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from: ArsTechnica

Chicago mayor opposes video franchising in Illinois

By Nate Anderson | Published: March 12, 2007

The Metropolitan Mayors Caucus, an Illinois coalition of local leaders that includes Chicago's powerful Richard Daley, has come out in opposition to a new bill introduced to the Illinois General Assembly that would allow cable and telecommunications companies to bypass the local video franchising process.

HB 1500 (PDF), currently in committee, would give companies the right to take out a statewide video franchise instead of negotiating separately with every municipality. This doesn't sit well with the municipalities, which stand to lose both money and control over local rights-of-way. Video operators, including companies like AT&T that are trying to muscle into the cable industry, love the bill for the same reasons and would prefer a single statewide set of rules to dealing with hundreds of local bureaucrats, each of whom may demand something different from the companies.

Fortunately for consumers, the bill does have some teeth; unfortunately, those teeth have been filed down to dull nubs. Take the contentious issue of build-out requirements as an example. The proposed law does in fact require certain build-out provisions; any company with more than a million lines that takes out a state franchise must offer service to 40 percent of people in its service area within six years. This is better than nothing, although it pales in comparison to most municipal requirements, which generally require an even higher level of service to ensure that all residents of the town get some value out of the commonly-owned rights-of-way.

AT&T is currently locked in a series of lawsuits with various Chicago suburbs over the issue of build-outs, and claims that it will never sign a local franchise agreement that contains such provisions. We suspect they will find the mild requirements in the state bill more amenable, however.

But according to the Metropolitan Mayors Caucus, the bill contains no enforcement mechanisms for its build-out provision; that is, the state would never check to see if companies have actually complied with the rule. Even more strikingly (although the mayors don't mention it), the bill allows video providers to meet the build-out requirements by offering "direct-to-home satellite service or another alternative technology that offers service, functionality, and content that is demonstrably similar to that provided through the holder's cable service or video services system." This means that AT&T could instantly claim to have satisfied the requirement because of its partnership with satellite providers (the basis for the company's current Homezone service), and AT&T could then deploy its new IPTV system only to those areas it wants to reach.

The mayors also complain that the bill gives eminent-domain powers to franchise holders under certain situations and allows them access to private property in order to construct, install, and maintain facilities. Fees will still be required, and that money will continue to make its way to local municipalities, but the amount will drop. In addition, local programming (called PEG channels) could be threatened if the channels show only repetitive programming, which most do.

The bill does require that providers offer their video services to low income households, it does require providers to abide by a minimal set of build-out requirements, and it does require providers to abide by federal customer service and privacy regulations. Municipalities don't feel that it goes far enough, but it's actually an improvement over the current situation. Late last year, the FCC took away the build-out power that local municipalities possessed and said that they could no longer make such requirements a condition of local franchise agreements.

With Congress unable to pass telecommunications reform last year, the issue of national video franchises seems to have dropped off the radar of the companies that once asked for them. Instead, the battle to eliminate municipal franchise agreements has moved to the state level. Illinois is only one of several states that are considering or have already passed such legislation.