If you live in Raleigh and you’ve got a problem with your cable service, and Time Warner isn’t taking care of things to your satisfaction, what do you do?
You call Mike Williams.
Williams is the city’s cable administrator. From his office downtown on Martin Street, he oversees the Raleigh Television Network, the city’s set of four public channels. And he’s the go-to guy when residents aren’t happy with their service. “I get calls regularly,” he says. “I contact Time Warner and try to work out a resolution that makes everybody happy.”
Down the hall at the RTN studios, staff members are helping volunteers get their shows edited and onto the server (RTN recently converted to digital). The studio has three high-end digital video cameras, as well as professional lighting. Camera rental and studio time are available for very little money, as are courses in video production and editing with Final Cut Pro. Portable cameras are available for on-location shoots. On this particular day, staff members are readying equipment to cover Mayor Charles Meeker’s state of the city address, which will air on Channel 11.
RTN’s set of public access, educational and government channels (aka PEG) exists in Raleigh and in cities all over the country thanks to local agreements with the cable companies that spell out exactly what the community needs. That includes consumer protection, public safety, public access and a take of up to 5 percent of the cable company’s total receipts, in exchange for allowing it to use the public right of way to run and maintain its cables. Those franchise agreements have worked well for 20 years, Williams says. “Everybody knows what they’re supposed to do, and there’s a process set up to deal with problems.”
But telephone companies, struggling with a late entry into the broadband Internet and video business, don’t want to play by the old rules. They’re lobbying hard, both in Congress and at the state level, to get rid of local franchise agreements. And they’ve succeeded in Texas, which instituted a statewide franchise agreement that eliminated all local cable access channels in, putting in place a handful of statewide channels instead. There was also a massive loss of revenue for local governments–but little in the way of competition. Cable companies are happy with the status quo, but if telcos get to dump the franchise obligations, you better believe the cable companies will do the same.
“This is all funded by a combination of PEG fees and franchise fees,” Williams says as he looks around the studio. “If those go away, so does all of this. All these community producers won’t have anywhere else to go.”
That’s not all Raleigh would lose. The city gets a total of $3.5 million a year from its arrangement with Time Warner, most of which goes into the general fund, which covers road repair, the fire department and other city operating expenses.
Charles Archer of the N.C. League of Municipalities says cities across America are getting wise to the phone companies’ efforts and are responding with a concerted effort to educate state legislators on the four big issues at stake.
First of all, the telcos want to cherry-pick the neighborhoods where they’ll provide service. “Essentially what the phone companies are after is to be able to compete with the cable companies for just a small share of the market where they can make the most money the fastest without having to play by the same rules,” Archer says. “They want preferential treatment.” So for people who live in less affluent neighborhoods, there won’t be any competition after all.
Then there’s the issue of having control over the rights of way–if the city’s not in the loop, what happens when the telcos want to dig up the street to repair cable? Who’s responsible for damages and liabilities, or simply communicating with police and public safety workers?
Then there’s the money. That big a loss of revenue means that either basic city services will get cut or property taxes will go up.
And of course, the loss of PEG channels is a big blow to public information. “It is very important,” Archer says. “That’s how a lot of our public gets its information about what’s happening in the city government, particularly the older citizens who may not be Internet savvy.”
The other issue is that, if local franchises go away, so does local help dealing with service disputes. You won’t be able to call Mike Williams for help anymore. Customer service will come from the state or federal government, if it ever comes at all.
National legislation that would eliminate local franchises is moving slowly through Congress (see 1ww.indyweek.com/gyrobase/Content?oid=oid%3A24864), so the telcos have gone to the states. About a week ago, Virginia became the second state to pass legislation establishing a statewide franchise similar to that in Texas. With the North Carolina legislature’s short session about to start in May, such legislation could be coming soon. Meanwhile, the Revenue Laws Study Committee has taken up the issue.
On Jan. 11, representatives from BellSouth and Verizon went before the committee to make their case. While it’s been relatively easy for Time Warner and other cable companies to move into the phone business, the telcos say entering the cable TV business is a much more complicated game that requires making separate arrangements with local governments–an onerous, expensive and time-consuming process, they say. And they know that video and Internet service, not phone service, are the future. They want the franchise agreements, which they see as burdensome regulation, and the franchise fees, which they see as taxes, “simplified” through a statewide franchise.
Furthermore, both Verizon and BellSouth claimed outright that making franchise agreements with local governments is a “barrier of entry into the market,” because it’s too hard and takes too long. “Cities typically retain Washington lawyers,” said Verizon’s regional executive Alan F. Ciamporcero, “to help extract the most from the applicant–and these consultants don’t move quickly. In the end, it takes about 12 to 18 months to get a local franchise.”
Yes, Verizon is shocked, shocked, at the use of Washington lawyers to negotiate a lucrative deal for the public.
Catharine Rice doesn’t work in Washington. She works for Action Audits, the Raleigh firm that helps the Triangle J alliance of local governments negotiate cable franchise agreements. She says Verizon and BellSouth, along with AT&T (which has put in a bid to buy BellSouth pending Federal Trade Commission approval–so much for competition), are leading the national effort to change cable rules. The telcos’ statements to the committee were “the first shot over the bow” in North Carolina. “The thing to remember,” Rice says, “is that these companies are using public land. It’s like someone parking on your front lawn for free. That’s what the phone companies want.”
Crazy thing is, none of the North Carolina communities she works with can recall being asked by BellSouth or Verizon for permission to compete in the cable market in the 10 years since Congress passed a law allowing them to do so. “In order to drive home the fact that that’s simply not true,” she says, “North Carolina communities are sending letters of invitation to both BellSouth and Verizon encouraging them to come in, that they are welcome and they will work with them to expeditiously get them a franchise.”
Scratch that: Williams says a company called Carolina Broadband was granted a franchise agreement in Raleigh, but it folded in 2002 before offering service.
Before he became Raleigh’s cable administrator, Williams worked for cable companies for 20 years. “Frankly, I can tell you,” he says, “if they had spent the time going after franchises that they’ve spent denying they can get them, they’d have more franchises and more service areas than they could handle.” He says the telcos are right when they say cable is the future of the industry–too bad for them they didn’t figure it out sooner. “They made the decision not to pursue them in the past and now they’re trying to get the state legislatures to make up for their error in judgment.”
So will North Carolina legislators buy it? “The Texas legislation is widely viewed as one-sided,” says N.C. Rep. Paul Luebke (D-Durham), who is House chairman of the revenue laws study committee. “I prefer a more balanced bill. My concern is that such things as public access channels need to be protected if there were any move toward a statewide franchise. I think the study committee has recognized that there are diverse views, and a compromise bill would make sense.”
But Archer is not at all convinced that a statewide compromise could work. “Obviously the devil is in the details, as far as what a statewide franchise agreement would look like. You have to keep in mind: There are 545 cities and towns in the state, and not all of them are exactly alike.”x
For more information on local cable issues, go to www.thepeopleschannel.org.
The Revenue Laws Study Committee will hear public comments on cable franchise issues at its meeting on Wednesday, April 5 in room 544 of the Legislative Office Building, 300 N. Salisbury in downtown Raleigh. If you wish to contact members of the committee, go to www.ncleg.net/committeefrontpages/revenuelaws for a list of names and numbers.