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from:NWI Times

Gate opens on cable, video franchises

New Indiana law, transferring local control to state, takes effect

BY KEITH BENMAN
kbenman@nwitimes.com

Indiana started taking applications Monday for statewide video franchises, upending the decades-old system by which each locality decided which cable company or companies could operate on its turf.

The Indiana Utility Regulatory Commission is prepared to grant franchises within 15 days to companies that apply, according to Mary Beth Fisher, an IURC spokeswoman. Applicants are expected to run the gamut from national telecom giants like AT&T to local providers that operate in only one or two counties.

The telecom industry is likening the new system to the "Oklahoma land rush," saying it will open up new opportunities for television and video viewers. They say the end of exclusive local franchises means more choices for consumers.

"We think even the consumer groups will be pleasantly surprised," said John Koppin, Indiana Telecommunications Association president. "There will be a lot of advantages they are not anticipating."

Consumer groups beg to differ, saying the new system is more akin to the land grabs of 19th-century railroad barons. They say telecom giants will be able to drive smaller competitors out of business, which will actually decrease competition.

"It's a local control issue, and it's somewhat ironic that a party, that is the Republican party, that often presents itself as favoring local control, voted for this," said Dave Menzer, utility campaign organizer for the Citizens Action Coalition, the largest consumer group in Indiana.

House Bill 1279, passed in the last session of the Indiana General Assembly with the backing of Gov. Mitch Daniels, authorized statewide video franchises. Indiana is among only a handful of states that has statewide video franchising.

The new legislation is a response to calls from telecom companies and others that changing technology calls for changed laws. In particular, telecom companies want to offer broadband television, which can be done over high-speed Internet lines.

At the end of May, AT&T announced it would invest $250 million over three years to expand broadband technology in Indiana. AT&T serves 44 rural communities with DSL Internet and 33 more will be added when the investment is done, according to AT&T spokeswoman Katie Hutchinson.

AT&T has not yet applied for a state-issued video franchise, but plans to do so within the next several weeks, she said.

Under the legislation and the new rules promulgated by the IURC, video providers must still apply to serve specific territories. But the territory can be as small as one county or as big as the whole state.

That is dramatically different than the previous system, in which cable companies like Comcast negotiated for exclusive video franchises with each local community in which they wanted to operate. The localities in turn could impose a surcharge of up to 5 percent on customer's bills.

For example, the town of Munster took in $178,277 last year from its cable franchise surcharge on Comcast customers' bills. Under the new law, the 5 percent surcharge will be paid to the state, which will then distribute the money to localities.

Cable providers can continue providing service under their current local franchise agreements until the agreements expire, or they can opt out immediately in favor of the state-issued video franchises, Fisher said.