WI: Cable bill, hot wired for quick passage, leaves municipal leaders cold

Posted on April 5, 2007 - 9:46pm.

from: Holmen Courier

Cable bill, hot wired for quick passage, leaves municipal leaders cold

By JO ANNE KILLEEN | Staff writer
To Assembly Speaker Mike Huebsch, a proposed cable television bill on the fast-track to passage will merely align state laws with technology and increase competition for cable services.

On the other hand, critics say the bill is being pushed by telecommunication giants AT&T and Verizon, that municipalities would lose money and consumers could be victims.

Either way you look at it, the bill would change how video providers do business in Wisconsin. For one thing, the Video Franchising Competition Bill (AB 207) would take away the rights of municipalities to negotiate with cable and telecommunication companies for video services.

Under the proposed bill, video providers who want to do business in Wisconsin would be required to apply to the Wisconsin Department of Financial Institutions for a state franchise, supplanting existing requirements for cable TV providers to get local franchise agreements.

“I’m dead set against it,” said Onalaska Mayor Jim Bialecki. As of now, municipalities each negotiate with cable companies to provide services to communities and in return for rights of way, etc., the municipalities can receive up to 5 percent of the cable company’s gross revenues from that community. Some municipalities use it for general revenues. Others use the funds to improve video infrastructure.

“Home rule should be the prevailing way of providing services,” Bialecki said. “I don’t see how it will increase competition. I don’t think the state should get into this. (Onalaska) has a lot in the ground that the city maintains.”

Bialecki and other community leaders in western Wisconsin and southeast Minnesota had been part of a regional effort years ago to negotiate with cable providers on a wider scale when only one company, Charter Communications, made cable available. Now that CenturyTel has entered the video market (not to mention satellite TV providers), area leaders think there is enough competition here.

“Competition used to be an issue,” said John Chapman, Holmen village president. “I don’t think it’s an issue anymore with satellite dishes and CenturyTel. At one point, Charter was the only game in town, but not anymore.”

Although Chapman said he was unaware of the bill’s specifics, he said he is generally resistant to legislation that takes away local control. “There’d have to be compelling reasons to do it.”

At present, satellite and other providers not using cable lines do not pay any of the franchising fees that cable companies have to negotiate with municipalities. According to state Rep. Phil Montgomery, R-Ashwaubenon, one of the author’s of the bill, 30 percent of the market is held by satellite providers.

“None of the franchising rules apply to satellite companies,” Montgomery said. “None of the provisions of the consumer bill of rights includes satellite. They do not have to go to every single municipality and negotiate to enter that market. That puts cable companies at a competitive disadvantage.”

According to Huebsch and Montgomery, existing laws reflect the technology available in the 1970s and ’80s and were necessary to provide cable services to communities. They both said current laws don’t reflect changes in technology and hamper competition for services in Wisconsin.

At the heart of the debate is an effort by AT&T to break into the Wisconsin market. The city of Milwaukee is currently suing AT&T to force them to negotiate a franchise provision. AT&T maintains it is not a “cable” provider according to the law because it doesn’t have any cable lines or infrastructure in the ground and doesn’t need it to broadcast, and therefore doesn’t qualify as a cable franchise.

Twelve other states have enacted state franchising legislation such as is proposed by Montgomery and co-sponsored by Huebsch. The first state to require state franchises was Texas in 2005.

According to the Wisconsin Policy Research Institute, Wisconsin residents could see savings estimated at $82.80 a year on the low end to $121.30 on the high end if the legislation were to be enacted. This would depend on what the regulations would require in terms of public access channels or expensive network building requirements on providers.

The Wisconsin League of Municipalities, opposes the bill, citing the following concerns:

# Current cable operators would immediately opt out of existing franchise agreements with municipalities and obtain a state-issued franchise.

# While the bill maintains the 5 percent franchise fee would still go back to the municipalities, the definition of gross receipts would change to exclude advertising revenue. That could mean as much as a 30 percent cut in revenue to municipalities.

# The bill prohibits municipalities from requiring video service providers to provide funds, services, programming, facilities or equipment in support of public, educational and government (PEG) channels.

# It allows a video service provider to drop a PEG channel if it is not substantially utilized by the municipality.

# The only fees a municipality can collect from operators are franchise fees. No right-of-way permits can be collected, and the bill calls into question the ability of municipalities to charge cable providers street-opening permits or require performance bonds.

# Existing cable operators can stop providing this service and municipalities cannot require new entrants to provide a service.

State Sen. Dan Kapanke, R-La Crosse, said he’s not so sure there is any cause for concern. “My staff has been assured issues like with consumer protections will be addressed,” he said.

A public hearing was held March 27 during which more than 300 testified for and against the bill. Montgomery said that due to the testimony, he will propose amendments to the bill on three areas:

# Restore the consumer protections and rights.

# Ensure build-out requirements to make sure all neighborhoods are treated equally.

# Respond to DFI concerns that relieve it from having to review and rule on an application in 10 days.

Montgomery also will look at expanding the thresholds for qualifying for a state franchise.

While both Huebsch and Kapanke say they understand municipalities concerns over loss of negotiating rights and some loss of revenues, they both said they feel that competition will increase those revenues over the long run.

“I can’t believe the fuss about this bill, and it’s not even out of committee,” said Huebsch, a Republican from West Salem. “But I’ve always maintained that we should get government out of the way of free market and consumer choice. This will provide the opportunity for the free market to work so consumers can benefit.”

Montgomery said municipalities would make more money under the legislation but it would take some time, perhaps up to three years. He argues the new legislation would bring in more providers and more residents would want bundled services. “They’d more than make up for the loss in revenues from advertising with the numbers of new subscribers.”

The bill could be up for a vote on the floor of the Assembly by the last week of April.

Contact Jo Anne Killeen at joanne.killeen@lee.net or (608) 786-6816.

( categories: State Franchises | WISCONSIN )