Category Archives: Insight Communications

City Council, City of Peoria, Insight Communications, Television

Cable franchise agreement on agenda Tuesday

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When the Cable and Video Competition Law passed in Illinois, I expressed some concern over what it would mean for Peoria. You may recall that the Act states:

…if the holder [of a state franchise agreement] is an incumbent cable operator or any successor-in-interest company, it shall be obligated to provide access to cable or video services within the jurisdiction of a local unit of government at the same levels required by the local franchising authorities for that local unit of government…

And I said:

The Act defines “incumbent cable operator” as an entity “that provided cable services or video services in a particular area under a franchise agreement with a local unity of government…on January 1, 2007.” Insight has not had a franchise agreement with Peoria since April 2006 when the last agreement expired. The city has been negotiating a new franchise agreement ever since, but the two parties have not come to terms. So it’s very possible that Insight would not be subject to the “incumbent cable operator” provisions of the Act.

But on Tuesday that problem may very well be solved. The council likely will approve a franchise agreement extension until January 1, 2008, retroactive to April 15, 2006. This extension would also approve a transfer of the agreement from Insight to Comcast. The upshot is that Comcast will be considered Peoria’s undisputed incumbent cable operator, and that may work to Peoria’s advantage whenever Comcast decides what kind of franchise agreement (state or local) it wants to pursue.

Basically what this means is that we won’t see any reduction in cable service, if this agreement is approved.

Insight Communications, Television

Cable and Video Competition Law passes

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On June 30, Gov. Blagojevich signed Senate Bill 678 into law. Included in that bill are two acts that impact cable television: “The Cable and Video Competition Law of 2007” and “The Cable and Video Customer Protection Law.”

This bill that passed is far superior to House Bill 1500, on which I commented back in March. A good overview of the bill is provided by the Illinois Municipal League.

Under this new legislation, a cable provider can choose to either get a local franchise license through the county or home rule municipality, or get a state franchise license through the Illinois Commerce Commission. However, even if the cable provider decides to get a state license, the bill provides adequate protection of and compensation to municipalities for the use of their rights-of-way.

Public, educational, and governmental (PEG) access is maintained in this bill (cable companies have to provide it), and the transmission of PEG programming must be transmitted to customers “at no cost to the local unit of government or the public, education, and government programming providers.” It’s also provided that PEG access must be available on the lowest programming tier (i.e., part of the most basic cable package) and have “equivalent visual and audio quality…from the viewing perspective of the subscriber, to that of commercial channels.”

The franchise fee paid to the municipality is set at 5% of gross revenues, which is the maximum allowed by federal law. But here’s an interesting item: the municipality can tack on another 1% of gross revenues “as support for public, education, and government access,” and the cable operator “may identify and collect the amount of the [PEG] programming support fee as a separate line item on the regular bill of each subscriber.” So don’t be surprised if that fee starts showing up on your bill someday — that will be the price you pay for having city council meetings broadcast on channel 22.

Telecommunications companies really win, though, when it comes to build-out requirements. Whereas under local franchise agreements, municipalities usually require cable companies to offer service to the whole municipality, this bill allows companies to target just part of a market area, as long as they meet certain requirements. The Illinois Municipal League explains it this way:

All of the requirements are outlined and can be summarized in the broad general sense — 35% within 3 years and if 15% of the customers sign up in that market area then they must build to 50% within 5 years. The requirements are based on local exchanges. The low-income requirements for service are in the bill, which are 30% in the area.

The bill makes it clear that a cable provider “is under no obligation to serve or provide access to an entire exchange or local unit of government.” But here’s something interesting. In section 21-1101(d)(1), it says this:

…if the holder [of a state franchise agreement] is an incumbent cable operator or any successor-in-interest company, it shall be obligated to provide access to cable or video services within the jurisdiction of a local unit of government at the same levels required by the local franchising authorities for that local unit of government….

So, that sounds like if Insight here in Peoria decided to get a state franchise, it would be required to continue providing service to the whole city. But not so fast — Insight likely wouldn’t be considered an “incumbent cable operator” under this law.

