HomeMy WebLinkAboutReso 1983-11454
RESOLUTION NO. 11454
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA
VISTA ENDORSING THE PROPOSED RESOLUTION OF THE
NATIONAL LEAGUE OF CITIES RELATIVE TO FEDERAL CABLE
LEGISLATION,LOCAL AUTHORITY AND CABLE SUBSCRIBER
PROTECTION
The City Council of the City of Chula Vista does hereby
resolve as follows:
WHEREAS, the City of Chula Vista has received a copy of
a proposed resolution which the City of Lakewood will introduce to
the National League of Cities Congress of Cities meeting in New
Orleans on November 27-28, 1983, and
WHEREAS, this resolution would mandate that the National
League of Cities withdraw its support for cable legislation based
on the NLC-NCTA "compromise" until certain consumer-oriented
provisions are incorporated into the bill, and
WHEREAS, the City Council has reviewed the proposed
resolution and agrees with the modifications suggested, and
WHEREAS, the proposed resolution is attached hereto.
NOW, THEREFORE, BE IT RESOLVED that the City Council of
the City of Chula Vista does hereby support the proposed
resolution of the National League of Cities relative to federal
cable legislation local authority and cable subscriber protection.
BE IT FURTHER RESOLVED that the City Council does hereby
instruct the Council's voting delegate to vote in furtherance of
the proposed resolution of the National League of Cities.
Presented and Approved as to form by
~~~mY
CHULA VISTA, CALIFORNIA, this
19 83 ,by the following vote, to_it:
McCandliss, Scott, Malcolm, Cox, Moore
ADOPTED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF
15th November
day of
AYES:
Councilmen
..
NAYES:
ABSTAIN:
ABSENT:
Councilmen
None
Councilmen
None
Councilmen
None
,
f<.~
STATE OF CALIFORNIA )
COUNTY OF SAN DIEGO ) s s.
CITY OF CHULA VISTA )
I, JENNIE M. FULASZ, CMC, CITY CLERK of the City of Chula Vista, California,
DO HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of
RESOLUTION NO. 11454
,and that the same has not been amended or repealed.
DATED
(seal)
City Clerk
/
CC-660
A RESOLUTION OF THE NATIONAL LEAGUE OF CITIES
RELATIVE TO FEDERAL CABLE LEGISLATION, LOCAL
AUTHORITY AND CABLE SUBSCRIBER PROTECTION
By Mayor Paul E. Zeltner
City of Lakewood, California
WHEREAS, the provision of cable television service has
already proven to be a valuable service to thousands of
communities across the country and holds great potential to
all cities; and
WHEREAS, local governments have had the responsibility
for franchising cable television systems in their cities and
for overseeing the implementation of those franchises once
awarded; and
WHEREAS, in most cases, cable television systems will
likely enjoy exclusivity within a community and will be the
only telecommunications medium with a direct link to the
homes of citizens with its facilities using the public's
right-of-way, and
WHEREAS, the presence of a strong local government role
in the overseeing of franchise agreements has worked to
ensure that contractual obligations are carried out and the
public interest served; and
WHEREAS, S.66 was approved by the U.S. Senate and is
substantially the same as H.R. 4103, which is pending before
the Energy and Commerce Committee of the U.S. House of
Representatives; and
WHEREAS, the provisions of S.66 have been specifically
opposed by the NLC. Transportation and Communications policy
committee and the municipal leagues of California, Colorado,
Iowa, Maryland, Michigan, Minnesota, Nebraska, Ohio,
Pennsylvania, Tennessee, Texas and Wyoming; and 8.66
opposition resolutions are pending before additional
municipal leagues, and
WHEREAS, S.66 is in direct conflict with the cable
communications provisions of the NLC National Municipal
Policy, the primary NLC policy document, therefore,
modifications must either be made to the existing NLC
National Municipal Policy statement on cable communications
or NLC's traditional policy in favor of local authority over
cable franchises should be reaffirmed via this -- or other
similarly formulated -- resolution; and
WHEREAS, NLC's continued support of S.66 would isolate
the League from its customary public interest partners on
cable legislation, including the U.S. Conference of Mayors,
the National Federation of Local Cable Programmers,.the
National Association of Counties and the Cable Television
Information Center; and
WHEREAS, the NLC Board of Directors in July recognized
that, "There are numerous substantive concerns among cities
on various port-ions of the compromise including franchise
renewal provisions, buy back procedures and grandfathering
of existing franchises and RFPSllj and
WHEREAS, S.66 will enable cable operators to renege on
~franchise commitments in terms of services, facil.itie"s and
equipment;
NOW, THEREFORE, BE IT RESOLVED, by the National League
of Cities, ass~mbled at the 1983 Congress of Cities in NewJ' /I~~~~
Orleans, LOUlSlana, as follows: Il (I f~ /
Section 1. National League of Cities support for u.S.
