TELECOM Digest OnLine - Sorted: Cable Competition Worries Some Municipal Leaders

Cable Competition Worries Some Municipal Leaders

Mike Johnson (
Thu, 17 Nov 2005 14:16:15 -0600

Original URL:


Legislation before Congress designed to increase cable TV competition
by allowing more companies into the market is getting a bad reception
from local governments.

Many leaders in municipalities in southeast Wisconsin and elsewhere
say they are worried they will lose the franchise fees they collect
from cable companies if the legislation passes.

The fees amount to thousands of dollars a year for some local
governments and, in the case of Milwaukee, almost $3.7 million
expected in 2006, for allowing cable providers use of public rights of

The Video Choice Act, legislation introduced by U.S. Rep. Marsha
Blackburn (R-Tenn.), would eliminate local franchise agreements, a
move she contends will drive down the prices consumers pay for cable

Blackburn thinks the franchise agreements create a monopoly. Current
law that mandates franchise agreements serves "as a barrier to
competition" and prevents "new technologies from entering the market,"
she told her U.S. House colleagues this year.

Many communities have agreements with a single provider, she
noted. The Video Choice bill would increase competition, allowing new
competitors, including other cable companies, telephone companies and
Internet providers, into the cable TV market, Blackburn said.

But local elected officials, who say they support increased
competition, are encouraging their federal representatives to oppose
Blackburn's bill and similar legislation, including a bill in the
U.S. Senate that could nationalize franchising.

Waukesha Mayor Carol Lombardi said municipal leaders are worried about
two things: the loss of the franchising fees and the loss of local
control in determining who provides cable service.

The revenue from franchise fees is crucial to municipalities, Lombardi
said, especially now that local governments are under a spending cap
imposed by state lawmakers.

Lombardi, who leads the Waukesha County Municipal Executives group,
sent a letter to U.S. Sens. Russ Feingold and Herb Kohl and
U.S. Rep. F. James Sensenbrenner Jr., urging them to vote against any
legislation that would remove local control over franchising fees.

"The financial constraints that we, at local government, ... are
facing is very serious," Lombardi wrote.

Waukesha's franchise fee with Time Warner Cable generates about
$600,000 a year.

Menomonee Falls will get about $232,000 this year through its
agreement with Time Warner.

Its village president, Rick Rechlicz, said he doesn't appreciate "big
government" sticking its nose in local government's business.

"At a time when we're trying to be fiscally sound, they want to
eliminate a non-tax revenue item," he said.

Milwaukee's Common Council also has opposed the measure, and city
officials have sent a letter to local congressmen stating their
opposition, said Paul Vornholt, a spokesman for Mayor Tom Barrett.

Need for competition cited

But Blackburn said local governments would not lose their fee revenue.
"My bill absolutely does not take away local revenue streams, and
those who claim otherwise don't have their facts correct," Blackburn

"The language was specifically written to require that video providers
continue to pay fees to the local government. In all likelihood, this
legislation would decrease costs for consumers and increase revenues
for our local governments as more providers enter your local
marketplace," she said. "More providers equal lower consumer prices
and more fees for local government.

"We've fallen to 16th in the world in broadband deployment, and we've
got little to no video provider competition because of the current
regulations. This bill manages to correct those problems while
preserving local funding streams and control."

Del Beaver, the administrator of the Village of Jackson in Washington
County, said the federal government should leave well enough alone.

Jackson will get about $45,000 this year through its franchise
agreement with Charter Communications.

"The competition thing is a sham," Beaver said. "It isn't going to happen."

From the Nov. 12, 2005, editions of the Milwaukee Journal Sentinel

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