[MEDIACOM] Cities line up to oppose cable TV franchise changes (1 Viewer)

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Apr 18, 2005
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CEDAR FALLS --- Politics can make strange bedfellows.

Many Iowa cities butted heads with cable television franchise holders last fall during bitter referendums establishing municipal utilities to compete with private telecommunication companies.

Now they've joined forces to fight proposed legislation that would strip cities of their franchising controls in favor of a statewide system and allow telephone companies and other new video providers to begin offering competitive cable television services across the state.

"The cities are concerned about losing control and finances while (existing franchise holders), like Mediacom and Cedar Falls Utilities, are worried about having an unequal playing field," Cedar Falls Mayor Jon Crews said.

Crews joined five other mayors earlier this month in Des Moines for a news conference opposing the bills.

But Max Phillips, president of Qwest Iowa, said the legislation is designed to remove barriers to competition in the cable television markets, which would result in more selection and lower prices for consumers.

"Basically what we're trying to do is open up the cable monopoly much like the 1996 Telecommunications Act opened up the telephone monopoly," Phillips said. "Over 150 telephone companies are supporting this."

For the past 40 years, cable providers have had to negotiate franchise agreements with cities to use public rights-of-way in offering services to residents. Each city is allowed to collect franchise fees, enforce provisions of the agreements and require companies to meet specific guidelines to conduct business in the community.

Companion bills pending in the Iowa House of Representatives and Senate would allow phone companies and other new cable television providers to get a certificate of franchise authority from the Secretary of State, which would allow them to begin offering competing services anywhere in the state without a city franchise.

The certificate holders would have to collect franchise fees equal to those paid by existing franchise holders, up to a maximum of 5 percent, which would be returned to the cities. But cities would not be allowed to impose other fees or standards on the new providers.

Meanwhile, incumbent franchise holders would be required to honor their existing contracts unless they serve less than 40 percent of the cable television subscribers in a community.

Crews said the cities fear the loss of control over franchises, noting local communities are best equipped to oversee the franchises to ensure the best benefits to the community. He also questioned whether the city would continue receiving the franchise fees from the state, noting legislators imposed a similar process on bank franchises years ago but have started keeping the money for state government coffers.

Cedar Falls has two cable franchise holders --- Mediacom and CFU --- which are both required to follow the same guidelines, including a franchise requirement to serve the entire community. The proposed legislation prohibits cities from requiring complete build-outs.

"That is not an equal playing field," Crews said. "Mediacom and CFU can't just say they're going to serve three new high-end subdivisions ... But this law would let somebody else come in and cherry pick, to compete only where it's profitable for them."

And because Mediacom serves less than 40 percent of Cedar Falls' cable television households, the company could terminate its franchise agreement in favor of the state certificate.

But Mediacom, which serves more than 300 communities under franchise agreements, is also opposing the bill, said Jon Koebrick, the company's regional vice president of governmental relations.

"This is a one-size-fits-all scenario that lets the phone companies avoid having to work with communities at all," Koebrick said. "We believe it is unfair."

Mediacom and its predecessors were required under their franchise agreements to serve all of Waterloo and Cedar Falls; connect all schools and government buildings to high-speed Internet for free; remit fees that help set up public access and government programming channels; and pay franchise fees on advertising revenues. New state certificate holders would face none of those requirements.

Koebrick also noted cities have boards established to oversee federal requirements on cable operators, which are enforced through the franchise agreements. He questioned whether the state could be diligent in enforcing those rules and said the location in Des Moines certainly would be less convenient for Waterloo residents and others with consumer concerns.

Phillips, of Qwest Iowa, disputes those concerns, saying the legislation allows cities to collect franchise fees and put limits on the use of rights-of-way. And he suggested the competition would build cable television subscribers, thereby increasing city franchise fee revenues.

He points to studies conducted in Texas, the first state to approve similar legislation, that shows cable customers realized savings of 20 percent or more on monthly bills because of increased competition.

Phillips said build-out requirements are simply a ploy by incumbent cable providers avoid competition. The statewide franchise removes time-consuming franchise discussions in every community and allows new providers to roll out services more quickly and in a way that is economically feasible.

And he compared the plans to the federal Telecommunications Act of 1996, which opened up the market for telephone service competition.

"It's the exact same model the telecom act created when the McLeod's of the world came in, and it worked well," Phillips said, referring to McLeodUSA, which began offering telephone services in Waterloo and elsewhere in competition against long-standing franchise holders.

"If McLeod had been forced to come into Waterloo and do a complete build-out of the entire town to compete against me, there would have been no telephone competition in Waterloo," he said. "Mediacom is just trying to protect the monopoly."

http://www.wcfcourier.com/articles/2006/03/19/news/metro/a964582cef8c609586257136001770c0.txt
 

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