Senate Bill 66 and House of Representatives Bill 4103 -- and
any other similarly formulated federal cable legislation --
is hereby withdrawn until the following modifications are
made:
1.'1 That federal cable ,legislation not limit the option
of local governments to regulate the rates charged by cable
operators for basic service, should cities believe rate
regulation is in the pun1ic interest.
1.2 That federal cable legislation not limit the option
of local governments to define by negotiation with cable
operators the definition of basic service.
1;3 That federal cabLe legislation provide maximum
competition in the franchise renewal process with no'
presumptlon or expectancy of renewal on the part of the
cable operator holding the franchise.
1.4 That federal cable legislation "grandfather" all
existing franchises, 'and their terms and conditions and all
franchise processes in which a Request for Proposals has
been issued; and that federal legislation not apply to
renegotiated franchise agreements, signed within six months
of enactment.
1.5 That federal cable legislation not provide cable
companies with the power to abrogate contractual obligations'
based on a unilateral assertion by a cable operator of a
significant "change in circumstances" in the cost,
marketability, or any cable operator-controlled condition
affecting"the availability of any cable service, facility
and equipment.
1.6 That federal cable legislation not limit the ~
ability of local governments to mandate public, educational,
government, and leased access to cable television.
1.7 That federal legislation protect cities from
antitrust liability for compliance with federal law.
1.8 That federal legislation limiting franchise fees
not apply to fees, charges and taxes charged to a cable
operator as part of a larger class, for example, utility
user taxes.
Section 2. That Congress is urged to closely examine
the potential of federal legislation in the areas of minimuIri
technical standards,. minimum cross ownership provisions,
corruption of franchising processes, minlmum consumer
protection safeguards, minimum third-party access standards
and" minimum standards for interconnection.
Section 3. That in working with Congress in the whole
area of cable communications legislation, the National
League, of Cities shall be guided by the principle of
preserving existing municipal authority'in the cable
communications field, which has greatly benefited the cable
telev~sion indust!y, the cities and nation.
;,
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URGENT THAT YOU REPLY IMMEDIATELY!
--
Please indicate your support for Lakewood's resolution on federal
cable tE!levision legislation by filling out this card and returning
it to the address below.
(xL-'We will support your resolution.
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Please include us in the planning of any floor fight': on behalf
of the resolution.
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( ) Please send us details on the Cities for Cable meeting at the
Congress of Cities meeting in New Orleans.
City
City of Chu1a Vista
Contact Person Gay1 e McCand1 i ss
Tit'le
Delegate
Address
P. O. Box 1087, Chu1a Vista
State
CA
Zip
92012
Telephone (619) 691-5044
Return to:
Mayor Paul E. Zeltner
City of Lakewood, 5050 Clark Avenue, Lakewood. CA 90712
(213) 866-9771
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G.C. (Dee) DeBaun
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Larry Van Nostwn
Council Member
,Ja~que]in{~ Hynerson
Vice Jlriyor
Robert G. Wagner
Council Member
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Paul E. Zeltner
J'vlayor
October 19, 1983
Dear Colleague:
Re: Cable TV Resolution at NLC Congress of Cities Meeting,
November 27-29, 1983
~he City of Lakewood will introduce the enclosed resolution at
the NLC Congress of Cities meeting in New Orleans, November 27-29.
