TELECOM Digest OnLine - Sorted: Re: Connecticut OKs Plan by AT&T to Offer TV Without a Franchise

Re: Connecticut OKs Plan by AT&T to Offer TV Without a Franchise

J. Nicholas Hoover (
Sat, 10 Jun 2006 22:10:37 -0400

John Levine <> wrote:

> Actually, Federal law limits the franchise fee to 5%, so
> that's what they all get.

But federal law allows LFAs to impose that 5% franchise fee on the
cable company's entire revenue from video services, *including* the
revenue charged to pay the franchise fee, so the total fee actually
works out to about 5.26%. See

Federal law also allows LFAs to demand, as part of the franchise
agreement, extra goodies like free basic service to schools and
government buildings, PEG access channels, access production studios,
company-paid personnel to run those production studios, million-dollar
performance bonds, institutional networks (I-nets). These items are
subject to negotiation during the franchising process, so LFAs can't
impose them unilaterally. But during the Great Franchise Wars of the
1970s and 80s, cable companies were competing against each other, and
LFAs were able to play applicants off against each other. In the
midst of competitive hearings, many cable companies made promises that
look pretty foolish today. Nevertheless, to the extent that these old
agreements are still in force today, these extra-goodie requirements
are still enforceable. And whatever it costs the cable companies to
comply are over and above the 5.26% franchise fee.

Speaking of I-nets reminds me of a three-year old thread about
Comcast's lawsuit against City of San Jose. As I recall, the city was
demanding, as a condition for approving a franchise transfer to
Comcast, that Comcast build a telephone network for the City government,
and that Comcast was refusing to agree to this requirement.

The details weren't clear at the time, but I assume that Comcast's
position was that such a requirement was not in the original (ca 1975)
franchise agreement.

At the time (June 1, 2003), John Higdon, a San Jose resident and
Telecom-Digest contributor, wrote [22:489]:

> Why Comcast, which operates a 30-year-old cable infrastructure in
> San Jose, is nit-picking about issues in its franchise agreement is
> beyond me. They don't even have a product to offer; there is
> nothing to discuss.

Whereupon, on June 1, 2003, I wrote [22.490]:

> Well, the city government apparently thinks there's a lot to
> discuss. Otherwise, why would this issue have come up in the first
> place. The whole point of the "nit-picking" is that Comcast wants
> to extend its franchise so that it can build a whole new network
> and completely abandon that "30-year old infrastructure."

On June 2, 2003, Higdon wrote [22:492]:

> Uh huh. We have been hearing this for decades from the half-dozen
> companies who have bought the system and then continue to milk the
> revenue out of the sixties technology. Comcast is just the latest
> in long line of empty promise providers.

On June 3, 2003, I wrote [22:495]:

> Well, I don't think either of us can predict the future. So here's
> a suggestion: mark your calendar for June 4, 2004, and post an
> update then on Comcast's progress.

Unless I missed something, Higdon didn't post an update in June 2004
or June 2005. So, Mr. Higdon, how about posting an update for us in
June 2006?

Neal McLain

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