Save Access

from: Kreucher Law Firm PLC

Combating State Video Franchising Reform: A Few Ideas

AT&T continues to press its vision of bringing Saturn’s “no haggle” policy to video franchising. There’s no need here to get into why video franchising reform is unnecessary and contrary to customers’ interests — that topic has been covered extensively in other places (get a copy of the International City/County Management Association’s white paper, “Forced Franchising: Why the Telephone Industry’s Calls for ‘Shall Issue’ Video Franchising Shouldn’t be Answered”). There is, however, some need to discuss how to deal with state legislation once AT&T makes its move.

In a prior life, I was responsible for legislative and regulatory activities for several different cable operators . . . in those roles, I also had significant exposure to the public advocacy techniques employed by telcos. Now that I’m representing local governments, it’s been fascinating to see how differently big, private companies advocate their public policy positions as compared to the processes employed by local government groups. The public policy teams at Fortune 100 companies have 2 big advantages when compared to those advocating the interests of local governments and their residents:

First, Fortune 100 public policy teams are very well funded — this is particularly true in the case of telephone companies, which have built and protected their core business through the offensive use of the regulatory process at the state and federal levels. Second, Fortune 100 teams are well coordinated — they discuss their best practices as they develop, pick their next target carefully, and constantly move up the learning curve as their effort moves from one state to another. Consequently, state associations representing local governments have to get out of the blocks very quickly — if not, the battle runs the risk of being lost before there’s time to even get a strategy in place.

Local government associations have their competitive advantages, too, of course. Municipal and township associations typically have very good relationships with the state legislature, and are respected — they don’t carry around the baggage of bad customer service or a history of confrontational relationships that telcos have in some state legislatures. So, how do local government organizations leverage their strengths against the big-dollar lobbying forces and coordinated efforts of Fortune 100 companies? Here are a few ideas that local government organizations should consider very early in the process:

1. Get a competing bill introduced. Have a competing bill ready so that it can be introduced before the filing deadline. If you don’t have one, you will be left to play on the telcos’ field. It becomes much more difficult to get your concepts included as the legislation progresses. And even if you do have some success, it won’t be long before the telcos start to refer to your amendment efforts as “obstructionist.” In most cases, it’s much better to first fight for home field rights rather than concede the issue and fight uphill thereafter.

2. Give your allies an independent reason to stick with you. It may be that you and those with whom you’re allied have an early, common interest in opposing a bill that a telco is advocating. Those common interests, though, can — and do — change. There have been several cases where local governments and cable operators began down the path of opposing a telco bill together. At the end of the day, however, each party is out to protect its own interest. While that may seem intuitively obvious, too many local government organizations have been surprised when cable, once a partner in opposing a telco-sponsored bill, jumps from a ship it perceives as sinking. It’s not enough to assume that your early ally will feel a moral obligation to remain your ally (some local government organizations are probably surprised because they do feel that a moral obligation exists, and that the same view will be reciprocated). The only way to ensure that a coalition remains in place is to guarantee that each member has an independent, unique reason to remain part of the coalition.

3. Drag others into the deep water. It may seem that the telcos have complete control of the legislative process. They certainly spend enough money for that to be the case. Even so, there have been occasions where the process has started to run out of control for them. You need to identify “sticky” issues that can develop a life of their own, to the detriment of both the telcos and cable (if that last statement strikes you as counterproductive, particularly if cable is also opposing a telco-sponsored bill with you — see #2). It’s not enough to believe that you understand the legislative process or that you’ve been successful before — you also have to know the telco and cable businesses and the issues that will drag them into deep water. “Net neutrality” is one such issue — if you don’t know what that is, figure it out now. Another relates to consumers’ legal rights — if the bills advocated by the telcos are intended to be “consumer friendly,” why is the industry so focused on having customers waive their legal rights as a condition of service? In most cases, customer contracts include mandatory arbitration provisions and they prevent customers from pursuing claims as part of a class action. If a bill includes a provision which prevents such waivers from being required by the industry, you’ll see the tide shift quickly. There are a number of other poison pill provisions. Find people who really understand these businesses and get their insights early on.

4. Have an exit strategy. Local government consortiums often concede the home field advantage (see #1), and then mount their defense as an all-or-nothing proposition. This may appear to be — and in some cases, may actually be — the appropriate approach. Too often, though, the votes for local governments (and their residents’ interests) come up short when counted. Consider employing an exit strategy before it’s too late. For example, maybe it would be appropriate to suggest the facilitation of standard franchise language that could be employed by local governments — that allows governments to remain part of the process, as opposed to the “cram down” approach taken by many AT&T -advocated bills. Many other compromise positions exist. Find and run them before it becomes too late.

Other ideas already being shared continue to have some merit. The “buildout” issue has some value, for example, and the FCC’s recent competitive franchising order establishes that a national policy on video franchising reform has already been established — it certainly makes sense to allow the FCC’s process to run its course before more states move on the issue. It’s important to build your arsenal of issues early in the process, though, because these positions alone will not save every day.

Best Wishes for your success.