It is our hope that, by adopting this resolution, the NLC
membership will mandate that the NLC withdraw its support for
cable legislation based on the NLC-NCTA "compromise" until
certain consumer-oriented provisions are incorporated into
the bill.
Despite our efforts ,to inform members of the House of
Representatives, 'that body still cites the NLC compromise as
the official stance of cities across the nation.
Recent actions taken by the NLC Steering Committee on Transporta~
tion and Communications, and by other municipal organizations,
indicate to us that there is a good chance that the NLC position
on the legislation can be reversed-~but only if the member cities
are united in their opposition to the bill in its present form.
Last month, the NLC Transportation and Communications Steering
Committee unanimously passed a resolution calling for additional
consumer protections in the areas of 'rate regulation, the franchise
renewal process, and "grandfathering" of existing franchises.
The National Association of Telecommunications Officers 'and
Advisors (NATOA) also unanimously approved a resolution advising
the NLC to oppose federal legislation that fails to protect the
interests of consumers and the rights and responsibilities of
local franchising authorities to serve those interests.
On Octbbe~ 5, the League of California Cities, unanimously adopted
a resolution, which I authored, in oppositi~n to the cable bill.
The state leagues of Ohio and Maryland have also gone on record
recently in support of a change in NLC policy.
'5050 N. Clark Ave., P.O. Box 158, Lakewood, CA 90714 213/866.9771- 213 / 773'296~ II~,,-y'
Page Two
These developments indicate that there is a good chance that the
NLC will reverse its policy if enough cities unite for a floor
fight at the Congress of Cities meeting.
Since the cable industry continues to wage a campaign of
misinformation in claiming that the efforts of local governments
would limit the industry's ability to provide more services
and that only a few "dissident" cities actually oppose the
bill, it is essential that NLC policy officially be changed so
that it accurately reflects the position of the membership.
It is also important that cities not lose momentum as a result
of the introduction of the Wirth Bill in the House. Although
H.R. 4103 is a slight improvement over S.66, it contains the
same deficiencies with respect to "grandfathering," franchise
renewals, rate regulation, and the other items identified in
the resolution.
Cities supporting the preservation of local authority will
. hold a legislative strategy meeting during the NLC Congress
of Cities conference, although not as an official part of the
conference.
For information .about this "Cities for Cable" meeting--and about
our resolution--please contact Jim Barnes of my staff, 5050 Clark
Avenue, Lakewood, CA 90712, telephone (213) 866-9771.
We urge you to support the resolution, and to indicate your
support by returning the enclosed reply card to me at the above
address.
Enclosures
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Sincerely,
~L~~r ~
Mayor '[tne~\
PEZ:am
Dated
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WRITI'EN COM:MUNIC,A:TlONS. r/ 3
CITY .COUNCIL MEETING 11- / - 0, .
by the City Council of
Chula Vista, California
11- /F-n
Dated
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UNITED STATES CONFERENCE OF MAyORS
1620 EYE STREET, NORTHWEST
WASHINGTON, D.C. 20006
TELEPHONE: (202) 293-7330
CABLE TELEVISION
AND
THE PUBLIC INTEREST
SEPTEM3ER 1983
,f /1;7S-!/
TABLE OF CONTENTS
Page
INTRODUCTION i i
PART I DEFINING THE PUBLIC INTEREST IN
CABLE TELEVISION 1
PART I I DEVELOPING AN APPROPRIATE CABLE
TV POll CY 8
PART I II THE SENATE CABLE BILL: UNSOUND
FEDERAL CABLE TV POLICY 11
APPENDI X A . RESOLUTION OF .THE U.S. CONFERENCE
OF MAYORS REGARDING fEDERAL CABLE
TELEVISION LEGISLATION (June 15.
19B3) 15
i
I< IIYSY:-
I NTRODUCTI ON
Cable television holds enormous promise for improving communications
and the quality of life in cities and towns across the country. This
potential has begun to be realized in thousands of communities already.
But there is a significant threat to existing conditions and future prog-
ress in this area.
In the past few years, the cable industry has sought federal legis-
lation to eliminate or reduce the role of community authorities in the
franchising and regulation of cable,television. On June 14, 1983, the
Senate passed S.66, which significantly erodes community oversight over
cable.
