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from: Kalamazoo Gazette

Lawmakers need time on cable franchise bill
Monday, December 4, 2006

The state Legislature is rushing to complete several bills and, in that rush, there is a danger that legislation may be passed hastily that requires more time and thought.

In particular, the Uniform Video Services Local Franchise Act, or H.B. 6456, is a complicated measure which would change how cable franchising works in the state.

AT&T, which wants the bill passed, claims it would increase competition and thus lower cable costs. However, there is no way to know if that would be the case.

The goal of the bill is to move the franchising of cable services from the local municipality and township level to a statewide system. This move would save AT&T the time and paperwork it requires to negotiate individual agreements with local governmental entities.

AT&T also has sweetened the pot by offering to hire 1,200 new employees in Michigan within the next year -- if the House version of the bill is passed without changes and signed by the governor before the session ends.

``If the structure of the bill is primarily what we see today, we will invest,'' AT&T Michigan President Gail Torreano said. ``If there are wholesale changes in the bill, we will not.''

It's important to note that there's nothing currently prohibiting AT&T from creating competition in local markets. Laws already exist to allow AT&T to negotiate its own franchise agreements with local governmental bodies as cable companies have been doing for years.

The Michigan Municipal League is against H.B. 6456. The cornerstone of their objection to the legislation is how it would affect the availability of cable services in individual communities. Franchise agreements are currently constructed so that, as a cable company's subscribers grow within a community, there are build-out requirements to ensure the company makes its services available to everyone in the community.

This provision does not exist in the new bill. Therefore, under the proposed legislation, cable or video-service providers could choose to offer their services only to selected areas or neighborhoods. This could mean that, in neighborhoods with a predominantly poor population, some residents might not be able to get video service.

In addition, the bill would basically end the franchise agreements that already exist. It would give cable operators the right to cancel their agreements or to tell local municipalities that they would operate in the future under the rules set forth in the statewide bill. This is likely to result in a reduction of revenue provided to local governmental units from these agreements. In addition, there is concern that the funds would be funneled through a state bureaucracy which would be likely to create delays before the money would be sent on to the local level. There are also concerns that this part of the bill may violate the state constitution and wind up in litigation.

Finally, the new bill contains provisions that would affect local cable access channels that provide coverage of public, educational and government (PEG) issues. No more PEG channels could be created under the new bill -- and the ones that do exist would have to pay a conversion fee to accommodate their signal to AT&T.

We don't want to impede technological progress or discourage competition. But local governmental units need to have control over services and should be able to ensure that those services are offered to all of its citizens.

This bill also would create more responsibilities at the state level without any funding mechanisms to pay for them. The state could end up taking the funds for administering this new system out of the franchising fees paid, which would result in municipalities getting their funds cut further.

These thorny issues need to be resolved. If they can't be resolved before this bill goes to the governor, we urge lawmakers to wait on this one and leave it to the next Legislature to tackle.