By Ron Thaniel
April 10, 2006

The House Subcommittee on Telecommunications and the Internet of the Energy and Commerce Committee approved April 5 a draft bill that nationalizes the franchising of video/cable services and would not require providers with a national franchise using a community’s public rights-of-way to eventually serve the entire community.

As stated in the April 4th action alert from Conference of Mayors Executive Director Tom Cochran, The U.S. Conference of Mayors strongly opposes the draft bill known as the Communications, Opportunity, Promotion, and Enhancement Act of 2006 (COPE).

“As currently crafted it nationalizes franchising of video/cable service, preempts local oversight of the rights-of-way, does not provide sufficient enforcement or audit authority, does not keep local government financially whole, and does not ensure service to all within a reasonable period of time,” wrote Cochran.

Sponsors of the draft bill are Energy and Commerce Committee Chair Joe Barton (TX), Committee Vice Chairman Charles W. Pickering, Subcommittee on Telecommunications and the Internet Chair Fred Upton (MI), and Representative Bobby L. Rush (IL).

Under intense lobbying by the telephone giants, the Subcommittee rejected a number key amendments introduced by Energy and Commerce Committee Ranking Member John D. Dingell (MI), Subcommittee Ranking Member Edward J. Markey (MA), Representative Mike Doyle (PA), and Representative Anna G. Eshoo (CA), and supported by a coalition of local government organizations including The U.S. Conference of Mayors, that would have protected local governments’ rights-of-way enforcement and revenue, buildout, and ensured that disputes related to rights-of-way management go to courts, not the Federal Communications Commission.

Within the manager’s amendment offered by Subcommittee Chair Fred Upton (MI), the Conference was successful in eliminating damaging language that would have excluded from gross revenues the charges for insurance, bonding and penalties.

In addition, the Conference effectively campaigned to include language in the manager’s amendment that allows for audits of fees by the local franchising authority and allows the local franchising authority to recover costs if underpayment is discovered.

Next step for the draft bill is mark up in the full committee shortly after members return from the Spring Recess on April 23rd.

Franchising of Video Services Is a Core Function of Local Government

Testifying at the March 30th hearing before the House Subcommittee on Telecommunications and the Internet on COPE, Arvada Mayor Ken Fellman highlighted the following concerns with the draft expressed by The U.S. Conference of Mayors.

Without a franchise agreement, the only effective mechanisms that local government has to manage its public rightsofway, ensure competition for everyone, and collect franchise fees are eliminated.

The measure allows a new cable provider through the national franchise to pick and choose the most profitable areas.

The legislation would allow the incumbent cable operator to abandon the existing locally granted franchise as soon as the federally certified national franchise holder offers service to one subscriber in the competing service area.

While the legislation ostensibly prohibits economic redlining, it fails to provide sufficient enforcement authority (indeed, the draft is incomplete in this area) to protect constituents.

Though the legislation preserves local authority over the management of rights-of-way, it fails to provide sufficient enforcement authority to assure compliance.

While the legislation is silent on the appropriate forum for resolving local rights-of-way disputes, by default that task would move to the Federal Communications Commission (FCC).

Although the bill retains the current five percent gross revenue cap on franchise fees, it limits the revenues from these fees by excluding revenue from “information services” in defining gross revenue.

Despite the fact that the legislation provides one percent of gross revenues for public, educational and governmental (PEG) channels and institutional networks (“INets”) for local government needs such as fire, police, and other governmental communications, for some jurisdictions this will not be sufficient.