Kansas Joins State Franchising Rolls

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Kansas has joined Texas and Indiana in adopting state regulation of cable franchising. And while a telecommunications-reform bill has moved ahead in Iowa, state proposals in Missouri and Florida both face a questionable future — and a bill has surfaced in California after months of debate over language among stakeholders.

The California bill’s co-sponsor, Assembly Speaker Fabian Nunez (D-Los Angeles), introduced the bill in an Assembly pressroom furnished as a 1970s living room, complete with lava lamps, shag rugs and psychedelic colors representing the era that ushered in current franchising policy — theatrics that incumbent cable firms said were provided by the telephone companies.

<p>New Face of Cable Regulation</p>

State Regulation approved:

Texas

Indiana

Kansas

Bills Still in Flux:

New Jersey

Louisiana

Iowa

Bills Possibly in Trouble:

Missouri

Florida

Newest state to the battle:

California

Source: MCN research

The bill will allow the state Department of Corporations to issue franchises. That agency will have up to 44 days to issue certification.

'REASONABLE’ BUILDOUTS

California’s current policy requires new competitors to universally serve the same franchise areas as incumbents. The proposal requires new providers to begin service within “a reasonable period of time” to all homes in their footprint.

To meet this mandate, the new provider can use direct-to-home services (such as current partners, direct-broadcast satellite providers) or other delivery mechanisms.

Nunez made his priorities clear: protecting local governments and their revenue; creating jobs; and encouraging billions of in infrastructure investments.

Dennis Mangers, president of the California Cable & Telecommunications Association, said his group would oppose the bill unless amended. He called the bill a blatant attempt by phone companies to “redline neighborhoods and just skim the cream off the top.”

Nunez expressed his belief that the bill, and market economics, would prevent discrimination in services.

Minorities in his district are among the heaviest users of video services, he said, and providers will want to acknowledge that market potential.

AT&T California president Ken McNeely praised the bill as “model legislation” that will help “re-establish California’s leadership role in the adoption of new, innovative technologies.”

The bill’s committee hearing will occur after spring recess, on April 24.

MOVEMENT IN KANSAS

Late last month, in Kansas, legislators ended their session March 31 by overwhelmingly approving an AT&T Inc.-backed bill to allow the state to franchise telephone companies.

The House voted 123-0 for the bill, followed by a 40-0 vote of the Senate.

If the bill is signed by Gov. Kathleen Sebelius, a Democrat, the Kansas Corporation Commission will become state’s cable regulator. Once that body receives an application, it will have 30 days to approve a franchise agreement.

Local governments are barred from assessing fees in addition to the 5% franchise fee on gross revenues mandated under the law. Local officials are also barred from applying local buildout requirements. Local governments can create local customer-service policies, however, if they give the service provider 90 days notice. The application must state an intended service area that must be built out in five years.

Once a competitor actually begins providing service, an incumbent operator can approach the local community to request franchise modifications, according to the new law. The locality has 120 days to act on that request.

Communities may request public, educational and government channel slots. A new provider has 120 days to provide them. A locality may demand no more PEG channels than are activated by the incumbent. If no such channels are active, the new provider is responsible for providing two slots, on request.

An Iowa version has advanced to the state Senate there with a committee amendment that will allow incumbents to seek modifications to local franchise requirements if they differed from a competitor’s operating terms.

While those bills advanced, reports from Missouri and Florida indicate bills there could be in trouble this session.

The state Senate in Missouri debated an AT&T Inc.-sponsored bill there for an hour April 3 before its sponsor, Sen. John Greisheimer (R-Washington), failed to work through all the objections to his state franchising bill. The proposal under debate was the 19th try at a reform bill.

'GONER’ IN MISSOURI

Griesheimer was quoted in the Kansas City Star stating, “It’s a goner, at least for this year … You can’t negotiate with somebody who doesn’t want to negotiate.”

Referring to Griesheimer, Greg Harrison, president of the Missouri Cable Telecommunications Association, said, “We’re taking him at his word.”

The bill went to the Senate twice and “and they got nowhere close to a vote,” he said.

Key to the debate over the bill was the advocacy of Sen. Gary Nodler (R-Joplin). He founded and operated SoMo Cable Inc. of Seneca, Mo. before he was elected to the state senate in 2002. Harrison said Nodler’s opposition to the bill was very important, adding he was very eloquent on the subject, able to explain things in a simple way to colleagues.

Down south, members of the Florida House committee on utilities and telecommunications moved a franchise reform bill forward March 31 on an 11-4 vote, but legislators there have commented publicly that allowing fair competition may be too complex an issue to adjudicate this session.

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