Join us at our forum Saturday March 10 at the Clive City Hall from 10
a.m. to noon.

Proposed Bill Would Eliminate Cable Franchise Fees

Des Moines Register
March 6, 2007
By Rep. Libby Jacobs

As a member of the House Commerce Committee, I have the opportunity to
consider legislation that provides regulation for certain aspects of the
business community. One such issue is cable franchise law, and it
appears this issue will face us again during this session.

Reforming the way Americans get their cable has been a long-discussed
idea. Across the nation, states have moved to provide more competition
as technology grants different industries the ability to distribute
video programming.

Going into 2007, 11 states had already approved some form of cable
franchise reform legislation. Those states are Arizona, California,
Indiana, Kansas, Louisiana, Michigan, New Jersey, North Carolina, South
Carolina, Texas and Virginia. This issue had been considered by Congress
last year, with the House overwhelmingly approving a bill to create a
national franchising structure.

So what does the proposed Iowa bill do? Under current Iowa law, Iowa
Code section 364.2, each city has the authority to grant a franchise for
cable television service. The proposed bill would dramatically change
this process. The bill would require a person or company providing cable
service or video service to apply to the state or a municipality for a
“certificate of franchise authority” to provide cable in a specified
service area. Companies already providing cable under a franchise
agreement entered into prior to July 1, 2007, are not required to apply
for a certificate of franchise authority until the agreement expires or
is terminated.

When a company applies for a certificate of franchise agreement under
the new arrangement, they would have to comply with a number of
requirements. These requirements include:
-Describing the area that the company plans on providing service to
-Agreeing to comply with federal requirements for cable service
-Agreeing to comply with local right of way ordinances and
-The address of the principal place of business

In what might be the most controversial aspect of the bill, the new law
would put strict limits on the power of cities over holders of the
certificates. Code section 364.2 relating to the powers of cities to
grant franchises, would not apply to a holder of a certificate of
franchise authority under the bill.

Cities also would no longer be able to get certain conditions inserted
into the franchise agreements. Among the things cities would no longer
be able to require of a holder of the certificate are:
– Mandatory build-out provisions
– Requiring the company to be granted a separate franchise from the city
– Paying fees that are not permitted under the bill and
– Requiring other conditions not mentioned in the bill

If a cable-service provider receives a certificate of franchise
authority and chooses to enter into a market, they would be required to
give that city 30 days notice of their intentions. If a company enters
into a market where there is an existing franchise, the company holding
the franchise would have the opportunity to renegotiate the agreement
with the city so that both companies are operating under similar
conditions.

Proponents of the bill will state that the main focus of this effort is
to provide competition and reduce the cost to the consumer. According
to their data, the national rate of inflation has increased 12 percent
since 2002 and median family income has risen 11 percent in the same
time period. Cable rates in Iowa for this time frame have risen by 36
percent.

I would expect cable providers in the state will put up strong
opposition to the bill. Cities, which fear the loss of revenue from
franchise fees and the loss of control over the service in their
cities, will also have issues. One of their main concerns will be the
build-out of services to underserved areas. Since this bill has
ramifications for consumers I expect quite a bit of debate on this
topic.