, .
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Mayors and other local and state officials, community l'~aders', edu-
cators, and many others across the country believe that the approach taken
inS.66 is contrary to the pub 11 c i nteres t.! They' be heve that S. 66 serves
the cable industry at the expense of the consumer.
1 ", I '\ I :" =" ... ,4
Appropri ate iOfedera 1 cable pol icy is comp 1 ex, ,and i nvo 1 ves many pub 1 i c
policy issues that have been largely obscured or overlooked in the Senate.
This paper highlights these issues for discussion before the House of
Representatives begins cable",television: legislation 'activity.; a,'has been
prepa red in three pa rts : ., "l '.
Pa rt I
Part II
Part III -
Def~njng-the Public Interest in Cable Television
De'/el opi ng an Apphipri ate Federa 1 :'Cab 1 e' TV: Policy
The Senate Cable 8"'i11: Unsound'Federal Cable TV
,Policy , " ,,'"., ':,.:, "
,,0;"0
If questions or suggestions arise after reading this paper, please
contact Leonard S. Simon, Assistant Executive Director of the U.S. Confer-
ence of Mayors, 1620 Eye Street, N.W., Washington, D.C., 20006 (202) 293-
7330. The Conference looks forward to working closely with you in the
coming months as the House of Representatives considers the important
questions of federal cable legislation.
IOn June 15, 1983, the membership of the U.S. Conference of Mayors unani-
mously approved a resolution which stated that federal cable television
legislation is unnr,cfssary and specifically outlined the most troublesome
provisions of S.66. A copy of that resolution is attached as Appendix A.
ii
PART I
DEFINING THE PUBLIC INTEREST IN CABLE TELEVISION
1 A - WHAT IS CABLE TELEVISION?
1 B - WHAT ELSE CAN CABLE DO?
1 C - HOW DOES CABLE TV HELP COMMUNITIES?
1 D - HOW CAN CABLE HELP LOCAL BUSINESSES?
E - HOW. IS CABLE TV REGULATED TODAY?
F - WHY SHOULD LOCAL GOVERNMENTS HAVE ANYTHING TO SAY ABOUT
CABLE?
G - DOES CABLE TV HAVE LOTS OF COMPETITION?
1 H - HOW DOES A FRANCHISE FOR CABLE TV GET AWARDED?
1 I - WHAT ARE THE ELEMENTS USUALLY INCLUDED IN A FRANCHISE
AGREEMENT?
,J - DO LOCAL GOVERNMENTS "DEMAND" EXCESSIVE SERVICE REQUIREMENTS
DURING THE FRANCHISING PROCESS?
1 K - WHAT HAPPENS AFTER THE FRANCHISE IS AWARDED?
L - WHAT DOES THE FEDERAL GOVERNMENT DO TO REGULATE CABLE?
1 M - WHAT'S THE UNDERLYING JUSTIFICATION FOR LOCAL GOVERNMENT
OVERSIGHT OF CABLE TELEVISION?
1 N - WHAT'S THE EVIDENCE OF ABUSE OF THE LOCAL FRANCHISING AND
OVERSIGHT POWER?
1 0 - HOW LONG ARE CABLE TELEVISION FRANCHISES AWARDED FOR?
1 P - WHAT HAPPENS AFTER THAT?
1 Q - BUT ISN'T THIS UNFAIR TO THE EXISITNG COMPANY?
,1 R - OVERALL, HOW ARE CABLE COMPANIES AND CITIES DOING TOGETHER?
~ II 'r':.S"'Y'
2
PART I - DEFINING THE PUBLIC INTEREST IN CABLE TELEVISION ~
I A - WHAT IS CABLE TELEVISION?
Cable television is an elec'tronic'highwaY' whih can provide audio,
video, and data services to residential ~~bscri~ers, businesse~
and institutions.l
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I B - WHAT ELSE CAN CA~LE DO?
