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HomeMy WebLinkAbout7.5 Oppose 4103 Federal Cable Legislation & & 0 - 5-0 . CITY OF DUBLIN AGENDA STATEMENT CITY COUNCIL MEETING DATE: January 23, 1984 SUBJECT H . R. 4103 - (Wirth-D . -Colorado) Federal Cable Legislation EXHIBITS ATTACHED Draft Letter of 12/f9/83 from June Bulman, Concord City Councilmember League of California Cities Buletin: 12/13/83 National League of Cities Resolution: 11/30/83 League of California Cities Memo: 11/4/83 Article from Nation ' s Cities Weekly: 10/24/83 RECOMMENDATION Send Letter of Opposition to Congressmen Stark, and Chairman of Energy and Commerce Committee . FINANCIAL STATEMENT: DESCRIPTION At the regular City Council meeting on January 9 , 1984 , Councilmember Drena requested that H . R. 4103 be examined, to determine the need for Council action. Staff has contacted Congressman Stark ' s office to determine when the legislation may be heard by the full committee . The staff members of the House Energy and Commerce Committee informed Representative Stark ' s office that they do not have a hearing date set at this time . Their best estimation was that the hearing would be held in mid - February. The legislation in its current form has been opposed by the National League of Citites and the California League of Cities . The attachments describe some of the difficulties the legislation would cause cities . Based upon these findings a draft letter of opposition has been attached. On behalf of the entire City Council , it is recommended that the Mayor be authorized to forward this correspondence to legislative leaders in the House of Representatives --------------------------------------------------------------------------- �1 COPIES TO: ITEM NO. l •� City of Concord PHONE: (415) 671- 3158 CITY COUNCIL Diane Longshore,Mayor December 19, 1983 Stephen L.Weir,Vice Mayor June V. Bulman Colleen Coll Ronald K.Mullin Farrel A.Stewart,City Manager TO: Cities in Alameda County FROM: June Bulnlan, Concord City Councilmember Member, NLC Transportation & Communications Steering Committee Cable TV legislation in the form of H.R. 4103, authored by Congressman Tim Wirth of Colorado, Chair of the House Telecommunications Subcommittee, was.reported out at the close of the legislative session. There has been growing opposition to H.R. 4103 over the last two years as more and more cities have come to realize that, as the legislation is currently written, their .local franchising authority is in serious jeopardy. As a result of concerted effort on the part of many cities and state leagues, including the League of California Cities, grass roots support to amend or re- write this legislation is building. At the recent National League of Cities meeting in New Orleans, a resolution was passed by the entire membership present opposing this TV legislation as currently written. I have attached a copy of that resolution. Please refer to the LCC Legislative Bulletin dated December 13 for background information. This legislation will be coming before the House Energy & Commerce Committee early in February. Chairman John Dingell of Michigan has generally been sup- portive of the cities' concerns. Those key concerns involve such provisions as requiring true renewal of existing franchises, 'refranchising without de novo judicial review, and rate regulation authority. There is a real opportunity to turn around this legislation; however, cities are going to have to act, and to do so within the next month. The following is suggested action on the part of each city: 1. Each city should pass a resolution supporting the attached NLC policy resolution. This is essentially the same resolution supported by LCC at its State Conference in October. 2. Contact your local congressman personally if possible, indicating oppo- sition to H.R. 4103. Our congressmen are hone in the districts until Congress reconvenes on January 23. 3. Send copies of your resolution to: a) Chairman John Dingell, Michigan House, Energy & Commerce Coltnittee b) Vice Chair James Broyhill, North Carolina c) Committee Members from California, listed on LCC Special Bulletin d) June .Bulman, Councilmember, City of Concord JB:kw attachments CONCORD CIVIC CENTER 1950 PARKSIDE DRIVE CONCORD CALIFORNIA 94519 LL'jG1SLAT1VE .dJLLET1N l® ® League of California Cities California Cities Work Together 1400 K Street • Sacramento 95814 • (916)444-5790 #47-1983 December 13, 1983 SPECIAL BULLETIN RE CABLE LEGISLATION ************************************************************************************ Federal Cable Legislation. H.R.4103. On November 16, the House Telecommunications Subcommittee amended and passed H.R.4103 (Wirth-D-Colorado) . It will next be heard before the full House Commerce Committee after Congress reconvenes January 23. It is important that all cities concerned about this legislation meet with their representatives regarding this bill before the House reconvenes in January. Attached to this Bulletin you will find a summary of the bill , the NLC's opposition letter, the California League's delegation letter requesting amendments, a description of the amendments made by the Subcommittee, and the policy adopted at the recent NLC Conference. Of greatest importance to California cities are the renewal provisions. The current provisions of the bill virtually guarantee renewal to an existing operator, no matter how poor the service, and also create antitrust exposure if cities comply with the bill 's requirements -- a veritable "Catch-22." Since the compromise on cable legislation between the NLC and the National Cable Tele- vision Association in March, cities have been divided in their views, while the in- dustry has spoken with a single voice. This has weakened cities' position, and resulted in the cable industry securing most of the provisions it desires. With the adoption of the NLC policy, cities are once again united, and we request all con- cerned cities to meet with their congressional