The Act defines “incumbent cable operator” as an entity “that provided cable services or video services in a particular area under a franchise agreement with a local unity of government…on January 1, 2007.” Insight has not had a franchise agreement with Peoria since April 2006 when the last agreement expired. The city has been negotiating a new franchise agreement ever since, but the two parties have not come to terms. So it’s very possible that Insight would not be subject to the “incumbent cable operator” provisions of the Act.

Added to the mix locally is the fact that Comcast is in the process of taking control of the cable system here from Insight, and nobody knows what their plans are. Peoria’s Corporation Counsel Randy Ray had this to say about the new law: “The new Bill changes the landscape. We do not yet know what course Comcast, which is purchasing from Insight will take. As we learn what is going to happen, we will share the information.”

On the positive side, this bill opens up the possibility that cable competition could come to Peoria (or part of Peoria, at least). Most likely this competition would come from AT&T, which already has its phone lines strung all over the city. Whoever wishes to get a state franchise license has to apply to the Illinois Commerce Commission (ICC), and the Act requires that the ICC publish those applications on its website within five days of receiving the application. So far, there have been no applications submitted.

City of Peoria, Comcast, Insight Communications

Still no franchise agreement, and now Comcast

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TV iconSince April 2006, the City of Peoria and Insight Communications have been operating without a franchise agreement. The old 20-year agreement expired last year and negotiations for a new agreement have been going on ever since. The City isn’t saying what the holdup is, although it could be any number of things, including state and federal legislation designed to take local franchising authority away from home-rule communities like Peoria.

In the middle of all that, the news has been released that Comcast will be taking over Insight’s cable systems in Illinois, including Peoria. So what does that mean for Peoria’s on-going struggle to nail down a new franchise agreement?

City attorney Randy Ray had this to say: “There is a procedure whereby the City approves the transaction. Hopefully we can use that as leverage and get an agreement.” He didn’t elaborate on what the “procedure” is.

City of Peoria, Insight Communications, State Legislation, Television

Almost a year later, and still no cable franchise agreement

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Cable TVOn 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.

City of Peoria, Insight Communications, Television

Cable franchise agreement still in the works

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Insight Communications’ cable franchise agreement with the City of Peoria expired six months ago, but renewal of the cable operator’s franchise has yet to be signed. I asked City attorney Randy Ray on Monday (10/23) what the status was, and he had this to say:

We have just completed 3 lengthy conference calls. Our attorney is working on a draft. There will be at least one more conference call. We hope to have an agreement in 30 days or less.

It remains to be seen how much longer franchise agreements like these will last. Just this month, California became the latest state to enact statewide cable TV franchises (joining Indiana, Kansas, New Jersey, North Carolina, South Carolina, Texas and Virginia), and lawmakers on Capitol Hill are still contemplating national franchise agreements.

City of Peoria, Insight Communications, Television

TV ads promote national cable franchise agreement

Have you seen a commercial like this one lately?

In this ad, which I got online, it lists Tennessee senators, but I’ve seen this same ad locally (frequently) with Illinois senators listed. It leaves you with the impression that some nefarious “special interests” are sabotaging a chance to lower our cable bills and allow something called “cable choice.” But these ads are totally misleading.

What the ads don’t tell you is that they’re advocating a bill in Congress known as the Advanced Telecommunication and Opportunity Reform Act. The House version of the bill (HR5252) passed 321 to 101, and is due to come up in the Senate. If passed and signed into law, this bill would allow the federal government to award cable franchise agreements.

I first brought this up back in April when Peoria’s franchise agreement with Insight expired. Right now, companies who want to offer cable television to a community must negotiate a franchise agreement with the local municipality. Peoria is still trying to negotiate a renewed franchise agreement with Insight Communications; according to city attorney Randy Ray, Insight and the City will be meeting again September 11 to hopefully hammer something out.

