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from: News Herald

State takes control of cable TV franchises

David S. Glasier
DGlasier@News-Herald.com
09/24/2007

Department of Commerce now awards state television and wire-video franchises

The channel is changed in the Buckeye State.
Beginning today, the Ohio Department of Commerce assumes responsibility for awarding cable TV franchises and wire-video franchises such as AT&T U-verse.

ODOC also will serve as clearinghouse for consumer complaints about the business and service practices of those franchises.
The change is codified in a bill easily approved by the General Assembly and signed in late June by Gov. Ted Strickland.

This new arrangement replaces the one used since the first cable-TV systems were established in Ohio in the early 1970s. Cable TV and wire-video companies previously negotiated directly with local governments to establish and renew franchise agreements.

"Ohio's consumers and businesses stand to benefit greatly from this change," Strickland said in a prepared statement. "It will bring additional investment to our state, resulting in lower costs and more choices for our consumers."

Two area legislators who voted for the bill are hopeful the new TV-franchising law lives up to the governor's optimistic forecast.

"It is supposed to bring down rates by fostering competition, but only time will tell if this provides price relief," said state Sen. Tim Grendell, R-Chester Township.

State Rep. Lorraine Fende, D-Willowick, said she'll closely monitor the economic aspect of the new franchising law and the impact it will have on the service practices of cable TV and wire-video companies.

"I think this arrangement will strike a good balance between local government and consumers while encouraging competition," Fende said. "But if that turns out not to be the case, then this legislation can be fine-tuned."

On the ground
Eastlake Mayor Ted Andrzejewski said he and City Council members are "fully up to speed" on the new law. The city has a cable TV franchise agreement with Time Warner and recently approved an interim wire-video franchise agreement with AT&T.

The same as the vast majority of area communities, Eastlake receives an annual cable TV franchise fee that amounts to 5 percent of Time Warner's gross revenue in the city.

This year, Time Warner is paying $194,900 to Eastlake. AT&T also will pay a 5 percent franchise fee to Eastlake once its business is established.

Under the new statute, cable TV and wire-video companies pay a $2,000 fee to ODOC when they apply for 10-year state franchises. The state has 45 days to review and approve the applications.

If the state franchise is granted, communities have 10 days to pass enabling legislation to continue receiving service from the provider while reaffirming the terms of franchise agreements.

"I think cities were doing a good job of negotiating deals with the cable companies, but I understand that the state wants to encourage competition and streamline the process," Andrzejewski said.

Kathy Pohl, the public information officer for Mentor, isn't persuaded that the new franchising law is a good deal for residents of her city or Ohioans, in general.

Mentor this year received a franchise fee of $572,000. The city has a franchise agreement with AT&T for U-verse, too.
Pohl is president of the Ohio chapter of the National Association of Telecommunications Officers and Advisors, an organization of municipal employees who regularly deal with TV and telecommunications companies.

"We believe in choice, but this really wasn't about choice," Pohl said. "This is about a piece of legislation written by lobbyists for AT&T after lawmakers were exposed to a public relations campaign fueled by AT&T."

Pohl said she believes local government entities are in a better position than ODOC to deal with service disputes and customer-related issues.

"Consumers, I fear, will be getting the run-around under the new law," Pohl said. She also accused AT&T of "cherry-picking" customers for U-verse, or only going into certain areas with the product.

The cherry-picking accusation was vigorously disputed by Caryn Candisky, director of public affairs at AT&T's office in Cleveland.

"We have articulated a very aggressive business plan to have U-verse in 18 million homes by December 2008. You can't cherry pick and do that," Candisky said.

Candisky also refuted the notion that Ohio's new franchising law is an early Christmas present for AT&T.

"This is a bill broadly supported by cable industry and consumer groups," she said. "It passed with large, bipartisan majorities in the General Assembly and benefits consumers in Ohio by offering a real choice in video services."

New reality
Ohio has joined Michigan, Indiana and 13 other states with laws on their books for cable TV and wire-video franchising.

Barney Wolf, communications chief for ODOC, said his department is geared up to handle the increased workload. ODOC will add a few full-time staffers to focus on franchising applications and administration.

The Ohio Cable Telecommunications Association, based in Columbus, represents the interests of 17 cable TV companies doing business in the state.

Jonathan McGee, executive director of OCTA, said those companies support the new franchising arrangement "as long as all providers are treated equally."

The Northeast Ohio division of Time Warner Cable has nearly
1 million subscribers in 450 communities in Lake, Geauga, Cuyahoga, Ashtabula, Summit, Stark and Portage counties.
"Our company certainly will be applying for a state franchise," said Chris Thomas, Director of Government Affairs and Media Relations for Time Warner Cable.

"It will be interesting to see how this all pans out."