representatives to seek help in amending the bill to make it palatable to cities. At this point the following members from California have signed on as co-authors of H.R.4103: Robert Badham Don Edwards Jim Bates Richard Lehman Howard Berman Mel Levine Doug Bosco Matthew (Marty) Martinez Eugene Chappie Norman Mineta Tony Coelho Henry Waxman However, reliable sources indicate that some of these co-authors may be "soft." Many may only support portions of the bill and may have agreed to co-author with the understanding that the bill would be made acceptable to cities before it is enacted, and therefore may be willing to help us obtain amendments. Accordingly, the co-authors should not be written off, but city officials should instead ascertain the member's reasons for co-authoring the legislation, seek his or her commitment to improve the bill in specific areas, and not to vote for it in its current form. If there are questions regarding this either before or after your meetings, please contact the League's Sacramento office. We would also appreciate reports from city officials on the results of their meetings. NATIONAL LEAGUE OF CITIES ADOPTED RESOLUTION November 30, 1983 New Orleans THE PROTECTION OF LOCAL AUTHORITY AND CONSUMER INTERESTS IN CABLE LEGISLATION WHEREAS, provision of cable television service has proven to be a valuable service to hundreds of communities across the country and holds great promise to all cities in the United States; and WHEREAS, local governments have had the responsibility for franchising cable television systems in their cities and for overseeing the implemen- tation of those franchises once awarded; and WHEREAS, the presence of a strong local governmental role in the overseeing of franchise agreements has worked to ensure that contractual obligations are carried out and the public interest served; and WHEREAS, since 1981, the National Municipal Policy of the League has called for the pursuit of federal cable television legislation which protects local regulatory authority; and WHEREAS, the National League of Cities has provided valuable leadership in developing such legislation; and WHEREAS, the U.S. House of Representatives has been deliberating on federal cable television legislation; and WHEREAS, the National League of Cities recognizes that since the U.S. Senate adopted S. 66, circumstances have changed due in part to the complexity of the legislative agenda involving telephone deregulation as well as to rapidly developing technology in the field of tele- communications; NOW, THEREFORE, BE IT RESOLVED that the National League of Cities continue its efforts to achieve cable legislation, consistent with the following goals: • that local and state governments not be limited in their option to negotiate the definition of basic services and to regulate the rates charged by cable television companies for basic. service, should they believe it to be in the public interest; • that at the time of franchise renewal, cities be able to obtain reasonable upgrades of system hardware to "state-of-the-art" standards; be able to refuse renewal to an operator which has given poor service during the life of the franchise; be able to negotiate the purchase price of a cable franchise when a' municipality buys back a cable system or the system 2 is transferred to a third party through a forced sale; and that any court review will not be de novo and court review of renewal or non-renewal decisions be the same as that accorded other legislative decisions; • that all existing franchises and their terms and conditions and all franchise processes in which a Request for Proposals has been issued be grand- fathered; • that the legislation protect cities from antitrust liability for compliance with federal law; • that any limitation on franchise fees not apply to fees, charges and taxes charged to or through a cable operator as part of a larger class, for example, utility user taxes; • that federal cable legislation not restrict the ability of cities to require public, educational, governmental and leased access to cable television; • that cable companies not be provided with the power to abrogate contractual obligations based on a unilateral assertion of a "significant change in circumstances"; and • that local government not be restricted from municipal ownership and operation. Submitted by: Resolutions Committee Date Received: November 28, 1983 Referred to: NLC Membership ® League of California Cities 12MME16 1400 K STREET • SACRAMENTO,CA 95814 • (916)444-5790 Cnldoinin Odes Milk ro(jul of Sacramento, California November 4, 1983 TO: MEMBERS, CALIFORNIA CONGRESSIONAL DELEGATION FROM: Don Benninghoven, Executive Director RE: H.R. 4103 - REQUEST FOR OPPOSITION We are writing to request your opposition to H.R. 4103 in its current form. Although the bill presents a great number of problems for cities, by far the most onerous provision is Section 635, relating to "renewal and extensions." It is our under- standing that H.R. 4103 goes far beyond the compromise to which the National League of Cities ag reed. As Section 635 is currently written, it places cities in an impossible "Catch-22" situation. Although the section enables cities to obtain upgrades of system hardware at the time of franchise "renewal ," it does not give cities the same ability when a franchise "extension" is given. Under the terms of the bill , an operator may apply for franchise "extensions" whenever he or she wants, as often as he or she wants, and for as long a period as he or she wants.. The city can deny the request only if it makes one of the specific findings set forth in the bill -- and even if the city makes one of those findings, court review is de novo , that is, court review completely Ignores the administrative proceedings and begins all over. The basic effect of these substantive provisions and of the franchise renewal proce- dures in the bill is to lock in the existing cable operator and system and make