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Cable can also provide interactive services such as security and
health monitoring, a'ccess to data' bases, educational opportunities
at hpme, h?m,e bankin,g ~nd shoppin~, and ~ne~~y,,~ontro! ,services,
These' serVlces are here now and wl,ll~ be 1 nc:reas'l ngly lmportant
in the future. ' ,
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I C - HOW DOES CABLE TV HELP COMMUNITIES?
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Cable television can be used to provide an array of public
'services on channel s dedi catedfor pub Ii c:, governnienta-'-:;-educa-
tional, and noncommercial institutional access; , On' pub I ic access
channels, the public can distribute noncommercial programming on
a first-come, fi'r~t-'serVed basis. Ciiiies' and others can use
governmental channels' to, provide 'such "services as Job listings,
home instruction, health and safety information, and other social
services'.' Local schools can provide classroom instruction and
other educational programs over educational access channels. The
institutional channels can be programmed by lotal'arts and cultural
groups, libraries, museums, and similar noncommercial institutions.
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I 0 - HOW CAN ~ABLE HELP LOCAL BUSINESSES?
"
Another deve I opi ng area for cab I e tel evi si on' is' servi ces for
busi nesses. Ins tituti ona I cab I e networks permit the trans fer of
information within, betw'een, and among instit\itions. The'types
of services available on institutional networks include data
trans fer and storage; closed circuit commun i tat ions; facsimi Ie
transfer; training and educational programming; tele-conf~rencing;
telediagriosis; security systems; 'and environmental systems control.
Cable teleyision can create..significant economic, development pos-
,,' sibilitie's'in a community. "The1constructi'on- and maintenance of a
cable television system provides purchasing, training, and jOb
opportunities for local residents and businesses. Moreover, as
the business and institutional uses of cable television develop
and mature, communities with interactive cable systems and in-
stitutional networks may have a significant advantage in retaining
existing businesses and industries and attracting new investments.
3
1 E - HOW IS CABLE TV REGULATED TODAY?
Most cable television regulatory oversight occurs at the local
level -- in cities, towns, and villages. There is also a small
role for the federal government: In a few cases, states have
something to say about it too.
1'.F - WHY SHOULD LOCAL GOVERNMENTS HAVE ANYTHING TO SAY ABOUT CABLE?
Cable television may not be considered a classic utility, but
in almost every case, it is certainly a monopoly. Therefore,
there is a'clear interest in public oversight of cable fran-
chises.
1 G - DOES CABLE TV HAVE LOTS OF COMPETITION?
Not really. The most important measure of competition is
market share. Other technologies which cable claims to be in
competition with have only a very small percentage of that
market share.
In some parts of cable franchise areas, entertai'nment services
are provided by technologies such as satellite master antenna
television systems, microwave systems, subscription television,
and movie videocassettes. Direct broadcast satellite systems
will also provide entertainment services. All of these other
service providers serve targeted and specialized audiences,
and they do not offer pUblic services. For the most part,
the other services are available only in selected, wealthier
'neighborhoods and, in most cas~s, only to subscribers' in
multiple dwelling units. These service providers generally
have no capacity for or interest in creating or originating new
programming or services; in short, they serve merely as non-
creative middlemen which provide conduits for the transmission
of entertainment programs intended for national distribution.
In contrast to the other service providers, only cable systems
have the capacity to offer a wide variety of public and in-
stitutional services, including interactive services. Cable
operators themselves a re a source of programmi ng, and they
provide facilities for the public and others to develop program-
ming.
Because of the absence of effective competition to cable tele-
vision, decisions with respect to the appropriate regulatory
framework for cable telev1s1on should not be premised on the
notion that there 1S grow1ng compet1t1on 1n the f1eld. Once a
person subscr1bes to cable. that person 1S not 11kely to purchase
.other services, which require additional .equipment and impose
additional costs. Thus,. the existence of other services does
not provide a realistic alternative to cable.
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1 ~ - HOW DOES A FRANCHISE FOR CABLE TV GST AWARDED?
