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from: Sheperd Express

City Plans To Challenge FCC Ruling on Cable TV Agreements

by Dennis A. Shook

May 10, 2007

There is a struggle being fought in Madison and Washington, D.C., to see who controls your TV set.

The big winners could well be the cable TV providers, such as Time Warner cable, and would-be providers, such as AT&T. But guess who might end up losing in the deal?

Much has been made about how competition will lower rates. But the City of Milwaukee also sees itself as losing its rights of local control. So the Milwaukee Common Council voted Tuesday to spend $10,000 to challenge a recently enacted decision by the Federal Communications Commission (FCC) that limits how municipalities negotiate agreements with cable TV providers.

The funds will be used to help hire Miller & Van Eaton, a Washington, D.C.-based law firm with extensive cable TV experience, which will try to get the rules overturned. Vince Moschella, Milwaukee deputy city attorney, said Milwaukee will be just one of an anticipated long list of municipalities nationwide that will likely appeal the FCC changes.

“The new FCC rules severely limit what we used to do with our negotiations and they also limit home rule,” Moschella said.

He added that the FCC believes Congress gave it the right to control the public rights of way, where cable wire and AT&T’s video service boxes are installed.

“But we believe they [the FCC] don’t have that authority and their action is in violation of our right of home rule,” he said.

The resolution says the FCC change:

n Limits the time-frame for approval or denial of cable TV franchise applications to 90 days by a local franchising authority (LFA).

n Limits the extent to which an LFA may negotiate for Public, Educational and Government (PEG) access and funding available to noncommercial media.

n Prohibits an LFA from negotiating for more than a 5% community compensation fee or for funding for Institutional Networks (I-Nets).

But the bottom line is that the resolution contends the FCC rules will result in a reduction in negotiated fees, payments and services from video franchise agreements.

While cable TV providers feel this kind of centralization will benefit them, the municipalities fear the FCC changes will leave them with virtually no clout in dealing with the service providers.

State Changes to Cable TV

Meanwhile in Madison, the state’s efforts to take over franchising from the municipalities appear to be nearly ready to pass the state Legislature. Sparked by an intensive ad campaign by potential providers such as AT&T and connected lobbyists, large numbers of constituents have contacted their legislators in the hope of getting lower cable TV prices.

Led by state Sen. Jeff Plale (D-South Milwaukee), who received a $1,000 contribution from AT&T, the legislators seem set to vote to become the controller of all cable TV franchising in the state. But there has been a delay as different groups seek to make cable TV live up to earlier promises.

Public, Education and Government (PEG) channels apparently have found a champion in state Sen. Mark Miller (D-Monona). Miller said he plans to introduce an amendment that would require that companies applying to the state to provide video service, such as Time Warner or AT&T, would have to pay a 1% fee each year to help fund PEG channels, which include cable TV access such as MATA.

That fee would be separate from the 5% of gross receipts franchise fee that has already been negotiated.

While Plale and other legislators have said they believe such a fee would be a “deal breaker,” Miller said he has yet to hear that and added he does not believe it. And Miller is uniquely situated to help make that adjustment to the deal, as he is on the budget-writing Joint Finance Committee.

“If competitors want to come in, they should have to pay a franchise fee and for PEG funding, just like cable TV,” Miller said. “This is from the subscriber’s view. They shouldn’t have to pay more in property taxes or lose their PEG benefits if this competition comes in.”

Some key persons involved in the AT&T effort have said off-the-record that Plale is wrong when he calls the 1% PEG channel fee a deal breaker.

But on the record, the company replied to that question by saying, “AT&T supports the bill in its current form, which includes amendments that provide more money to municipalities and additional benefits to government TV. Consumers want alternatives to the cable monopoly. It’s unclear whether consumers support paying an extra monthly fee for government television in addition to the 5% fee they’d also be paying to municipalities under the bill.”