The Broadband Alliance — a partnership of 30 south Florida communities and the unincorporated territory within Broward County — has issued a request for letters of interest to companies that want to overbuild AT&T Broadband's cable system.
The plea is especially interesting because the communities have also reached out for a competitive DBS provider. EchoStar Communications Corp.'s Dish Network and DirecTV Inc. both have subscribers here, but the proposal offers mayoral endorsements and other local promotion for the company that agrees to negotiate with the alliance for special perks.
The member cities that issued the RLIs, including Fort Lauderdale, are angry at AT&T Broadband for service lapses since the beginning of the year. A switchover in billing software caused a tremendous surge in call volume that the operator was unable to handle. Though the cities concede that AT&T Broadband has reversed the trend, the municipalities are still unhappy.
The towns' greatest concern: AT&T has told franchising officials that it won't upgrade its network — and thus enable the delivery of cable-modem service — until December of 2004.
These factors led the Fort Lauderdale City Council to recently reject a 10-year franchise renewal for AT&T Broadband.
Fort Lauderdale administrative assistant Ronna Adams said the renewal talks remain still informal. The city and operator are still trying to hash out a renewal agreement, she said.
"It's premature to say where they are going with the talks," said Adams. "We're anxious to explore other ideas [with AT&T].".
Cities upset with AT&T's performance formed the alliance, which is supported by the board of directors of the Broward County League of Cities.
The invitation to overbuilders is a sign that the alliance hopes to negotiate a master or model franchise agreement on behalf its members.
It also promises to speed and simplify the franchising process "as is practicable and legally permissible."
The request advises potential competitors that the alliance would be flexible on such key issues such as the speed of build-out requirements; public, educational and government channel programming standards; and institutional network requirements.
STUFF OF LAWSUITS
But competitive "breaks" such as the ones in the RLI have been lightning rods for lawsuits by incumbent cable operators.
The competitive proposals can include public-private partnerships, in which a potential competitor uses county- or city-owned infrastructure as part of a video-delivery network, according to the RLI.
On the DBS side, the cities hope to negotiate for special programming and pricing for the region. Municipal officials also want to determine whether DBS providers have the capability or desire to deliver local-government programming that subscribers would lose if they drop AT&T Broadband cable service.
A DBS partner would also have to be willing to make up some of the local revenue a city would lose when consumers switch from cable to DBS. This appears to be a big hurdle to the partnership.
Florida has dropped local franchise fees in favor of a simplified, generalized tax structure, with the proceeds paid directly to the state. Since the taxes are no longer based on right-of-way use, it is now applicable to satellite services, and DBS customers have been hit, since Oct. 1, with a 14.5-percent increase on their bills.
Cable operators pay the same amount of taxes as before, but they are not labeled franchise fees. Added payments to cities by a DBS provider could have a negative impact on its competitive pricing.
But DBS operators that meet the terms of the alliance would get endorsements from officials, articles in city and county publications, promotional inserts in municipal utility bills and the ability to make live presentation during city and county meetings, according to the alliance proposal.
City endorsement of a provider is a growing topic of discussion. City officials across the U.S. liken the idea to a spate of deals that The Coca-Cola Co. and PepsiCo Inc. have cut in the past two years. The soft-drink makers paid cities to be designated the "official soft drink" of the community and received exclusive rights to place its vending machines in parks, at city halls and in other municipal property.
One city councilman in California, angry at his local operator, said an "official DBS provider" would be promoted as a sponsor of city events. That would include the televised council meetings, which the local cable incumbent would be compelled to transmit, he noted gleefully.
The RLIs in Florida were issued Oct. 5 and the cities don't expect responses until close to the Nov. 5 due date.