By Lee F. Brown - lbrown@dailypress.net
Tuesday, December 26, 2006
Escanaba Daily Press
http://www.dailypress.net/stories/articles.asp?articleID=6770

GLADSTONE — Recently-passed House Bill 6456 will change how cable television operates in Michigan. The bill was passed by the state Legislature earlier this month and signed into law by Gov. Jennifer Granholm Thursday. The act goes into effect Monday.

The Uniform Video Services Local Franchise Act releases cable companies from franchising agreements arranged with local units of government. Instead, it allows interested companies to negotiate franchises with a statewide service.
“The legislation streamlines the process for new entrants into the wire line television business,” said Tim Ransberger, Charter Communications vice president for governmental affairs.

Ransberger said the act sets up a new regulatory framework. The Public Service Commission (PSC) will write a statewide franchising agreement by Jan. 31. Companies with existing local franchise agreements can apply for the new uniform statewide franchise, amend existing agreements to mirror the franchise written by PSC or, if in expired status, get 120 days to apply for a new franchise.

State Rep. Tom Casperson, R-Escanaba, supported the amended version of the bill. “We were looking out for them,” Casperson said of his constituents.

Some of the amendments to the legislation included protection for local right-of-ways, franchise fees and PEG (public access, educational and governmental) channels, all of which will continue to be determined at the local level.

Casperson doesn’t expect to see more cable companies enter the area soon. “It’s not going to happen overnight,” he said of bill sponsor AT&T’s involvement in the area. “At least they’re being straight with us,” he added.

State Sen. Mike Prusi, D-Ishpeming, voted against the bill. He agrees with Casperson that competition will take time to reach the Upper Peninsula. “I don’t anticipate a flood of competition here in the U.P.,” he said. “The big investments will be made where there is a big return, i.e. the heavily-populated cities and suburbs downstate.”

Local officials worry the act may negatively impact smaller communities. “The big fear is that you lose local control,” said Gladstone City Manager Brant Kucera.

Kucera raised several questions about the new act. “How much bureaucracy will that add to it?” he asked, referring to the PSC determining all franchise agreements. “Will they take a portion of franchise fees to pay for it?”

The issue of franchise fees is an important one across the state. Many municipalities receive two to five percent of cable television revenues. Gladstone began collecting a five percent fee from Charter Communications based on a city commission decision in July. This amounts to an estimated $56,000 annually.

Currently, Escanaba does not collect a franchise fee.

Kucera said the new act does not regulate administration of the franchise fees. Previously, cable companies paid the full fee up front, he said. Now, a company could come into the area, provide service to only 10 percent of the area in the first year and then only pay 10 percent of the franchising fee.

That idea of cherry-picking customers is another complaint of some detractors. The act, according to the Michigan Municipal League, provides for 25 percent build out in the first three years and 50 percent in the first six. Gladstone already has 100 percent build out from Charter Communications.

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