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from: Valley Independent

Cable TV fees safe?

By Jeff Pikulsky
VALLEY INDEPENDENT
Saturday, July 15, 2006

While many local officials fear their communities could lose cable franchise fee revenues because of a proposed federal law, a spokesman for the congressman who sponsored the legislation says that's not the case.

Officials in Rostraver Township, North Belle Vernon, Monongahela and Donora recently adopted resolutions opposing the proposed Communications Opportunity, Promotion and Enhancement Act of 2006.

The various resolutions indicated how much revenue each municipality would stand to lose if the franchise fees would no longer be available.

But a spokesman for U.S. Rep. Joe Barton (R-Texas), chairman of the House Energy and Commerce Committee, said franchise fees would not be affected by the proposed legislation..

In May, with a vote of 321-101, the U.S. House of Representatives approved the bill that would create a national approval process, known as a "franchise," for telephone carriers and cable providers that offer subscription television.

Cable providers would have to obtain the national franchise tag from the government, which would, in turn, regulate their operations.

The changes would supposedly spur competition and create lower prices for consumers. Providers would be allowed to choose which areas within a municipality that they want to serve, based on demand and profit.

The bill also requires cable and telephone companies to offer broadband services without requiring consumers to subscribe to telephone, television or other services.

"The primary focus of this legislation is to create a streamlined cable franchising process in order to increase the number of facilities-based providers of video, voice, and data services everywhere in our great nation," Barton said in a statement released by his office.

"Today, there are thousands of local franchising authorities, and each may impose disparate restrictions on the provision of cable service in its specific franchising area. The requirement to negotiate such local franchises, and the patchwork of obligations local franchising authorities impose, are hindering the deployment of advanced broadband networks that will bring increasingly innovative and competitive services to all of our constituents.

"The United States doesn't even rank in the top 10 of the nations of the world in broadband deployment. This bill should change that statistic. This legislation can increase competition not only for cable services, but also unleash a race for who can supply the fastest, most-sophisticated broadband connections that will provide video, voice, and data services."

Nick Lorenzo, chairman of the Rostraver Township Board of Commissioners, said he began researching the legislation in March, after cable providers in this area contacted him to tell him the way they do business could change if the bill goes through.

Lorenzo said he became concerned that Rostraver could lose the $150,000 cable franchise fee it receives each year from cable companies. For years, cable companies have paid up to 5 percent of their gross income to the communities they serve

Lorenzo sent copies of a resolution the Rostraver commissioners adopted in opposition of the bill to several Mid-Mon Valley community boards.

But Barton spokesperson Terry Lane said the bill would not take away the cable franchise fees.

"We're going to leave the five percent franchise fee cap in place," Lane said. "Whether they want to or not, the bill would require (providers) to pay once they've been designated as a franchise."

Lorenzo said some telephone companies that provide cable services could claim they do not have to pay the fee.

But Lane said all companies that provide cable service will be required to get the franchise tag and subsequently pay the franchise fee.

"There's nothing in the bill that exempts the telephone companies," he said. "That's actually part of the whole deal; their treatment as being a telephone company is hampering them from deploying cable service. Generally, the idea is to treat them like cable when it comes to their service."

Lorenzo said he would continue to protest the legislation because it would take local government out of contract negotiations.

"I strongly oppose losing control. It's been working for 20 years. Why change it?" he said. "

"If we start to lose control, we will start to lose money. Any time federal or state government wants to take control away from local government, there's a problem.

"They can say what they want. I still don't believe we'll get the same. They're up there making wheels and deals for big money people. They want to cut us out of the pie. There's a catch all and I think we local people are going to get caught up in the catch all."

Lorenzo said the township commissioners would lose the ability to use the cable franchise fee as a bargaining tool.

"We work with the cable outfits to string cable where they said it wasn't feasible," he said. "We've said, 'Listen, we'll give you some of our franchise fees back' and they'd do it. Now Washington D.C. is going to do my negotiating?

"How is Harrisburg going to say they can negotiate with the cable co better than our people? That's impossible."

Lorenzo said he suspects nothing beneficial for his community will come from the bill.

"Why are the cable companies warning us? I've got letters from both of our cable companies telling me how this is going to hurt them," he said. "Nobody in D.C. or Harrisburg has said to me in writing that you will not use what you're collecting and how you're collecting it."

The legislation is now being considered in the Senate.

U.S. Rep. John Murtha (D-Johnstown) voted against it.

"This bill will take revenues away from communities," Murtha said, contradicting the idea that the bill would have no negative impact onm franchise fees.

"For example, one mayor told me they'll have to make up 4 mills in the town's budget because of the loss of the cable franchise fees. And there is nothing in the bill to guarantee that cable rates will go down.

"The phone companies are only going to go into the areas where it's cost-effective for them. Also, the bill didn't require the phone companies to provide everyone with Internet access or charge everyone the same rate. So I don't see how this bill would have benefited the people in our area."

U.S. Sens. Rick Santorum and Arlen Specter were unavailable for comment.

Jeff Pikulsky can be reached at jpikulsky@tribweb.com.