obtaining system upgrades or entry by competitors almost impossible. Under the terms of this section, cities which comply with Section 635 would most likely be violating federal antitrust laws. The renewal provisions must be revised to either make renewals and extensions a truly competitive process, or to give cities immunity from antitrust liability for their actions in compliance with those provisions. We will be meeting in December with California cable industry representatives to discuss the franchise renewal issue, and we urge you not to commit yourself to supporting any legislation until those meetings are concluded. Other problems with H.R. 4103 include: (1 ) The definition of "basic service" in Section 601 is sufficiently vague that cities are unable to ascertain the rates they may regulate pursuant to Sec. 633. (2) The requirement in Sec. 612 that a city's request for public education and government access (PEG) channels be "reasonable" will only foster litigation. Sec. 612(b) 's provisions allowing the cable operator to commercially program unused PEG channels assures that only the reasonably necessary number of channels is needed. (over) California Congressional Delegation Page 2 November 4, 1983 (3) The provisions of Sec. 613 requiring an operator to lease for commercial use a certain percentage of the cable system capacity above 35 channels dis- courages upgrades above 35 channels. Cable operators have historically been hesitant to lease any channels for commercial use by others. These provisions give cable operators an incentive to refuse to upgrade above 35 channels. An across-the-board percentage of the stations not committed to carrying "must carry" signals and PEG channels would be far preferable. (4) Sections 631 (e) and 634(a) allow an operator to change contractually- agreed-upon facilities, equipment, or services upon a claim of a "significant change of circumstances." None of these provisions require the operator to substitute reasonably equivalent facilities, services or equipment if available. Further, with services, the operator is authorized to unilaterally opt out of his or her contractual obligations and the city can do nothing. These pro- visions should be revised to require substitution of reasonable equivalents for discontinued services, facilities or equipment, and the operator should have to submit to a reasonable dispute resolution process before the changes are made. If you share one or more of these concerns, please contact Conni Barker in our Sacramento office to discuss specific amendments. We look forward to hearing from you in the near future. Thank you in advance for considering our concerns. DB:CB:ft NV i Cities Weekly October 24, 1`!bs text o letter o Second, PEG access requirements in llSSLL o cluded in franchises granted after the O � cable legislation bill's date of enactment that result from franchise processes already in progress tier. Because multiple tiering has become are not grandfathered, making those Following is the text of the National commonplace in recently-awarded fran- franchises vulnerable to legal challenge. League of Cities letter from President chises, cable customers are frequently Third, PEG access capacity may be Charles Royer sent to all members of the able to purchase the major components used only for "programming purposes" Energy and Commerce Committee content- of basic service (i.e., local broadcast sig- under section 612(a), raising major ques- ing cable legislation (HR 4103) introduced nals and access channels) without pur- Lions as to whether the use of PEG access in the House of Representatives. chasing the lowest priced tier. Thus, the channels for nonvideo purposes is.per:- nature of current franchising arrange- milted. The use of PEG access capacity Dear Congressman Wirth: ments is such that limiting basic service should not be limited to video program- For several months, the National to the lowest priced tier will effectively ming as the utilization of those channels League of Cities, acting under the direc- reduce or eliminate authority to regulate for a variety of communications services tion of our Board of Directors, has sup- basic service rates in many communities. should be encouraged. ported compromise federal cable legisla- Second,section 633(b)provides short- tron. The NL-C Board's endorsement of a term grandfathering (i.e., the longer of COMMERCIAL ACCESS compromise position this past March es- five years or one-half the remaining term Section 613, which establishes federal tablished an inte-im position; a final po- of a franchise) for the regulation of basic leased access standards and imposes un- sition must now be determined by NLC's service rates in-existing franchises, sub- necessary restrictions on state and local full membership at our annual meeting j� to section 602(2)'s restrictive defini- authority, is intended to ensure that a in New Orleans Nov. 26-30. 1 can assure diversity of information 4.rrovided over tion of basic service. It fails, however, to you that a number of options will be provide any grandfathering for fran- cable systems and to encourage the use presented to our membership and that of cable systems by competitive provid chisel granted after the bill's date of en- ' the issues will be thoroughly debated. achnent that result from a franchise pro- ers of cable service.It does not,however, You should be aware,however, that sev- cess already under way. establish adequate safeguards to ensure eral resolutions calling for major changes Third, section 633(a) authorizes the realization of these important objectives. in the present NLC position, including a regulation of basic service rates only in Moreover,the ability of local franchising resolution unanimously approved by a noncompetitive markets,defined as fran- authorities to establish leased access re- key NLC committee (the Transportation chise areas not within the grade B con- quirements through the franchise process and Communications Steering Commit- tours of four or more television signals. is unnecessarily restricted. tee),will be taken up by our membership Unfortunately, the FCC's regulations de- First,section 613(a)(1)requires the set in New Orleans.