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from: Marietta Times

Officials get cable TV law update
Thursday, August 02, 2007

By Connie Cartmell, ccartmell@mariettatimes.com

Marietta City Councilman Tom Vukovic initially had serious reservations about deregulation of cable television in Ohio.

Today Vukovic, a member of council’s special public utilities committee, has learned more about the process, brought about through Senate Bill 117, and has fewer concerns.

“My main interest in all of this has always been that we are currently using cable franchise money to fund the information technology department in the city,” Vukovic said. “In the beginning, we had no idea what was going to happen and it looked like it might totally take our franchise money away, putting that in jeopardy.”

For more than 30 years, City Council has negotiated with cable TV companies to provide service to the city under a single franchise agreement.

Under the new system, cable providers will obtain authorization from the state rather than individual cities. Consumers could then select their cable provider from among those in their market approved by the state.

City officials have been concerned about, among other things, what would happen to the revenue from franchise fees.

Mayor Michael Mullen has said Marietta draws about $170,000 per year in cable franchise fees from the current provider, Suddenlink. Because of tight city budgets, that money is counted on.

Mullen said Wednesday that he still has some reservations because of a long history of dealing with deregulation of utilities.

“I’m a skeptic that good things will come from this,” he said. “It was passed with only the best of intentions, and at the front end it may look good, but the end result (of utility deregulation) has not always benefited the consumer.”

Mullen said the city must be mindful of potential changes in the franchise revenue when considering future budgets.

“If and when a new company comes in, it will be a new game,” he said.

Cable deregulation, approved handily by the Ohio Legislature and signed by Gov. Ted Strickland on June 25, promises to open the doors for competition in television and Internet cable services — and hopefully lower prices. Telephone companies like AT&T are hoping to get a foothold in the cable TV and high-speed Internet business, providing services to municipal customers through the phone lines instead of cable.

“This bill was made so much better in the House for municipalities,” said state Rep. Jennifer Garrison, D-Marietta. “It’s not just Christmas for the cable companies.”

With deregulation will come improved choice, lower prices and optional services, she said. Because each provider is required to pay a fee at the same percentage of the current provider, not to exceed 5 percent of gross revenues, she doesn’t expect Marietta to lose any funds. In fact, she said, there may be some gains.

City Law Director Roland W. Riggs III is less optimistic.

When he first heard about the bill, Riggs wasn’t sure what it would mean to Marietta. The law director attended a presentation last week at a meeting of the Ohio Municipal Attorneys Association in Columbus and came home armed with additional information.

“The city will still receive 5 percent of gross revenues, but there is now a narrower definition of gross revenues,” Riggs said. “The bill preserves revenue to an extent, but the city will lose some.”

Garrison said she expects Marietta will not be one of the earlier markets that AT&T decides to enter. The current franchise is honored until there is competition in the market area.

The current contract between the city and Suddenlink does not expire until Aug. 31, 2011.

“I don’t have any reason to believe that Suddenlink would leave this area when it already has capital invested here,” Garrison said.

Riggs said he also has concerns about customer complaints.

“The city will have no part in that process,” he said. “I can’t see the folks in Columbus addressing minor issues or consumer complaints like we would here in the city.”

Local government will not have any control over negotiations with cable providers or issues raised.

“When you take a look at how much control we have now,” Vukovic said, “with price, we can’t argue. Service — maybe.”

Vukovic said council will have to watch what happens next and pay attention.

“We don’t know where it’s going,” he said.

Riggs said Council needs to soon adopt a cable franchise ordinance that will specify what is expected, getting everything in place prior to a new provider coming to town.

Senate Bill 117

• Reforms the video franchise process by promoting competition.

• Encourages new providers to enter the local cable market.

• Will be administered by the Ohio Department of Commerce.

• Streamlines the current city-by-city authorization process by allowing providers to obtain a single state authorization.

• Preserves local authority over right of way.

• Requires video providers to pay a fee at the same percentage of the incumbent provider, not to exceed 5 percent of gross revenues. Payment of fees will be made directly to local government on a quarterly basis.

Source: Sen. Joy Padgett, R-Coshocton.