Most Recent Action
Since taking effect on July 1, 2008, AT&T and Charter Communications have been granted statewide cable or video franchises. As part of this process, both providers have disclosed the municipalities and counties that are included within their respective service areas; a table can be found on the next page which lists the municipalities covered under these franchises.
Each covered municipality should have received a letter from the Tennessee Regulatory Authority (TRA) requesting information concerning any PEG channels that might be afforded the municipality under a local cable franchise agreement. By law, the city has 10 days to provide the requested information concerning PEG channels to the TRA. In addition, affected municipalities are required to provide additional information, such as locations within the city that are receiving free service, to the provider within a prescribed timeframe.
Background
In 2007, the “Competitive Cable and Video Services Act,” SB1933/HB1421 was introduced by House Commerce Committee Chairman Charles Curtiss, Rep. Steve McDaniel, Senate State and Local Chairman Bill Ketron, and Senator Doug Jackson.
It was clear from the beginning that this bill would have many lasting and damaging effects if it were to pass. Limitations would have been placed on municipal authority to perform audits on a cable provider, including a reduction in the statute of limitations. Franchise fees would be significantly reduced by redefining “gross revenues.” Similarly the bill would have eliminated fees currently paid by providers operating local franchise agreements and preempted a municipality’s authority to levy any new tax.
Also, a municipality’s ability to police its rights-of-way would have been eliminated and only by suing could a municipality recoup costs incurred by taxpayers to repair damages to public rights-of-way.
Furthermore, consumer protections would have been significantly weakened by the elimination of federal, state and local customer service requirements. The absence of any build out requirements would have allowed for a statewide cable and video provider to “cherry-pick” which parts of a municipality they would provide service to. In addition, loopholes would have effectively nullified anti-discrimination requirements. Onerous programming requirements and transfers of costs to municipalities would have excused statewide cable and video providers from carrying virtually all PEG channels.
In testimony before the House and Senate Commerce Committees, TML drew attention to the myriad of flaws within the bill. Enough legislators took notice; and with the help of pressure from municipal officials, the bill stalled in 2007.
In 2008, TML introduced legislation modeled after a compromise amendment proposed by House Commerce Committee Chairman Charles Curtiss in the final legislative days of 2007. TML's proposed bill, HB 3959/SB 4021 was sponsored by Chairman Charles Curtiss and Senator Tim Burchett.
In February 2008, House Speaker Jimmy Naifeh convened a months-long process of meetings and negotiations between legislators, state officers, local governments, cable industry leaders, and AT&T executives. Eventually, this process led to a negotiated compromise.
Under the “Naifeh Compromise,” or Public Chapter 932, all providers are free to choose either a local franchise or a state franchise, and all providers must abide by local rights-of-way ordinances and local governments can enforce these ordinances. In addition, existing PEG channels are preserved and PEG costs not currently borne by a municipality will continue to be paid by the provider. AT&T as well as any other new market entrant will pay a franchise fee equal to five percent of its gross revenues generated within a municipality.
AT&T and any new entrant to the market must begin to provide service within 24 months of receiving a state franchise. AT&T is required to offer video service to approximately 570,000 households within its existing telephone customer base no later than 3 ½ years following receipt of a state franchise. Current cable providers are required to offer service to thirty percent of households, if expanding into an area currently not served under a local franchise. If an incumbent provider elects to terminate its local franchise in favor of a state franchise, then the incumbent must continue to offer service to every household within the municipality that was subscribing to its service on the effective date, until the natural expiration of the franchise.
Moreover, the compromise provides that in the event that an incumbent cable company elects to terminate its local franchise in favor of a state franchise, then the affected municipalities may, by resolution, increase the franchise fee to five percent. However, if a municipality elects to increase the franchise fee paid by the state franchisee, then the state franchisee is no longer required to abide by the build out requirements that were included in the original local franchise.
The compromise also preserves a municipality’s right to audit franchise fee payments annually, which may cover the three most recent years; however, a municipality may not audit the same records more than once.
