Tenn. Ops Fight Utility TV Entry


Tennessee lawmakers are considering legislation that would
allow municipal utilities and rural cooperatives into the cable-television and
Internet-access businesses.

Committees in both houses are weighing a proposal that
would create a four-year pilot program that would allow four municipal electrical
utilities and two rural cooperatives to offer cable and Internet services on a trial

At the end of that time, the legislature would evaluate the
impact on consumers and decide whether to open the market to the state's remaining
electrical providers.

"They could open it up to everybody or say that nobody
else can get into it," said Bill Moss, executive director of the Tennessee Municipal
Electrical Power Association, a trade group for 63 municipal electrical utilities in the

The bill has passed out of a Senate committee, and it is
expected to be reviewed this week by a subcommittee in the House of Representatives.

Predictably, Tennessee cable operators opposed the measure,
arguing that electrical providers should be subject to competition and public scrutiny
before being allowed to offer video and high-speed-data services.

"Our basic argument is that government should be in
the business of providing essential services," said Stacey Burks, executive director
of the Tennessee Cable Telecommunications Association. "Cable television is
entertainment, not an essential service."

Cable-industry officials have drafted a bill of their own
that would require competition in the electrical market and a public referendum before
utilities and rural cooperatives would be allowed into the telecommunications market.

With one exception, there are currently no private
electrical providers in the state, which means that there is no competition, since the
publicly owned providers must purchase their power from the Tennessee Valley Authority,
Burks said.

"We contend that there is no need to get into
providing other services until deregulation is imminent," she said.

Moreover, electrical providers are not subject to the same
tax and franchise requirements as cable operators are, she added.

"If they want to compete with private entities, they
should have to act like private entities," Burks said.

Moss argued that electrical providers already make payments
to municipalities that exceed anything that cable operators shell out. In Nashville,
Tenn., for example, the municipal electrical utility made "in-lieu-of-tax
payments" to the city totaling $12 million last year, he said.

"They [cable operators] are always talking about a
level playing field. But, if anything, it's unlevel in our direction, not in
theirs," Moss said.

Burks said the industry's contribution to
municipalities does not end with franchise fees.

"Our payments are beyond that," she added.
"We pay rights-of-way fees and fees to the Federal Communications Commission, and we
give back to communities in the form of public, education and government channels and in
franchise agreements that require that we do many things for the cities."

So far, cable-industry officials have been unable to sit
down and work out a compromise with the state's electrical providers.

"It looks like they're unwilling to
compromise," Burks said. "And the bill isn't much of a compromise.
It's very one-sided."