(A copy of that commit- fining grade B contours require that only aside of channels for leased access use tee's resolution is attached.) Conse- 50 percent of the households be theoreti- only on systems with 36 or more chan- quently, fundamental changes in NLC's cally able to receive a television signal nels(the only exception to this limitation position are possible. over-the-air. A more accurate standard of leased access set asides to systems We believe that the "Cable Telecom- with 36 or more channels is for leased than grade B contours should be utilized munications Act of 1983" (H.R.4103), for determining whether customers can access requirements in existing fran- because it recognizes diversity of in- chises). We see no reason for denying actually receive four television signals formation as a major public policy goal, over-the-air. customers of systems with fewer than 36 establishes a sound framework for the channels,which currently serve a major- development of national cable policy. In Fourth,the FCC is given broad author- ity of customers, the benefits of leased many ways, however, H.R.4103 does ity to establish additional regulatory re- access. quirements under section 613(f) when not provide municipal franchising au- cable systems become dominant provid- Second, under section 613(aX2) state thorities with adequate authority to en- ers of service.it would be more appropri- and local franchising authorities are pre- sure diversity of information or to protect ate to provide states and localities with cluded from establishing leased access other essential interests of consumers, residual authority to implement the nec- requirements in excess of section 613(a) The following is a review of the bill's essary requirements in such circum- (1)'s schedule even if the operator is will- major shortcomings. stances. ing to provide additional leased access channels. We see no reason for preclud- RATE REGULATION Public, Educational, and Govern- ing the setting of more stringent leased The rate regulation provisions, which mental Access access requirements than section 613's purport to authorize the regulation of Section 612, which authorizes the set- minitrial standards at the local level or for basic service rates in noncompetitive nullifying existing leased access require- ting of public, educational, and govern- markets and to provide partial grand- mental (PEG) access requirements ments. fathering for the regulation of basic ser- through the franchise process, includes Third, section 613, which limits the vice rates under existing franchises, are several unnecessary restrictions on use of leased access channels to "video deficient in several respects, municipal authority. programing," implicitly precludes the First, section 602(2)'s unnecessary re- the amount of channel capacity First, use of leased access channels for non- striction of basic service to the lowest set aside for PEG access use is limited to a video purposes, an inappropriate restric- priced tier of service, which includes cer- "reasonable" amount. "Reasonable," lion in light of the anticipated use of tain services (i.e., local broadcast signals however, is not defined, potentially ex- cable systems for the provision of non- and public, educational, and govern- posing the franchise process to unnec- video services such as security services mental access channels), will effectively on a competitive basis. essary legal uncertainty and failing to preclude meaningful regulation of basic because section 61.5 requires provide guidelines for determining Fourth service rate, under franchises in which whether PEG access set aside require- the set aside of channels for leased access basic service is offered in more than one ments are reasonable. i only on the subscribe network and pre- eludes state and local franchising au- ter, into a judicial matter, reflects a view 6s.,_), which grandfathers service-re. . thunties from establishing additional that municipalities are unlikely to com- quirementb in existing franchises, must lea+e•d access requirements, channels on ply with the law. Under section 635(e), if be strengthened in two ways in order to ir—citutional networks, which are ex- municipalities do not follow a quasi-judi- ensure that the community's residents pecte•d to provide vital communications cial process in making franchise renewal actually receive the services bargained links in urban areas, cannot be set aside decisions, court review must be de novo, for through the franchise process. for leased access, a restriction which is effectively empowering the courts to First, section 634(d), which authorizes not in the public interest, make franchise renewal decisions. the unilateral removal of services re-. Fifth, section 613 fails to include Third, section 635, which by implica- quired by a franchise upon a determina- guidelines for the allocation of leased tion permits the consideration of compet- tion by the operator that there has been a access channel capacity among potential ing applications in franchise renewal pro- significant change in circumstances,must lessees when demand is greater than the cecdings, as is appropriate in light of the be revised to require the replacement of amount of channel capacity set aside un- potential liability of municipalities under any service removed with a service of der section 613(a)(1)'s schedule. the antitrust laws, establishes complex comparable quality and nature. In the Sixth, section 613(b) provides the ca- procedures which are unworkable in any absence of such a requirement, the cable ble operator with overly broad discretion case in which competing applications operator would have the right to unilat- in the setting of prices and terms for the have actually been