By law, cable franchise agreements are non-exclusive. That means no one is keeping “cable choice” from happening. Any company who wants to offer cable TV to Peoria can come in and negotiate their own franchise agreement with the city. But big telecom congomerates like AT&T don’t want to have to negotiate with every municipality, hence the push for a national franchise agreement.

The telecom-backed www.WeWantChoice.com, which sponsored the above commercial and others like it, call the current franchise system “a lengthy, expensive process that just doesn’t make sense.” By having a national franchise agreement, it will make it easier for them to compete, they claim, and that competition will lead to lower cable bills.

The Illinois Municipal League (IML) sees it differently. Local governments and their advocates like the IML are undoubtedly the “special interests” to which the commercials refer. The IML believes this legislation “would harm consumers, cities and counties in many ways, including:”

  1. It fails to keep local govemment financially whole because it strips state and local governments of tax authority over broadband and wireless telecommunications services.
  2. It would permit local telephone companies to pick and choose the neighborhoods in which they want to provide video and broadband services, while allowing them to bypass other
    neighborhoods completely.
  3. It would replace strong state and local consumer protection and customer service standards with federal standards drafted by federal bureaucrats not accountable to state and local communities and consumers.
  4. It would unilaterally preempt other carefully crafted state and local laws that encourage competition and protect the public interest.

If this process is so expensive and burdensome, how is it that cable companies have figured out a way to do it profitably? Why should telecom companies be allowed a shortcut — an end-run around local control? This is not about leveling the playing field — it’s about very large telecom companies wanting an advantage over cable companies. This is not a process that needs to be nationalized. Cable franchises should not be a federal issue; they are a local issue, and they should stay local.

Incidentally, Randy Ray mentioned that the city has been lobbying our representatives in Washington concerning this, and “the Mayor has written several letters.”

No one has admitted it, but I’m guessing this legislation is one of the sticking points that’s delaying the new franchise agreement between the City and Insight. I’ll bet Insight wants language in the agreement that will allow them an “out” if national franchise agreements are permitted in the future. Otherwise, they would be at a competitive disadvantage.

City Council, City of Peoria, Insight Communications, Television

Will Peoria’s new cable franchise agreement be moot?

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Peoria is in the process of renewing a franchise agreement with Insight Communications. The city has been through this twice before (for a history of cable franchise agreements in Peoria, see my previous post on the topic), so you’d think this is pretty mundane stuff.

Not so. You may surprised to learn that franchise agreements are a hot topic across the nation because of a newcomer to the video-distribution market: phone companies. Yes, telecommunications giants like AT&T and Verizon are spending lots of money upgrading their infrastructure to offer not just better broadband internet access, but cable television. Many believe this new competition will help stabilize cable prices, which are increasing at twice the rate of inflation according to the Consumers Union.

The problem is, these phone companies don’t like negotiating unique cable franchise agreements with each municipality across the fruited plain (like the cable companies have to do). So they’ve been working very hard to do an end run around local municipalities by pushing for statewide franchise agreements. They’ve already succeeded in getting franchise agreements with Texas, Virginia, and our Hoosier neighbors to the east.

So successful they’ve been, phone companies are ready to trump both municipalities and states by pushing for a national franchise agreement. That’s right, legislation was introduced last year in the nation’s capital that would radically change the Telecommunications Act: S.1349/H.R.3146 (“Video Choice Act”), and S.1504 (“Broadband Investment and Consumer Choice Act”). And this year, a bill will be introduced in the House called the “Communications Opportunity, Promotion, and Enhancement Act of 2006.” These bills are all designed to take franchising authority out of the hands of cities and states.

There are a couple of groups against — in fact, incensed by — this action: cities and cable companies.

Cities don’t like the idea of losing local control. Franchise agreements offer numerous benefits to communities, such as: compensation for the use of public rights of way (e.g., utility poles, easements); mandates on customer service responsiveness; accessibility for public, educational, and governmental (PEG) purposes (e.g., channels 17 and 22 in Peoria); and requirements to serve the whole city (non-discrimination of service). That’s not an exhaustive list, but you get the idea. These agreements are beneficial to cities.

