Cable Bill Questioned

August 19, 2005
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GRAND RAPIDS — The Grand Rapids Community Media Center could be looking at a large reduction in funding if the Broadband Investment and Consumer Choice Act sponsored by Sen. John Ensign, R-Nevada, passes.

“It would be quite devastating for us, there’s no question about it,” said Chuck Peterson, acting director of the CommunityMediaCenter. “It’s a significant part of our operation that relies on the fact that franchise fees exist.”

The Broadband Investment and Consumer Choice Act would eliminate cable franchise fees, creating a national franchise that would not require telephone companies looking to get into the video business to go through the franchising process with each municipality as cable companies are now required. Franchising fees are used by the municipalities to keep up on the infrastructure used by the cable companies. A percentage also helps to fund public access such as GRTV.

Peterson said it is too early to tell what the end result would be and how long it would take for the bill to go into effect. GRTV, which is funded primarily by the cable franchise fees, would be the CommunityMediaCenter affiliate most affected by the proposed act. Peterson said GRTV may have to start charging or charging more for services they offer free or at low-cost, which would hurt those individuals with low-income or little access to the public forum, as well as non-profit organizations.

“We serve hundred of non-profit organizations who really rely on this kind of service, especially since the fairness doctrine was repealed and commercial broadcasters rarely show public service announcements anymore,” he said.

Besides the non-profit community, Peterson said the underrepresented communities that use GRTV as a forum may lose that outlet.

“A lot of the minority community would be devastated,” he said.

Peterson said the bill would cause problems for the municipalities too, by doing away with a public service requirement in the charters. Many community organizations and municipalities throughout the country are speaking out against the proposed act.

“A lot has already been done on a national level to rally the non-profit communities and the underserved communities to let them know that this threat was occurring,” he said.

Though it would hurt GRTVs funding, Peterson said the CommunityMediaCenter does not depend solely on franchise fees, as do some of the nation’s community access stations.

Grand Rapids is actually probably in better shape than most in that regard,” he said. “The kinds of services that depend on the franchise fees are the ones that are core services for the underserved and it would be a devastating loss to the community.”

“This would be good for your telephone company, but it will be bad for your community if you value community media.”

Tim Goodwin, a board member at the Community Media Center and managing editor of the Community Media Review, said though he is concerned about the Community Media Center, he is more deeply concerned with the lack of authority the municipalities would have over the telephone companies.

“There are a lot of issues that go beyond the franchise support,” he said.

Goodwin said he was also concerned about the possible loss of public, education and government channels.

“With the absence of PEG I think it eliminates one more voice,” he said. “That’s the you and the me all over this country.”

Ensign’s bill states that it is meant to “establish a market driven telecommunications marketplace, to eliminate government managed competition of existing communication service and to provide parity between functionally equivalent services.”

Tim Lundgren, associate attorney for Varnum Riddering, Schmidt and Howlett, said municipalities would run into problems with consumer protection with the Broadband Investment and Consumer Choice Act.

“One of the concerns that we have is it doesn’t provide the consumer protections that we see under the current system,” he said. “The local franchise authority is the one that enforces them; you can tailor them to their community.”

The municipalities would not have the same ability to control the cable services under the proposed act, Lundgren said.

“They have less power to oversee the sort of day-to-day implementation and the way that it would impact their customers,” he said.

Lundgren said the cable companies now have to protect shrubbery and trees and repair private property if it is damaged during installation, while the bill does not contain anything that would give the municipalities the authority to require that.

“It’s not a question of making it easier,” he said. “But having less oversight over them.”

Lundgren said the bill is at the behest of the large telephone providers who want quick and ready access to the cable market.

“If they can get a national franchise, they wouldn’t have to negotiate with the individual cities,” he said. “They claim their need for this is because it’s a delay for them. Their claim on this, we feel, is overblown.”

Lundgren said the last franchise his firm did took three weeks to accomplish.

“We can do it in one to four months, which is a fairly quick turn around for municipalities,” he said.

The “one-size-fits-all” national franchise doesn’t provide for local needs, Lundgren said.

While the bill would provide four public, government and educational channels, there is no funding mechanism and possibly no line to pick them up.

“It doesn’t provide the detail for how you would implement it and how it’s going to be funded and the day-to-day operations that are in the franchise,” Lundgren said.

Though competition is good for the municipalities and for the customers, Lundgren said the main concern is the consumer protection issues and the public, education and government channels.

“We’re happy to see the phone companies moving into cable,” he said. “If they come under the current system, I think that’s great and the municipalities would be more than happy to have them. It’s the attempt to evade existing franchises that’s the problem.”

Ed Merlis, senior vice president for government and regulation for the United State Telecom Association, said the existing franchise system hampers the telephone companies.

“Right now when a company who is in the voice telephony business wants to enter the video business, it has immense hurdles getting to it,” Merlis said. “The Ensign Bill says ‘Let’s tear down those barriers and let people really compete out in the market place.’ ”

Merlis said the bill would help telephone companies to offer more choices, such as packages that may include broadband, video, telephone and other communication access.

“This is one of those situations where really the biggest benefit will be the ultimately the consumer because they’ll have more choice,” he said. “This Ensign legislation helps to bring down some of the walls and barrier to entry, erected by the entrenched monopoly.”

Jon Koeze, cable television administrator for the city of Grand Rapids, said the bill makes sense in the fact that telephone companies are interstate agencies, but he is concerned about a slippery slope leading away from public access and franchising fees.

“It could take the funding that we receive from the cable company away,” he said.

Grand Rapids is expected to get nearly $1.5 million from franchise fees for the 2006 budget

“Telephone wants one contract so it’s easy for them,” he said. “It creates an uneven playing field for cable companies.”

Koeze said he thought the biggest problem would be providing customer service from an FFC level if the municipalities had no authority.

“We’re not excited about anything that takes away out ability to control our environment,” he said. “They’re going to have to deal with the municipality at some level.”

Colleen McNamara, executive director of the Michigan Cable Telecommunications Association, said the cable industry in Michigan is happy with the current system.

“We don’t have complaints about it,” she said. “Others may, but we don’t. We think that we’ve been pretty responsible and we’ve followed those rules.”

McNamara said at this point the association is just watching to see what comes out of Washington and where it is going.

“These are early days yet in these bills,” she said. “A lot of very high powered lobbyists are out there working on these.”

Though McNamara said she is concerned about quality of service under the requirements of the bill, she is confident in the cable industry and their service.

“I think our customers are getting a really nice, high level of service from us because we’ve invested so much in our networks in their communities,” she said.    

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