Ohio Bill Sets Overbuild Ground Rules

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Ohio lawmakers have passed precedent-setting legislation that may slow the municipal-overbuild craze threatening the state's incumbent cable operators.

The Fair Competition in Cable Act requires equal franchises, limits a municipality's ability to sell cable outside of its city limits, mandates advance notice to the incumbent of an overbuild and establishes an arbitration process for settling disputes.

Passed by the Ohio General Assembly after two years of wrangling, the measure was awaiting Gov. Bob Taft's signature last week.

The final bill was the result of a compromise between the Ohio Cable and Telecommunications Association and the Ohio Municipal Electric Association.

"These are uncharted waters," OCTA executive vice president Ed Kozelek said. "Before this, there was nothing. Local governments were not getting franchises or paying the same fees and taxes they imposed on private-sector competitors."

Among the new law's features is a provision requiring that cities produce annual reports accounting for the direct and indirect costs of their cable businesses.

"This way, cities can't play shell games with their funds," Kozelek said. "If they attribute the cost of their cable system to their electrical utility, they have to show it."

The law also requires equal franchises for both the incumbent and municipal cable systems, which will force all publicly owned networks to pay the same franchise and permit fees, as well as pole-attachment rates and local taxes.

It also contains a provision that requires that the incumbent operator receive 45 days' notice of a city's plans for a public cable system, as well as language prohibiting a city from enacting an emergency ordinance for construction of a municipal cable company.

Finally, it establishes an arbitration procedure to settle disputes. If either side has to go to court to enforce an arbiter's decision, the losing side is hit with court costs and "reasonable" attorney fees.

Municipal cable networks are currently up and running in the Ohio communities of Wadsworth, Lebanon and Bryan. Several other venues reportedly considering such projects.

Meanwhile, despite a law that seemed to overwhelmingly favor the cable industry, officials with a local trade group representing municipal power companies said it was still better than the "overly litigious" language contained in the original proposal.

"It's less onerous than the original version," OMEA executive director Jolene Thompson said. "We saw some provisions in the original versions as being invitations to lawsuits. We knew going in that there was going to be some kind of bill. We think this one is workable.p"

Kozelek argued that neither side got everything it wanted in the final legislation. Cable operators, for example, wanted a provision requiring municipal governments to pay for their public systems only out of surplus funds.

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