Cable companies don’t like the idea of these phone behemoths being treated as start-ups and given preferential treatment. They’re not buying the sob story from phone giants that it’s just so hard to negotiate all these individual franchise agreements when cable companies have managed to do it for 40 years. Plus, Verizon already has cable franchise agreements covering over two million households, so they don’t seem to be hampered too badly.

What does all this mean for Peoria? At this point, I can’t find any pending Illinois state legislation that would change the franchising process for municipalities, so there’s no threat on that front (correct me if I’m wrong). But if phone companies are successful in their lobbying efforts for national franchise agreements, it would render all Peoria’s current cable negotiations moot, and it could mean more expense to broadcast the city council meetings or the loss of PEG access altogether.

City of Peoria, Insight Communications, Television

Cable franchise agreement to be extended until July 15

The 20-year cable franchise agreement the City of Peoria has with Insight Communications is set to expire April 15, but the city is offering to extend it until July 15, according to Randy Ray, corporation counsel for the city.

Ray didn’t explain further, so the rest of this post is pure speculation.

It appears the only things the city wants are to have Insight broadcast the city council meetings for free, which would save the city about $32,000 annually, and to have a shorter term for the agreement.  I’m going to guess that the $32,000 is not the sticking point, but that the cable company wants a longer agreement.  I seem to remember (and I could be remembering this incorrectly) Ray saying that he wanted the new agreement to be for only five years.  If that’s the case, that would be a disincentive for a cable company to invest a lot in infrastructure; I could see how it would hold up negotiations.

And Insight is not shy about holding up negotiations.  In Decatur, their franchise agreement has been expired for three years and they’re still negotiating a new one.  Let’s hope it’s not that bad in Peoria, and that the short three-month extension is a signal that both parties are hoping to come to agreement soon.

City of Peoria, Insight Communications

Cable franchise agreement update

I decided to go straight to the source and ask City Attorney Randy Ray what the status is of the cable franchise agreement. He was kind enough to write me back this evening:

We have a meeting scheduled with Insight next week. We hope to have an agreement by April 15. Our biggest local concern is to end the payments by the City for televising Council meetings live. Thank you for the question.

One of the pitfalls of using sarcasm as I occasionally do is that you always have to qualify when you’re being serious. This is one of those times. So, seriously, thanks to Randy Ray for responding to my e-mail and providing this update. Some may complain it wasn’t that newsy, but I know there isn’t a lot he can share while the city and Insight are still negotiating.  Hope the negotiations turn out well and in the city’s best interests.

City of Peoria, Insight Communications, Television

Question for council: How are cable negotiations going?

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I wonder what the status is of the city’s negotiations with Insight Communications for a new cable franchise agreement. Last June, the City hired the Varnum Riddering firm from Grand Rapids, Michigan, to help them negotiate a new agreement. The current agreement expires on April 15. It looks like these negotiations are not exactly a walk in the park, at least if Decatur is any indication.

According to the Decatur Herald & Review, the Decatur city council is still negotiating their cable franchise agreement, also with Insight, even though their previous agreement expired in 2003. The sticking point appears to be over how much money Insight should be forced to spend for public, educational, and governmental programming:

Brian Gregory, regional director for government relations for Insight . . . said a proposal calls for about $76,000 for new cameras and equipment for the council chambers. The city hopes to expand programming for other governmental and community groups, which could cost up to $300,000.

Money provided for additional cameras or equipment would raise rates, and Insight cable customers in Decatur would “bear the burden” of those costs, Gregory said . . . . City Manager Steve Garman said there is “nothing that we have asked for that is not ordinary and common for cities of our size.”

Peoria is expanding its own programming slightly — adding a new show called “Inside the City” which starts March 2 on channel 22. But, according to the Request for Council Action last June, they were only looking to save $32,000 when they hired Varnum Riddering. So maybe things will go better for Peoria. Still, it would be nice to hear an update.