News

Tennessee Telecom Bill Faces Surprise Delay

4/26/1998 8:00 PM Eastern

Tennessee lawmakers have shelved legislation that was
designed to give municipal utilities and rural electrical cooperatives provisional access
to the state's telecommunications market.

In a surprise move, a House of Representatives subcommittee
voted recently to delay until next year a bill permitting a limited number of electrical
providers to offer cable and Internet-access services in their communities.

The move to table the proposal came despite a last-minute
compromise hammered out between cable operators and electrical providers that had been
pushing the bill.

However, the measure remained alive in the Senate last
week, leaving cable-industry officials counting the remaining days in the 1998 legislative
session.

"Anything can still happen," said Stacey Burks,
executive director of the Tennessee Cable Telecommunications Association. "Until they
[lawmakers] have gone home, we can't be sure of anything."

As originally written, the proposed bill created a
four-year pilot program involving four consumer-owned electrical utilities and two rural
cooperatives.

Lawmakers would have evaluated the program at the end of
that time and decided whether to open the Tennessee telecommunications market to all
electrical-service providers.

Burks conceded that she was surprised by the
subcommittee's action, considering that the same lawmakers had pushed both sides to
iron out compromise language.

"It was the first time that the municipalities had
shown that they were willing to sit down and compromise," she said. "I think
that they knew that they weren't going to get their bill through if they
didn't."

Under the compromise, the municipalities participating in
the pilot program would have been prohibited from subsidizing their video operations with
revenues generated by their electrical utilities. They also would have been required to
operate their systems as separate entities, and they would have been subject to annual
audits.

Moreover, the cities would have been forced to charge their
cable divisions the same pole-attachment rates as local cable providers are charged, and
the cable divisions would have been required to pay the same taxes and fees as incumbent
operators.

"We worked out a good bill," Burks said.

However, some proponents of the original legislation
weren't so sure that the cable industry had acted in good faith.

In an interview with the Chattanooga Times,
officials for the Chattanooga Electric Power Board -- one of the municipal electrical
utilities hoping to participate in the pilot program -- said the bill's demise
"had the makings of a cable-industry hit."

Cable-industry officials dismissed the accusation.

"We didn't want that," cable lobbyist Bo
Johnson told the Times. "We would have preferred a vote that we could have
lived with to put the issue behind us for a while."

Nevertheless, Burks said, the compromise gives both sides a
jumping-off point when the bill resurfaces next year.

"We're in good shape for next year," she
said. "At least we can start with a good, common understanding in place."

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