The Utah Legislature has passed a measure that would make it significantly more difficult-but not impossible-for local governments to enter the cable business.
House Bill 149 includes the usual provisions that prohibit a locality from granting a municipally owned network franchise terms more favorable than those awarded a private operator, or from using its regulatory authority to gain a competitive edge over a cable incumbent.
In a unique twist, however, the law discourages localities from competing as cable retailers, but exempts local networks that resell wholesale capacity to outside service providers.
Gov. Michael Leavitt is expected to sign the measure into law within the next few weeks.
Introduced by House Majority Whip Greg Curtis, a Republican-and sponsored by a local business coalition headed by AT&T Broadband-the new law also forbids a municipally owned utility provider from using any of its proceeds to bankroll municipally owned telecommunications networks.
"Even the seed money can't come from the city," said Provo spokesman Paul Venturella. That city prompted the push toward the law's passage late last year, when it announced plans for a $34 million telecom network that would take on AT&T Broadband.
Venturella predicted the new law would hurt the state's small, isolated rural communities, which want to bring high-speed Internet access to their residents, but can't count on the private sector because of their locations.
But Curtis said the law prevents municipalities from using taxpayers' money to get into a "very competitive and speculative business."
"I didn't think a city's enterprise funds should be used for cable," he added. "I just didn't think that is the role of local government."
Provo-which recently acquired the small, independent operator Provo Cable-said it will become a telecom wholesaler. Provo Cable will either be sold to the outside company or operate as a joint venture between that company and the city.
Provo has received 17 responses to its request for proposals, said Venturella, with one of them including an offer of up to $20 million for an equity stake in the venture. Among the respondents were Denver-based overbuilder WideOpenWest LLC and an unidentified multistate utility.
The city will begin meeting with potential partners beginning this week.
Officials at AT&T Broadband said they're "delighted" with the new legislation.
"It gives us the level playing field we need, and doesn't mean we have to compete against our own regulator," said MSO regional communications director Barb Shelly.