Cities to Fight Moves for National Cable Franchising System

Lawyers for cities said they aren’t certain how a national franchising system would look, but some said they worry that the idea would be hard to beat if pursued by a coalition of cable and telephone industries. NCTA’s backing of a national franchising system is a “signal” to SBC and Verizon that “maybe we can reach a deal on nationwide franchising or getting rid of local franchising if we can have other things that satisfy us,” attorney Tim Lay said, calling the statement a worrisome sign for local govts. If cable and Bells align to get rid of local franchising, Lay said, “it’s a pretty formidable coalition.”

The cable industry isn’t suggesting abolition of local franchising, an NCTA spokesman said. He said people are reading more into NCTA Pres. Kyle McSlarrow’s speech (CD June 8 p1) than what was said. McSlarrow’s purpose, the spokesman said, was to acknowledge that telecom is entering a new era of convergence and instead of changing laws state by state, “we believe there should be a comprehensive discussion at the national level involving all stakeholders, including industry and local governments.”

The spokesman said McSlarrow didn’t endorse any particular approach, but merely expressed cable’s willingness to talk about the issue. Suggested topics include localism, content rights management and redlining, he added. Because today’s franchising system is based on federal law, the spokesman said, McSlarrow was indicating cable’s readiness to revisit the federal framework and “see if it needs to be

On the Bells’ Capitol Hill push for a national franchising system, the NCTA isn’t going to prejudge the issue, McSlarrow told us. “And we certainly are not in a position to endorse any specific proposal.” He said he hasn’t had a chance to speak to Sen. Stevens about his comments on franchising or seen any draft bill on the subject: “But it’s a willingness to sit at the table.” McSlarrow said cable would insist, however, that if Congress looks at franchising, “it would not be appropriate to play to one industry alone. It ought to be a conversation with a lot more people, including cable, municipalities and satellite.”

Cable worked with cities to defeat legislation in Va. and Tex. to move franchising to the state level. Asked if he sees a shift in cable’s position, attorney Nicholas Miller said local govts. have been skeptical that cable is a “big defender” of local govt. regulatory authority. “The industry has been consistent over the years that it does not like efficient and effective regulation.” Cable had made common cause with cities because both are interested that new entrants and incumbents should face comparable regulatory regimes, he added. However, it’s not a surprise, he said, that cable is trying to find a way to shed regulations it faces. “How this will actually play out is far too early to tell.”

Cable still opposes moving franchising to the state level, said Dan Knight, chmn. of the Tex. Coalition of Cities for Utility Issues. “What they are saying now is that as long as we all get preferential treatment we are okay with that.” The NCTA move strongly challenges local govt. authority, he said, urging cities to mobilize to educate Congress. Cities want to streamline the franchising process to make it easier for new entrants and welcome competition, he said. However, what companies who espouse statewide or national franchising “want is franchises that don’t require them to do anything,” he said.

Cable has “certainly thrived” under local franchising, said NATOA’s Wilson: “I don’t think anybody can look at the cable industry today and say that local franchising has held them back in any way.” A point ignored in the franchising debate is cable’s success in deploying to all communities thanks to existing local franchising obligations, said Cheryl Leanza, principal legislative counsel for the National League of Cities (NLC). Local franchising, she said, hasn’t limited or hurt cable. Rather, it has improved deployment, she added: “I don’t see why we would abandon a successful system.”

Cities want competition because rate regulation hasn’t worked, and they are willing to work with companies toward that end, said Wilson, exec. dir. of the North Suburban Communications Commission, a 10-city consortium near St. Paul, Minn. But cities won’t issue a franchise that isn’t “pretty similar” to an incumbent’s, she added. That means any new entrant must pay franchise fees, provide public, educational and govt. (PEG) access channels and institutional networks (INETs), she said. All these compensate for use of public rights-of-way, Wilson said. Companies are obliged to pay ROW fees just as they pay rent for the building that houses their offices, she added: “Why should they expect to use public property for free?”

Referring to Senate Commerce Committee Chmn. Steven’s (R-Tex.) reported remarks that Verizon and SBC shouldn’t have to get 10,000 franchises nationwide, Wilson said the figure seem exaggerated. “I don’t think the number is 10,000, frankly,” she said. Neither Verizon nor SBC has shown it has a footprint translating into 10,000 franchises, she said. Also, many cities have formed consortiums like hers, a single entity that grants multi- city franchises, she added. Asked if cities would be willing to embrace a national franchising system if it included franchise fees and other existing obligations for companies, Wilson said the federal govt. is incapable of creating a national franchise that reflects local needs and interests that vary community to community.

Redlining by the Bells isn’t the only issue with statewide or national franchising for cities, said attorney Miller. For instance, he said, proposals by Verizon don’t compare with existing franchises in terms of fees and rental obligations or level of support for local community needs like PEG and INETs, he said.

National franchising would limit benefits of “head- to-head” video competition to a chosen few, National League of Cities Exec. Dir. Donald Borut said in a communique to key members of Congress. “Physical head-to- head competition is the most important way that our citizens will receive lower prices and better service,” Borut wrote in identical letters to Sens. Stevens and Inouye (D-Hawaii) and House Commerce Committee Chmn. Barton (R-Tex.) and ranking member Dingell (D-Mich.). Declaring all citizens should benefit from competition, Borut said local govts. ensure that “reasonable” deployment schedules are set so no neighborhood is considered “unworthy of competition.”

Borut said it’s not true that local franchises are hard to get. “The franchising process is open and quick for those companies that do not seek to use the process to cherry pick who they will serve or obtain a regulatory advantage over their competitors.” Cities must ensure that all similar services are treated the same, he added. However, Borut said, local franchising could stand some streamlining, and local govts. are ready to work with Congress on the issue as it eye changes. - Dinesh Kumar