submitted. Section eraliy make fundamental changes in the use of leased access channels, including 635(d)(1), for example, requires good franchise's service requirements, sub- authority to consider a wide range of faith negotiations with the incumbent stantially altering the package of services factors such as the impact of channel operator even if competing applications required by the franchise. leasing on the financial condition and are under consideration at the same time. Second, while section 631(d)grandfa- market development of the system. The bill should not mandate negotiations thers service requirements in existing Seventh,claims of unfair dealing by a with only one of the applicants in a franchises, it fails to grandfather service cable operator may be resolved only competitive refranchising process, espe- requirements included in franchises through unnecessarily complicated court cially given the potential liability of granted after the bill's date of enactment proceedings in which the operator's municipalities under the antitrust laws. that result from franchise processes in prices and terms are presumed to be FACILITIES progress which were not begun before reasonable. Section 631, authorizing franchising October 1, 1962. There is no reason for Finally, the FCC is given broad au- authorities to require the provision of exposing franchise processes which are thority of an unspecified nature to im- particular cable system facilities and re- under way to unnecessary legal chal- pose additional requirements when 70 laced equipment,has one major problem: lenges. percent of households are passed by 36 under section 631(e),cable system facili- FRANCHISE FEES channel systems and 70 percent of ties may be removed whenever there has Section 632, which"establishes a cap households passed are cable subscribers. been a significant change in circum- on franchise fees of five percent and Clear limits on FCC authority are essen- stances grandfathers access-related payments in vial to prevent further erosion of state and Under the procedures established by existing franchises, should be revised in local authority in the future. Further- section 631(e), a franchising authority is two areas. more,residual authority should more ap- required to negotiate with the cable oper- First,section 632(b)(2),grandfathering propriately reside with state and local ator for the purpose of establishing moth- access-related payments in existing fran- franchising authorities in matters of clear fications in the facility requirements chises,should also apply to any franchise intrastate concem, such as rate regula- specified in the franchise in any case in prACess under way. It is fundamentally Lion. which the operator shows that a signifi- unfair to change the ground rules in the cant change in circumstances has made middle of the process. RENEWALS AND EXTENSIONS the provision of particular facilities im- Second,section 632(f),which prohibits Section 635, which requires the re- practicable for economic or other rea- the mandatory renegotiation of existing newal of a franchise unless the incum- sons. If the parties are unable to resolve franchise fees lower than five percent, is bent operator has failed to meet any one their differences through negotiations, inequitable. No comparable provision is of five tests,has several provisions likely then the matter must be submitted to included prohibiting the renegotiation of to make franchise renewal proceedings a binding arbitration for resolution, franchise fees in excess of five percent. legal morass for franchising authorities, Binding arbitration is an inappropriate Furthermore, section 632(c), which per- adversely affecting their inability to pro- method for resolving a matter so central mits the pass through to customers of tet,t the interests of consumers. to the franchise process as the makeup of any increase in franchise fees, does not First, because no distinction is made the system. When the operator cannot require the pass through of reductions in between renewal and extension applica- lose by going to arbitration (i.e., if a costs that result from the mandatory low- tions,a cable operator may file an appli- reduction in facilities is not approved by ering of franchise fees in excess of five cation for extension under section 635 at the arbitrators, the won � CONCt that could ha CONC. LUSION any time during the term of the franchise pen is continuation of the status quo)and While H.R. 4103 has some good fea- and as many times as it wishes. Conse- the franchising authority cannot benefit tures it is clear that a number of major quently, the operator may invoke the (i.e.,the best that could happen is that no changes must be made if the interests of complex procedures of section 635, in- changes in facility requirements would consumers are to be fully protected. We eluding the right to a de novo determina- be approved), then the process is inher- are pleased,however, that you recognize tion by a court in certain circumstances, ently unfair and,more importantly,jeop- diversity of information as the central imposing unfair and unnecessary bur- ardizes the franchising authority's ability public policy issue, a view which 1 have dens on the franchising authority. There to ensure that up-to-date facilities are long shared.We look forward to working clearly is nokpublic policy justification for provided. closely with you in making necessary e:,tabliehing a presumption of extension. SERVICES improvements to the bill as it moves Second, section 05(e), which effec•- Section 634, which authorizes the en- through the legislative nrrw-5s. lively transforms franchise renewal pro- forcement of cable operator offers to pro- Sincerely, ceedings, traditionally a legislative mat- vide particular services, and section Charles Royer, President Mavnr nE SPaffIP 1 _ . ®use gets Nate-s Ctbes Weekly October 10, 1983 Tne price charged to a user of a leased Wi���I h ���� channel would be set by the