On April 15, 2006, Peoria’s 20-year cable franchise agreement with Insight Communications expired. As of today, we still have no cable franchise agreement, but City Attorney Randy Ray is hopeful that we will soon. In an e-mail I received in response to my question on how negotiations were going, he said this:
Our attorney is working on what I hope is a final version [of the proposed new franchise agreement]. We are subject to being affected by pending legislation in Springfield.
That is one, long, drawn-out negotiation. No doubt the legislation to which Ray obliquely refers is H.B. 1500, the so-called “Cable and Video Competition Law of 2007.” It’s backed by telcom behemoth AT&T which wants to get into the cable TV business without having to negotiate franchise agreements with each municipality the way cable companies have done for the past 40 years.
Under H.B. 1500, a cable provider such as AT&T would apply not to the City of Peoria or the Village of Morton or any other local municipality for a cable franchise agreement to serve those communities, but rather to the Illinois Commerce Commission (ICC) to get franchise authorization. Furthermore, it would preempt home rule, meaning that it would strip municipalities of any authority to regulate use of their rights-of-way by cable operators (e.g., use of utility poles, underground easements, etc.), as they do through local franchise agreements now.
Opponents of the bill, such as the not-for-profit organization SaveAccess.org, say that it does a number of harmful things, including:
- Shuts down Public, Educational and Government (PEG) stations around the state
- Drops requirements that companies serve everyone
- Weakens customer service protections
- Harms fair competitions
Granted, those are all sound-bite sized talking points, but I think they’re true. Consider:
The first point is a reference to a provision in the bill that states, “Any public, education, or government channel provided under this Section that is not used by the franchising authority or local unit of government for at least 8 hours per day of non-repeat programming for 3 consecutive months may no longer be made available to the local franchising authority….” That’s a lot of public access programming to sustain. Insight provides channel 17 (Illinois Central College) and channel 22 (public/government access), and I don’t believe the two of them combined provide 8 hours/day of non-repeat programming. So I believe it’s fair to say the effect of the bill would indeed shut down PEG stations.
As far as it dropping requirements to serve everyone, local franchise agreements were always concerned with equity — with the same service being available throughout the city (see, for example, §5.1 of Peoria’s 1986 Cable Franchise Agreement). The bill as written would not require total coverage, and in fact would only require that by five years after rollout, 30% of households accessible to the cable operator’s service be low-income.
Since complaints about service would no longer be made locally, but to the state, I think there’s no question that it weakens customer service. Who do you think is going to be more responsive to your cable TV complaint: your city staffer/council rep or a state bureaucrat?
But the last point is the kicker. As a recent article in Multichannel News points out, “As currently written, the bill [H.B. 1500] would hold only incumbent cable operators to current franchises until their statutory end dates.” Indeed, §21-301(2) of the bill states, “Upon expiration of its current agreement, an incumbent cable operator […] shall obtain State authorization from the Commission pursuant to this Article and shall be subject to the provisions of this Article.”
And this may be one reason it’s taking so long to get a new franchise agreement between Insight and Peoria. Insight will want to protect themselves against signing a 10- or 20-year franchise agreement that is going to put them at a competitive disadvantage to AT&T, which will be deploying cable services under a state-granted franchise if this legislation is passed.
The bill has been assigned to the Telecommunications Committee, and there was a hearing on it today (3/22) in Springfield. There is a website set up specifically to oppose this bill called KeepUsConnected.org.
The flip side of this is cable companies wanting to get into the phone service business and not wanting to have to provide service to rural residents like the phone companies do.
Mahkno, can you provide a source on that? I can’t find anything on it. Thanks!
Cable companies, like Insight that are going into the phone service don’t have to provide phone service where their cable doesn’t go. So if you live in a rural area without cable, then they don’t have to provide cable phone. (internet phone)
Emtronics: And phone companies are required to provide phone service in rural areas? What’s the law that requires that, and where can I find articles that talk about how the cable companies are refusing to comply with that law? I’m not questioning that what you say is true — I just want to see specifics.
Last fall, I stopped a man who was counting poles in my neighborhood and asked what he was doing. He told me a company other than Insight was doing a study to provide cable in this area. (he did not name the company) I just thought you’d all like to know.
Yes CJ, the core telephone companies are required to provide service to anyone in their designated area.
