from: Heritage Newspapers [1]
Cable reform not yet active
By Cristen Kis, Press & Guide Newspapers
PUBLISHED: March 18, 2007
DEARBORN/DEARBORN HEIGHTS - It was pushed through legislature and overwhelmingly passed by both the Michigan House and Senate, but the Uniform Video Services Local Franchise Act has yet to be implemented.
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The act eliminates the need for cable providers, such as WOW! and Comcast, to negotiate separate contracts with local units, as had been the practice for the last 25 years. Instead, companies can enter into a uniform franchise agreement that will be used statewide.
While proponents say the act will increase competition and help drive down prices, local leaders are worried about what the act doesn't guarantee and the effect it will have on residents, including: a decrease in the level of customer service, loss of service to existing customers, unprotected public right-of-ways and the loss of free cable subscriptions in schools and city buildings.
AT&T has said it will hire 2,000 workers and invest up to $620 million in Michigan over the next three years, but cities still stand to lose $47 to $57 million annually. While municipalities have traditionally received revenue from cable providers in the form of franchise fees, which are paid out in return for access to locally controlled rights of way — the area between a sidewalk and a curb and abandoned alleys — the new legislation would give any telecommunications provider that access for free.
Although the act officially went into effect Jan. 1, Comcast and WOW! have not yet terminated existing agreements and AT&T hasn't submitted a contract application to city officials, said Bill Irving, an attorney in Dearborn's legal department, chair of the Michigan Municipal League's Technology and Rights of Way Committee, and board member of PROTEC, the Michigan Coalition to Protect Public Rights-of-Ways.
"There was an all-fire hurry to get it passed ... but it seems like they put the cart before the horse," he said. "We're at a holding pattern."
Irving doesn't expect any developments for the next six months to one year. He said it appears as though AT&T is having software problems. And while Comcast has filed an application in Detroit for the state-mandated contract, Irving said it was because an existing franchise agreement expired. WOW! and Comcast have not yet indicated they will terminate current agreements with Dearborn, Irving added.
In fact, because those contracts are active, city officials can still cut through red tape with cable providers. Residents on Linden, near Southfield and Outer Drive, have experienced repeated cable outages with Comcast over the two weeks.
Irving said he contacted Comcast on Monday and they promised to send a crew over to look into the problem.
"Once the city makes a request they usually respond quickly," Irving said.
But when the Uniform Video Services Local Franchise Act is executed, cities won't be able to act on behalf of residents and cable customers will have to call Lansing for support.
Local governments will also lose control over public right-of-ways, which means cities will have no control over what happens to streets or the right-of-ways in front of homes. Cable companies are free to install large equipment boxes in front of sidewalks or next to driveways.
The act 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.
Under current contracts, 30 city buildings in Dearborn and all Dearborn public schools receive cable programming for free — a common agreement in other cities, but one that isn't protected under the statewide agreement.
The state bill was amended slightly from its original form and will provide 2 percent support (in contrast to the 1 percent support that was proposed) to PEG channels — channels that currently air school board and city council meetings. That percent will also only go towards equipment and cannot be used to pay employees.
AT&T also requires PEG channels 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.
Although local leaders, including Dearborn's late mayor Michael Guido and Dearborn Heights Mayor Dan Paletko opposed the act, the bill was overwhelmingly passed.
On Nov. 14, 2006, it sailed through the House of Representatives with an 80 to 21 vote and was subsequently passed by a vote of 26 to 12 in the Senate. State-elected officials in Dearborn and Dearborn Heights were divided on the bill. Rep. Gino Polidori, Rep. Morris Hood III and Sen. Irma Clark-Coleman all voted against the bill, while Rep. Andy and Sen. Burton Leland voted in favor of the bill. It was signed by Gov. Granholm on Dec. 21.
Although WOW! and Comcast haven't broken local agreements and aren't facing competition from AT&T yet, it appears WOW! is trying to offer services Comcast already provides. On March 6, WOW! announced the launch of WOW! OnDemand, which touts free, one-time charge and subscription programs, including movies, sports and premium channels. WOW! is also guaranteeing bundle prices until 2009.
News Editor Cristen Kis can be reached at (313) 359-7820 or by e-mail at ckis@heritage.com.