Ops, Officials Snag on Ohio Overbuilds

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Ohio cable operators and the state's municipal
governments have hit a snag on compromise legislation governing the latter's entry
into the video business.

As a result, the industry will throw its weight behind a
substitute bill containing the four key elements that operators and cities have managed to
agree on.

"But those aren't enough for a successful piece
of legislation," Ohio Cable Telecommunications Association executive vice president
Ed Kozelek said.

The substitute "Fair Competition in Cable Act"
will be unveiled in both the House and Senate this week, as cable tries to prevent
Ohio's 84 municipal electrical utilities from following in the footsteps of Wadsworth
and Lebanon -- the first local jurisdictions in the state to launch competitive cable
service.

At cable's insistence, the bill includes
cost-allocation language that bars cities from shifting the expense of providing municipal
video services to their electrical utilities.

The idea is to prevent cities from using artificially low
cable prices as a way of luring subscribers away from established operators, Kozelek said.

Under the bill, a city caught allocating costs to a
separate entity would be subject to financial penalties.

"And the only way to find out if they're offering
cable at below fair market costs is for them to have to show their costs," Kozelek
said.

Officials for the Ohio Municipal Electrical Association
argued that cities should not be required to allocate the total cost of a network to a
telecommunications utility if portions of the network are used by other municipal
entities.

Moreover, OMEA executive director Jolene Thompson said
cities had become frustrated with cable after repeatedly agreeing to compromises, only to
see the language altered when translated to paper.

Kozelek answered that cable operators had tried to speed
the negotiations by agreeing to drop their insistence that municipally owned cable
networks be subject to the same tax requirements as their privately owned counterparts.

Nevertheless, there have been some areas of agreement. Four
mutually acceptable provisions in the substitute bill were:

• A clause mandating that cities impose the same
requirements on municipal networks as on private operators. Municipalities failing to
impose equal obligations must remove those same obligations from the incumbent.

• A provision calling for disputes to be settled by an
outside third party, whose decision is nonbinding.

• A requirement forcing cities to provide the
incumbent with 45 days' notice before passing an ordinance authorizing construction
of a municipal network or expenditure of public money for a feasibility study.

• A clause requiring that cities create a service fund
separate from all other municipal funds, which can only be used to finance the cost of
providing cable service.

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