cable oper- rth In those areas in which basic service ator who could take into account a vari- rates may be regulated, the cable open- ety of favors,such as the impact of than ����� ator may automatically increase basic nel leasing on the financial condition and 4� service rates by the increase in the-re- market development of the system, in gional consumer price index(CPI)for the setting those prices. A potential user by Cynthia Pols prior year and may carry over unused could challenge the operator's terms only CPI increases for up to three years. Basic to a court proceeding in which them Rep. Timothy E. Wirth, chairman of service rates yvhich are frozen under ex- would be a presumption that the oper- the House Telecommunications Sub- - proposed terms are reasonable. fisting franchise agreements, however, committee, introduced comprehensive The Federal Communications Com- islation HR 4103 last Thursday may not be automatically increased un- cable legislation( } y der this provision. mission (FCC) is given unspecified au- which generally follows S.66, the Sen thority to establish different regulatory ate-passed hill, but makes important Public, educational, and govern- p p mental access.Under section 612,a fran- requirements when 70 percent of the changes in several respects. households in the nation are passed by The bill has 24 cosponsors includin a chising authority may require the set p g aside of a "reasonable" number of than- systems with 36 or more channels and 70 majority of the subcommittee members nels for public, educational, or govern- percent of the households passed are and a near majority of the parent Energy mental (PEG) access programming pur- subscribers. and Commerce Committee. poses and establish rules and procedures § Franchise fees. A cap on franchise Following are the major provisions of for the use of these channels. Existing fees of five percent is set, replacing cur- the bill: franchise agreements requiring the set rent FCC regulations limiting franchise § Franchise renewals and exten- aside of channels for PEG access are fees to three percent unless greater cable- sions.Section 635 requires the extension fi related costs are shown in which case the grandfathered. No criteria are specified, or renewal of a franchise unless the fran- however, for determining whether PEG fee may go as high as five percent with chising authority finds that: (1) the oper- access requirements are "reasonable," 'the approval of the FCC. Franchise fees ator has not complied with the existing making access-requirements vulnerable are defined broadly, as including assess- franchise; (2) the operator's legal, tech- to legal challenge. ments and taxes, but taxes of general nical, or financial qualifications have so applicability and franchise enforcement changed as to adversely affect its ability The cable operator is permitted r, use p requirements are specifically excluded to provide service; (3) the cable system unused access channels. However, the fm that definition.p y franchising authority may require the facilities proposed by the operator are $ Services. Requirements in existing unreasonable; (4)the quality of the oper- restoration of any access channel used by franchises specifying the provision of ator's signal has not met federal stan- the operator whenever there is demand dards; or (5) the operator's proposal is for those channels for access purposes. particular cable services are grand- unreasonable in any other area. A deci- PEG access channels cannot be used fathered by section 631 and franchising sion to deny an application for renewal for nonprogramming purposes, which authorities are authorized in section 632 or extension is subject to de novo review presumably means that access channels to enforce voluntary offers by cable oper- in the courts unless specific adminis- cannot be used for nonvideo communi- ators to provide particular services in the trative procedures are followed. In those cations services such as data transmis- future. The regulation of content of pro- cases in which de novo review is re- sion. This restriction is likely to cause gramming, including obscenity, is spe- quired,the courts can reexamine the pro- major problems for those cities planning cifically prohibited. Additionally, a cable cess followed by the franchising author- to use a portion of the institutional net- operator may remove a particular service ity and make a completely new finding as work for the transmission of govern- whenever it finds that there has been a to whether the franchise should have mental information such as data. significant change in circumstances. Dis- been renewed. § Commercial access. Section 613 putes between the operator and the fran- Rate regulation. State or local au- preempts virtually all state and local au- chising authority as to whether a removal thority to regulate rates is restricted by thority over leased access and establishes of a service was justified can be settled section 633. Franchising authorities may federal leased access standards for sys- only through litigation. Moreover, the regulate basic service rates and related tems with 36 or more channels. Leased cable operator is not required to replace a charges only in franchise areas served by access requirements in existing franchises particular service with a similar service. fewer than four television stations or un- for systems with 36 or more channels § Facilities. Under Becton 631,a fran- der existing franchises for the longer of would be nullified. Moreover, leased ac- chising authority may require the provi- ve years or one-half the remaining life cess chqpnels ,Vpuld not be used for sion of particular cable system facilities five franchise. However, because basic nonvideo purposes and no leased access (e.g.,channel capacity)and access related, of service is narrowly defined as the lowest requirements would be established for facilities (e.g., studios) in the franchise. priced tier which includes local