteps federal regulations.

In December, the Federal Communication Commission, motivated by cable rates that have nearly doubled in the past 10 years, voted 3-2 on rules to make it easier for states and municipalities to allow phone companies to offer phone and video services through local franchises. Franchising authorities must now process a franchise application within six months — or 90 days if the applicant already has secured local rights of way for cable or wiring. The idea is to speed up the process for companies to begin competing with existing cable franchisers.

Howell said the FCC’s order is the rule of law and that if a state does not already have a state-issued franchise rule — Georgia does not — the federal guidelines should apply.

Concerning cable rates, the FCC currently outlines local cable regulation under the following guidelines:

“In most instances, your local franchising authority is responsible for regulating:

“Rates for basic cable service, equipment used to receive basic cable service and installation and service charges related to basic cable service. The term ‘basic cable service’ refers to the lowest level of cable service you can buy, and is the program package that includes signals from local television stations (such as ABC, CBS, and NBC affiliates; educational stations; and independent television stations) and public, educational and governmental access channels. Your cable system may use other terms to describe this service.

“Customer service — for instance, complaints about bills, a cable system’s response to inquiries about signal quality, and a cable system’s response to service requests.

“Franchise fees — the fees paid by the cable system to the franchising authority for the right to offer cable service.”

Under HB 277, there is not language regarding rates, so if cable companies opt out of current franchise agreements, rate regulation would fall under the purview of the FCC.

The bill does provide that state cable franchise holders will pay local governments a 5 percent franchise fee on gross revenues for cable and video service. That is the current fee that Charter pays Athens-Clarke County, though, Turner said that ACC collects about $1.6 million annually from Charter.

Howell said that counties may see a decrease in fee revenues based on the language of the bill.

“In the bill, the definition of gross revenues (doesn’t include) all of what most cities and counties collect from the franchise agreement,” Howell said.