Iowa lawmakers are preparing to enact new rights-of-way
legislation that would prevent municipal governments from piling new fees on cable
As proposed, the bill limits the fees that a municipality
can assess on a telecommunications-service provider to only those necessary to cover the
costs of managing local rights-of-way.
Just as important for the state's cable operators, the
legislation exempts any entity already paying franchise fees from any new rights-of-way
"Even though it's mostly a telco bill, we
supported it because it certainly accomplishes some nice things for us," said Jon
Koebrick, franchising director for Tele-Communications Inc.'s TCI of Iowa, the
state's dominant MSO.
At press time last week, the legislation had passed the
House of Representatives and moved on to the Senate, where passage was expected before
lawmakers adjourned for the year.
Koebrick said the legislation was necessary because cities
like Des Moines, Iowa City and Waterloo were already drafting ordinances that would impose
a host of new fees on all telecommunications-service providers operating on public
"And there are probably a lot more cities out there
[with similar plans] that we aren't aware of," he added.
Surprisingly, the state's municipalities were taking a
"cautiously neutral" position on the bill, reasoning that the bill that
local-exchange carriers backed would have been far worse.
And even though the bill is seen primarily as benefiting
LECs, cable-industry officials threw their support behind the measure in order to avoid
problems when it came time to renew their local franchises.
"Our argument has always been that our franchise fees
were for rights-of-way access," said Tom Graves, executive director of the Iowa Cable
Telecommunications Association. "But we wanted to be sure that the next time we went
to get a franchise, people wouldn't try to add these fees to us."
Graves speculated that cities are not protesting the
exemption for existing franchises because those deals produce more revenues for the cities
than any new fees would.
Meanwhile, Tom Bredeweg, director of the League of Iowa
Cities, said the state's municipalities found the provision involving franchised
entities "troublesome," but, they thought, "We can live with it."
"Our belief is that a franchise fee is a form of a
rental," he said. "But the legislature is forcing us to go one way or
Nevertheless, he predicted that an outbreak of litigation
will result the first time that a telephone company claims that street repairs are not a
reasonable "management fee."
"There no question about that," Bredeweg said.
"They don't think that a repair fee when they tear up our streets is a
reasonable cost. Reasonable, in their view, is the cost of the paper to give them a
permit. That's not our view by a long shot."