CABLE LOOKS FORWARD TO QUIET 2003 IN STATE LEGISLATURES

Attorney James Baller, who represents cities, said decrease in interest in restricting municipal entry stemmed from realization that local govts. had role to play in speeding deployment of broadband. With downturn in economy and telecom meltdown, it had become far more clear that private sector alone couldn’t ensure prompt rollout of advanced services and capabilities any time soon and that it was essential for local governments to play role in that. “And that is in large part what accounted for Virginia’s turning around after having enacted a pretty tight barrier to entry a couple of years ago.” Predatory pricing by some incumbent cable operators also is drawing attention and could be legislative issue, he said.

For 3rd successive year in R.I., Rep. Elizabeth Denigan (D-Pawtucket) filed open access bill (H-6941) this year, but measure failed to make it out of committee, said Bill Durand, exec. vp of New England Cable & Telecom Assn (NECTA). “It [open access] is part of a package she puts out every year.” Other cable-specific bill was H-6947, which would have limited cable franchises in state to 12 years. Franchises in R.I. currently are in perpetuity with no term of years but can be terminated by administrator of Div. of Public Utilities, Durand said. Bill, filed by Denigan along with others, also called for franchise fee of 3% to be added to customer bills. NECTA pointed out, Durand said, that unlike Mass., which has franchise fee of up to 5% and no sales tax on cable, R.I. charges 7% sales tax on cable. As for limited franchise term, NECTA had said R.I. had highest penetration (96%) of high-speed Internet access in U.S. “Legislators were reluctant to make changes in a system that is obviously working to the benefit of the subscribers,” he said.

As for issues that cable anticipated in coming session, Durand said major concern of industry, like that of other business entities in New England states, was whether taxation measures contemplated to tackle budget cuts would affect telecom industry. “They can always look to tax us more -- increase taxes and resort to other kinds of fees and licensing. We see that as a big problem in the coming year.” Industry is working to show lawmakers that it’s really customers, not cable companies, who pick up taxes, he said. At city level, common new issue is effort to require cable to get easements when it goes to customer, as was proposed in Providence, he said. Industry believed that was in violation of Sec. 253 of Communications Act and would actively oppose it either through litigation or legislation. “We want to get these cities and towns to understand that in a competitive market if we have a process that requires us to go to a city council and wait 8 weeks for approval before we can reach a customer, the customer is gone,” he said.

In N.J., there were 2 cable-related measures. Senate on voice vote unanimously defeated resolution to form study commission that would look into ways state could encourage cable competition in municipalities statewide. Resolution (SJR-28) by state Sen. Gerald Cardinale (R-Cresskill) would have created 13-member study panel to make recommendations on how state could increase number of cable service providers in marketplace. Cardinale also sponsored cable competition bill (SB-1304) that would call on Congress to let states make presence of cable competitors condition for granting or renewing local cable franchises. That bill cleared Senate committee process in mid-June, but hasn’t been scheduled for consideration on floor. N.J. Cable & Telecom Assn. didn’t take position on bill that asked Congress to allow states to regulate cable, Assn. Public Affairs Dir. Cathy Traz said. “We believe that the 1996 Telecom Act is doing what it was meant to do,” she said. Cable also was following SB-668 that looks at customer service reporting through Board of Public Utilities, she said. Provision to allow municipal overbuilds that was part of original bill didn’t have support of legislators or Conference of Mayors because of current economic situation, she said. Assn. didn’t see any major legislative issue for next session.

It was relatively quiet legislative year in Md., Del. and D.C. as well, barring two cable-related bills in Md., said Pres. Wayne O'Dell of Md.-Del.-DC. Cable Assn. Low- power TV bill HB-1077 that would have required must-carry for LPTV stations in Md. didn’t pass, he said. Another Md. bill, HB-1089, that would require moving overhead utility lines underground would have huge financial impact on cable, telephone and electric utilities, he said. Bill called for study over next year with report to General Assembly at end of 2003. As for next session, he said: “We are certainly keeping our eyes open for taxation issues… All states around here are in deep financial difficulties and we have to try to prevent any form of unfair taxation.”

No adverse cable-specific measure was anticipated in 2003 session of Tex. legislature, which meets every other year, said Kathy Grant of Tex. Cable Assn. But cable was anticipating “mini Tauzin-Dingell” bill in state similar to ones in Okla. and Kan., which basically said state couldn’t apply to phone companies what wasn’t applied to cable, she said, and that “created the idea that maybe you can do something to cable.” If bill is filed, cable will oppose provisions that “create ambiguity for cable operators and regulatory uncertainty in terms of regulatory climate,” Grant said. Municipal entry into telecom and cable businesses could be another legislative issue next year, she said. While state statute precludes entry by municipalities, there’s affirmative provision in general law that allows cities to own and operate cable system, Grant said. That provision was enacted before cable had data product, she said, and there’s some ambiguity in statute. “We will work in the next session to get some code of conduct for municipalities when they act as both regulator and competitor. We tried to get it into the rural deployment bill in last session (2001) and we will try to bring it in again.”

In W.Va., except for bill (HB-4148) that proposed to create special panel independent from state PSC that would have cable rate power, there was very little activity on matters specifically pertaining to cable in session that ended in March, said state cable association. Exec. Dir. Mark Polen. It was only bill that directly affected cable, but never was considered because what it proposed wasn’t permissible under federal law. For coming session, he said: “I don’t really anticipate that we will have any cable- specific issues.”

In Tenn., SB-3310 in session that ended in July resulted in increase in sales tax for cable, said state cable association Pres. Stacey Burks. Joint House Resolution 1037 proposed setting up committee to study pole attachment issues. Poles in Tenn. are owned almost 100% by municipal and rural electric cooperatives, which have exemption from federal pole attachment regulation, she said. “What we are doing is to get some equitable relief on pole attachment.” In next session, cable hopes to get legislation to restrain municipal overbuilds and cable theft legislation.