California Cities Seek a Veto for Video Bill

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California cities and counties, concerned that a new statewide video-franchising bill will disenfranchise groups of consumers throughout the state, have launched an effort to get Gov. Arnold Schwarzenegger to veto the bill.

The municipalities and their advocacy group, the League of California Cities, strongly opposed the bill throughout the hearing process. Local regulators stressed their support for competition, but said they fear the bill (approved Aug. 31) will allow new providers, including telcos Verizon Communications Inc. and AT&T Inc., to geographically “cherry-pick” the state.

Schwarzenegger has already wielded his veto power this session, spiking a controversial bill that would have changed the education code to extend protections against anti-gay speech in schools. But bill watchers don’t anticipate that he will stand in the way of state franchising.

BUILD-OUT RULES

The bill has some build-out provisions, but only requires the telcos to offer their video products to 50% or less of California, according to its final version.

The bill was amended to address some of the concerns of local governments.

For instance, agreements on existing public, educational and government channels and institutional network commitments are protected until incumbent agreements expire, or until Jan. 1, 2009, whichever is later. But cities argue there is no protection for communities that have yet to establish networks.

Local authorities also object to losing the ability to negotiate the amount of support for public, educational and governmental (PEG) channels to match local needs. The bill allows communities to collect a fee equaling 1% of gross revenues to support PEG activities.

If a community already has a 1% fee in place, it can pass an ordinance authorizing a fee of up to 3%. But it must act by the end of this year to obtain that higher level of funding, according to the bill.

The bill leaves regulating customer service in the hands of local authorities, but city and county officials are unsure exactly how they will enforce state or local rules. They also object to the incumbent-friendly amendment that lets cable operators exit their franchises once a competitor gives notice to serve the community.

Local officials have launched a letter-writing campaign against the California bill.

LOUISIANA MODEL

The effort to stop the bill at Schwarzenegger’s desk echoes a successful effort in Louisiana. There, parish officials met personally with Gov. Kathleen Babineaux Blanco to argue against a state-franchising measure approved by legislators.

Local officials argued the new bill, which would have moved franchising approvals to the office of the Secretary of State, could cost cities a source of local revenue, resulting in higher taxes for consumers.

Sources of revenue are a hot-button issue in a state struggling to recover from the devastation caused a year ago by Hurricane Katrina. Blanco vetoed the bill, sending it back to the state House of Representatives with a request that lawmakers find a way to speed technology deployment without depleting municipalities’ coffers.

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