Illinois along with all the other states are carved up into service regions in which they have a ‘monopoly’. In that region they have to provide service by the same terms to everyone, rural or in town. Then came the changes to laws to encourage competition in local phone service. This law is deeply flawed in that the established ‘monopoly’ had to provide space and use of equipment to any comers. The would be competitors were under no requirement to service the entire service region. So these new competitors get to cherry pick customers and get use AT&T’s equipment. It is more complicated than that… lets keep it simple.
I should point out, the phone companies are required to provide basic phone service only. They are not required to provide DSL to everyone or any other service.
Now some years on and technological advances later. Everyone wants to be into everyone else’s business without the limitations.
The cable companies discovered they can do telephony with the use of VoIP. The phone companies want VoIP to be treated like telephony, especially since the cable guys are intent on it interfacing with the regular phone lines. Cable is under no obligation to provide minimal service to anyone. This issue is 4 or 5 years old now and I think the Cable companies got their way. There was an effort by the phone companies to lobby for a change in the law to either undo the minimal requirement or require it of all comers (incl. wireless btw). I don’t think it got anywhere.
The phone companies discovered that they can, somehow, deliver ‘tv’ via the phone lines. The cable companies cried foul (its all politics you know). The phone companies have an advantage, sort of, because they have all those pre-built transmission lines. The phone companies, because they are not cable, would not have to provide local programming, public access, nor be required to adhere to any content restrictions. This too is several years old which may affect finding news articles on it.
My other main source for info is my old man who worked for the phone company until he retired last year. He was in planning, which had to deal directly with a lot of these issues.
C.J., the ‘universal service fee’ on your phone bill is to cover your telco’s cost for providing service to unprofitable [usually rural] areas that it would probably not serve if it didn’t have to.
“And phone companies are required to provide phone service in rural areas? What’s the law that requires that, and where can I find articles that talk about how the cable companies are refusing to comply with that law?”
Makhno covered it really well — cable companies aren’t REQUIRED to comply with that law, which is why phone companies are screaming bloody murder about cable telephony (and internet telephony, which is the bassackwards way of sneaking telephone in over cable lines that neither cable or phone companies really thought much about until it was already happening via startups).
The Telecommunications Act of 1934 requires universal service nationwide — partly because phone systems are only useful if a lot of people are connected up to them — and running and maintaining lines in sparsely-populated areas is a lot more expensive than in densely-populated areas. Basically the densely-populated areas subsidize the sparsely-populated areas, and phone companies may take a separate fee from all subscribers to cover the cost of this subsidization (rather than rolling it into higher rates).
The Telecommunications Act of 1996 wants to do this for “telecommunications services,” but I don’t think the law is that well-written, and when telephone and electricity lines were laid down, it was a nationwide effort with substantial subsidization to get the whole country connected. There’s not the same political will today, nor quite the same urgency. (Obama actually talks about putting such a drive into place in his campaign speeches. Laying high speed internet nationwide could be the electrification of the 21st century with similarly spectacular results, or it could be an expensive debacle that would be outdated before it was begun b/c of high-speed sattelite internet.)
The root of the problem is that anything that comes over wires — cable, telephone, electricity — is a “natural” monopoly because SOMEONE HAS TO OWN THE WIRES. (This is actually true of pipes, too — water, sewer, gas — but for some reason there’s never the same brouhaha over pipe utilities, probably because pipes are by nature single-access while wires can carry multiple “data streams.”)
So what happens is either that the wire-owning company is forced to allow competitors on its wires and is SCREWED because competitors have zero maintenance cost, or the wire-owning company can impose such high access costs that no competition materializes — as in the case of our current lack of competition in residential electricity rates. Electric companies love deregulation because they know that nobody will come in to compete and since they’re no longer regulated as monopolies (because of the theoretical, never-materializing competition), they can charge a lot more.
One option would be to have the government or local authorities or a government-controlled corporation own all the wires and have all service providers using those government-owned wires, but this leads to a problem where maybe nobody wants to serve your area and then the government may be forced to take on that role as well.
What’s interesting is that real rate competition for phone and cable didn’t come from forced wire sharing — it came from cell phones and sattelite dishes which don’t use the wires at all. (Perhaps this implies that real electric rate competition will come in the form of home generation — there are already companies that “rent” you solar cells by the generated kilowatt — for less than you pay per kilowatt to your electric company.)
I’m not entirely sure what that implies for telephone-based television or cable telephony, since we do have two actual separate sets of wires. Maybe that could provide actual wire-based competition. But I suspect this battle is somewhat moot because of cell and sattelite providers, and the wired companies haven’t adapted to that yet.
(I apologize for my scattershot spellings of sattelite. I cannot spell that word.)