broadcast use of an institutional network. The operator may secure changes in signals, public, educational, and govern Under the bill's standards, roughly 10 these facility requirements when there mental access channels, and other ser- Percent of the channels on systems with has been a significant change in circum vices specified by the franchise as basic 36 to 54 channels would be set aside for stances. The franchising authority is re- service, local authority over basic service leased access and 15 percent on larger quired to negotiate with the cable oper- service, would be more circumscribed than systems. On systems with fewer than 36 ator for the purpose of varying the rates S. 6 Under many franchise agree- channels, no leased access could be,re- franchise's facility requirement upon a merits,basic service is the second or third quired unless leased access requirements showing of a significant change in cir- tier, rather than the lowest priced tier. In were included in an existing franchise. cumstances. If the parties are unable to reach agreement, then the matter is sub- such cases, franchising authorities would have no meaningful authority over basic mitted to binding arbitration. sPrvicP ratPS. $ Municipal ownership: Under sec- tion 636, a municipality may purchase a cable system on the expiration of a fran- chise for fair market value with disagree- ments on price resolved through binding arbitration. When a franchise is termi- nated for cause, no minimum price is specified but de novo court review of the basis for termination is required. Under section 614, a municipality which owns a cable system must set up an independent board or separate man- agement company to make program- ming decisions. No elected or appointed official may serve on the board or com- pany. 6 Crossownership restrictions. Un- der section 614, daily newspapers are prohibited from owning a cable system in the community in which the newspaper is published and local broadcast station licensees are precluded from owning ca- ble systems in their operating areas. Lo- cal telephone companies may own but not operate cable systems serving their operating areas. States and localities are prohibited from establishing crossowner- ship restrictions in new franchises. $ Additional provisions. The bill provides strong protections for subscriber privacy and prohibits theft of service. Additionally, the federal pole attachment law is strengthened by subjecting pole :. attachment fees for the use of coopera- tively-and publicly-owned poles to regu- lation and requiring states that regulate pole attachment fees to establish more complete regulatory programs than is currently required. Finally, the bill estab- lishes a right for residents of multiple 'dwelling units to receive service. ❑ I Nation's Weekly � r, 1983)use unit votes cable bill § Access. Municipalities would have authority to establish public,educational, by Cynthia Pols and governmental (PEG) access require= ments through the franchise process The Telecommunications Suhcommit without limit. The subcommittee tee of the House Energy and Commerce adopted an amendment offered by Rep.. Under an amendment offered by Rep. Committee approved Rep. Timothy E. Collins that would allow cities to estab- Thomas Tauke (R-Iowa), cities are spe-. n a o cable bill ter t ring cm Nov. 16 lish PEG access requirements for non- cifically given broad authority to prohibit. in a voice vote after turning back efforts video services (e.g., data transmission, the provision of any programming which ofdelay consideration of the bill until interactive services) and eliminate re- it determines to be obscene, filthy, lewd, after the Congress of Cities. strictions originally included in the bill lacivious, or indecent. Several revisions to the bill were made on the amount of PEG access channel § Renewals. The bill would establish in the course of f the markup. These capacity. an expectancy of renewal,specifying par- changes, however, did not deal with many of NLC's objections to the bill, § Leased access.The bill would estab- ticular performance standards and proce- outlined by NLC President Charles lish federal leased access requirements dures for consideration of renewal appli- Rover, mayor of Seattle, in testimony for video programming of ten to fifteen cations. As a result of an amendment percent of the channels on systems with offered by Rep.Wirth, the bill no longer heRep the subcommittee on Nov. 3. 36 or more channels. The subcommittee includes an expectancy of extension and, Rep.John Bryant si Tex.)introduced a accepted a number of amendments b consequently,the renewal provisions caq, motion to delay consideration of the bill Rep.P Wirth that would clarify the en- be invoked only in the period between until Dec.6 in order to provide afo full forement provisions of the leased access two and three ears prior to the fran- membership with time to take a formal p �• p policy position on H.R. 4103. While his requirements and permit cities to estab- chise's scheduled expiration date. The' motion failed, in a 9 to 5 vote, it drew lish leased access requirements for non- bill allows for de novo court review of a support from two key members of the video services such as security services city's action on a renewal application and data transmission through the flan- unless the city-followed a quasi-'judicial full committee Reps. John Dingell (D- chise process. process in which the actual renewal deci- Mich.) and James Broyhill (R-N.C.), § Franchise fees. Municipalities sion on the application made by an ad- chairman and ranking Republican of the would be allowed to establish a franchise ministrative law judge or independent Energy and Commerce Committee re- fee of no more than five percent of gross hearing examiner. spectively—as well as Reps.Cardiss Col- revenues. The cable operator would be § Municipal ownership. Municipal lins (D-111.) and James Scheuer(D-N.Y.). permitted, however, to show the fran- ownership