South Dakota Redefines 'Level’

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Now that South Dakota Gov. Mike Rounds has signed a bill redefining the meaning of “level playing field” in that state, cable competitors are left to put the new law to the test.

The quest for similar competitive terms remains a hot issue in several states, and South Dakota was the first this legislative season to alter the competitive elements that comprise the term “level playing field.”

Overbuilders in South Dakota will now be subjected to contract terms no more or less favorable that the cable incumbent, but only in three specified areas: franchise fees, rights-of-way access and public, educational and government access.

CITIES CAN VARY

Cities may now craft franchise agreements for a buildout that does not match that of the initial telecommunications developer; may offer a shorter or longer franchise than the incumbent; and can be more flexible on construction deadlines, among other issues.

PrairieWave Communications, a bundled-services provider, supported the bill. CEO Craig Anderson said prior state policy kept PrairieWave from negotiating for a conventional franchise for its Sioux Falls overbuild.

Instead, the company had to settle for an open video system agreement — and found it could not obtain bank financing, he said.

Since Rounds signed the bill and returned it to the legislature on March 22, Anderson has been back to talk with Sioux Falls about the possibility of revising its franchise there to a closed system build.

As for South Dakota’s revised competitive terms: “It’s a good first step, but it doesn’t solve all the issues,” Anderson said. He suggested there might be a need for other bills, or legal challenges, to create equal competition.

One big hurdle to building a successful system in Sioux Falls is lack of access to a large number of the city’s multiple dwelling units, he said. As PrairieWave worked out the details for a municipal franchise, Anderson said, incumbent Midcontinent Communications was busy signing apartment complexes and other bulk users to five-to-10-year contracts.

“That makes it uneconomical to develop large areas of the city. It’s unfair to residents,” he said.

Midcontinent vice president of public policy Tom Simmons said PrairieWave already competes with the incumbent in other towns.

“There’s always all kinds of reasons why they can’t build a network,” he said.

Pointing out that it has a universal buildout requirement in its franchise, Anderson said, Midcontinent has threatened to sue. Anderson doesn’t feel that issue has been entirely resolved because of the local pact.

SEWER PROBLEM

The state of the city’s storm sewers may become a cost issue for the overbuilder. Last summer, heavy rains inundated the drains and some collapsed.

After the drainage problem ebbed, engineers determined that the city’s utilities had bored through the storm sewers, placing conduits that plugged them up with debris.

As the latest user into the ground, Anderson fears the cost of repairing placements may fall to PrairieWave.

“If they want us to fix it, it’s problematic for us, for it greatly increases our cost,” he said.

Simmons said it was his understanding that the problem sewers had either been repaired or taken out of service.

As for Midcontinent, Simmons said he’s unsure how the new bill would affect the incumbent. None of the MSO’s contracts will be reopened for at least five years, he noted, adding that the company would protect its interests if necessary, presumably by asking for relief from franchise terms if faced with an overbuilder with less onerous terms in areas not addressed by state law.

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