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from: JS Online

Bill would level playing field for TV programming providers
Only cable companies now held to franchise requirements

By DORIS HAJEWSKI

Posted: March 8, 2007

A bill that would eliminate municipal cable franchises and shift the approval process to the state was unveiled Thursday in Madison.

The legislation comes just as AT&T has rolled out its U-Verse Internet-based television service, which competes with cable.

The bill aims to address technology that didn't exist when the cable franchise process was set up in the 1970s, said Rep. Phil Montgomery (R-Ashwaubenon), who introduced the legislation with state Sen. Jeff Plale (D-South Milwaukee).

Under the existing scenario, satellite dish providers, for example, aren't subject to franchise requirements.

"This brings competition to the video market," Montgomery said. "What I am looking to do is to streamline a process that the FCC and the Justice Department have ruled is an impediment to competition."

Telecommunications giant AT&T has started installing the system in the Milwaukee metropolitan area without seeking franchise agreements, maintaining that the existing law on cable franchises doesn't apply to the U-Verse service.

AT&T has indicated, however, that it is willing to pay fees to municipalities where it offers U-Verse, and is in talks now with the City of Milwaukee on an agreement that would allow it to offer the service in the city. Milwaukee filed a lawsuit in federal court in December in an attempt to force AT&T to negotiate a franchise agreement for U-Verse, and area suburbs have sought to join in the suit.

The Plale-Montgomery bill would preserve a franchise fee of up to 5% of revenue to be paid to municipalities by all television service providers.

Eleven states - including Texas, Indiana, New Jersey, California and Michigan - have enacted bipartisan statewide franchise reform since 2005, according to Steven Titch, a policy analyst for the Reason Foundation and managing editor of Info Tech & Telecom News, a research and commentary publication of the Heartland Institute for policy-makers.

"Franchise reforms benefits have been undeniable," he said in a report. "Consumers have enjoyed greater choice and a range of new services.

"Legacy cable providers have responded to new competition by lowering costs and improving service."

Rich Eggleston, spokesman for the Wisconsin Alliance of Cities, said his group would work to change parts of the bill to address the concerns of its member municipalities. Eggleston said member cities want to preserve funding for public access programming. He said there also was concern that the state wouldn't do as good a job as municipalities of addressing consumer complaints.

In general, Eggleston said the alliance didn't like the idea of a statewide franchise system.

"But it seems to be the wave of the future," he said.

Barry Orton, professor of telecommunications at the University of Wisconsin-Madison and a longtime consultant to municipalities on cable issues, criticized the bill, which he said was written to suit AT&T.

"The two big losers," he said, "are the public and the cities."

Orton said the oversight of complaints under the new bill rests with the state Department of Financial Institutions, the agency that oversees banks and investment businesses. The agency's staff has no experience in overseeing telecommunications services, Orton said.

In addition, the bill forbids the agency from making any rules on the complaint process for video services and repeals existing requirements enforced by the Department of Agriculture, Trade and Consumer Protection and district attorneys regarding cable television subscriber rights.

"It's deliberate, so it would be an agency that doesn't do anything," Orton said of the choice of overseer.

Also, cities will lose revenue from the video providers because the method for calculating the 5% of revenue in the new bill eliminates some forms of revenue that are included under current law, Orton said.

Agreement near

Bev Greenberg, spokeswoman for Time Warner Cable, said the company had no objections to the bill.

"Time Warner believes if there is to be any legislation on the state level, it is very important to provide a level playing field for all providers," Greenberg said. "I think the proposal encourages fair competition among all providers."

AT&T Wisconsin President Scott T. VanderSanden said: "The video competition bill will benefit Wisconsin consumers by encouraging more choices, real competition, better prices and new features for video entertainment."

Milwaukee City Attorney Grant Langley said he is close to reaching an agreement with AT&T. The agreement is designed to be in place while a city lawsuit with the company is resolved.

If the bill passes, it would likely supersede the local agreement. Langley said he hopes the state takes into consideration the provisions of the deal the city is negotiating as it sets the standards.

Greg Borowski of the Journal Sentinel staff contributed to this report.