is permitted if an independent Subcommittee members who spoke chise fee is a separate item on subscrib- board or separate management company against the motion to delay indicated that ers'bills.In any case in which a franchise is established to make programming-de- while additional compromises might be fee in excess of five percent is reduced, cisions. Under an amendment offered by made at the full committee level, sub- the cable operator would be required to Rep. Edward Markey(D-Mass.),a provi- committee action was necessary to force pass along any cost savings to subscribers sion prohibiting state and local officials the cities to take a reasonable and re- in the form of reduced rates under an from serving on these boards and compa- sponsible position on cable legislation. amendment offered by Rep. Wirth. nies was eliminated from the bill. If a city Most members of the subcommittee, § Facilities. Municipalities would be buys back a cable systern on the expira- however,indicated that additional modi- authorized to establish facility require- tion of a franchise, it is required to pay fications would probably be made by the ments in the franchise,including channel fair market value with disputes on price full Energy and Commerce Committee to capacity and access-related require- submitted to binding arbitration. accommodate some of the concerns of ments. Facility requirements could be al- § Miscellaneous provisions. H.R. cities. tered, however, whenever a significant 4103 also includes provisions establish- The following are the major provisions change in circumstances makes the pro- ing federal privacy standards,prohibiting of the bill, including changes made by vision of particular facilities impracti theft of service, ensuring availability of the subcommittee: cable for economic or other reasons. If service in multiple unit dwellings, and § Rate regulation. The regulation of changes in the franchise cannot be limiting the ownership of cable systems the rates for basic service, defined as the agreed to through negotations, then the by local newspapers and broadcasters. lowest priced tier of service, installation matter must be submitted to binding ar- NLC Executive Director Alan Beals charges, and the rental of converters bitration for resolution. said, "we are pleased to see that a num- would be permitted in franchise areas not S Services. Cities may enforce re- ber of improvements were made to the served by four or more over-the-air tele- quirements for the provision of particular bill by the subcommittee, particularly in vision signals and under existing fran- services included in existing franchises the access area.' chises for the longer of five years or one- and any offer to provide particular cable He further stated, "we continued to half the remaining term of the franchise. services in new franchises.The cable op- have major problems with the bill in The subcommittee accepted an amend- erator,however,may remove a particular numerous areas, including the restrictive ment offered by Rep. Matthew Rinaldo service required by a franchise whenever definition of basic service, the provisions (R-N.J.)that would permit the regulation there has been a significant change in allowing the cable operator to remove of basic service rates in any franchise area circumstances such as a service no longer services and facilities required by the with a penetration rate of 70 percent being available or being available only franchise,and the franchise renewal pro- unless the cable operater established that on terms which are substantially more visions." on-site reception of four broadcast sig- burdensome than these prevailing at the full committee action is expected early nals was adequate. time of the operator's original agreement next year. ❑ to provide the services. January 19 , 1984 Honorable, Fortney "Pete" Stark Representative 9th District 22300 Foothill Boulevard Suite #1029 Hayward CA 94541 Dear Congressmen Stark : On behalf of the entire Dublin City Council, I would like to encourage your opposition to H . R. 4103 and solicit your assistance in gaining important amendments . At the regular City Council meeting on January 23 , 1984 , the Dublin City Council considered H. R. 4103 which addresses the cable television industry and their relationship with municipalities responsible for granting franchises . The City Council recognizes the valuable service that a cable television system can provide to the community. We are supportive of the check and balance system created by the franchising process, which will allow local governments to oversee their implementation and to ensure that contractual obligations are carried out and the public interest is served. The content of H. R. 4103 places cities in a difficult "Catch-22" situation. The legislation makes it difficult to deny the renewal of a franchise despite the operator ' s performance . If a city were to comply with this provision it may also create antitrust exposure . This situation is unnecessary and will create a burden on local governments . It is also important to note the extensive limitations placed on a city in granting extensions . Extensions are required to be granted unless the city makes specific findings as noted in the bill . However, even if a city makes those findings the operator can seek judicial relief . H. R. 4103 requires that the court review ignore the administrative proceedings and begin all over . The position taken by the City of Dublin is representative of the issues raised by the League of California Cities, and the National League of Cities . These organizations support amendments protecting the interests of cities , which most monitor cable operators to assure that the interest of the general public is served. Again, on behalf of the Dublin City council I urge you to oppose H. R. 4103 in its current form. We would welcome any amendments which support the League of Cities position. Sincerely, Peter W. Snyder Mayor PWS/lc