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The fi rs t, step ,i n the cab 1 e, franchi sing process usua lly occurs
at the loc'al l'evel'. The process is 'initiated either 'by the
submission of an application by a company or' bY the issuance
of a request for proposals (RFP) by a franchising authority,
!.' Aft~r the submission of applications,: the:\"ranchising authori,ty,
often assisted by experts, evaluates the applicants and the1r
'PToposa 1 s. The app 1 i cants and the pub 1 i,c have; an oPP9rtuni ty
'.to comment on the proposals'and ~he evaluation, ,Af~erpublic
comment, the franchising authority targets one\Q~ more appli-
cants for negotiations to develop a franchise or lic~ryse
agreement.
1 I - WHAT ARE THE ELEMENTS USUALLY INCLUDED IN A FRANCHISi'-AGREEMENT?
, - ,,: . -". " "
'The negotiated agreement typically co'ntai'ns provisions 'relating
'to subs'criber services; access services and.faci,lities; insti-
.... -,' I .. _, _ ._,
tutional services; construction of the system; technjcal fea-
tures and performance; rates to be charged for basic service
and fran,chise fees to be paid by the franchisee; franch,ise
overs ight and regul at i on; securtty, i nsur,an'ceand bond,i ng re-
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, quirements; subscriber rights; and renewal procedures',
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1 'J -, DO LOCAL GOVERNMENTS "DEMAND" ExCESSIVE SERVICE REQUIREMENTS
DU~ING' THE FRANCHISH,JG PROCESS? " ' , ", \. L
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there has been a lot of talk about "local aovernments'asking
too.l11uch":,during the franchi~'ing process: '-Mo\tlocal ,govern-
ments calJ.fo~basic state-of-the~art packages in the, request
for 'proposal., Competition between the cable'co~pa~!es, in the
,franchising process often,brings about respon~esto proposals
'from the cable companies which exceed the cit'ies', inftial re-
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quests, an example of the marketplace working its will. In
final, approval ?~ ad franchise. tho,u,gh, cities try ,to ma~e sure
that the' franch1se agreement 1S s,tructured so that cable com-
pani es' can de 1 i vel" everythi ng they' p~omi se'. ,. , , ,
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'1' K - WHAT 'HAPPENS AFTER THE FRANCHISE IS AWARDED?'
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After the awar9 of the fr,anchise, the franchising, authority
has conti nui n9 respons i bi 1 i ty to oversee the impl ementat i on
',and enforcement" of the ter.ins of the, franchi se. 'Many 1 oca 1
',:, authorities also regulate the -rates to be charged for, basic
. subscri bel' 'serv,i ce to proted s'utis'cr'i bel'S from unreasonable
rate,iilcreases and ensure proper franchise implement'ation.
Bas ic subscr'i bel' servi ce' is defi ned in the' franchi se agree-
ment,and u~uaily consjsts of over~the-ajr signals" aCCess
serV1ces, and several cable program networks.
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5
1 L - WHAT DOES THE FEDERAL GOVERNMENT DO TO REGULATE CABLE?
Right now, relatively little.
In the past decade, the FCC has adopted a' number of rul,es
relating to cable television, some of which have been sus-
pended. The FCC currently has in effect rules governing the
level of franchise fees, cross-ownership of cable systems and
other media interests, technical standards, equal employment
practices, and record-keeping requirements. In addition, the
FCC has adopted rules which apply to programs originated by the
cable operator. The FCC also requires cable franchises to
register with the FCc", '
In almost every area of existing FCC cable rules, there are on-
going rule-making proceedings to consider deleting or modifying
particular provisions. Because the Supreme Court has struck
down a number of cable rules that the FCC had promulgated in the
past, and has narrowed the FCC's jurisdiction over cable, there
is some question regarding the FCC's authority to adopt minimum
franchise standards. To the extent minimum standards are neces-
sary, new federal legislation may be required to empower the FCC
to act in this area.
1 M - WHAT'S THE UNDERLYING JUSTIFICATION FOR LOCAL GOVERNMENT OVER-
SIGHT OF CABLE TELEVISION?
Local governments must be involved in the franchising and regu-
lation of cable television to ensure that cable systems meet
particular needs of a community and that the public services
and public benefits that cable makes possible will be available
to all residents, rich and poor, throughout the franchise area.
It should be emphasized that cable television, unlike over-the-
air broadcast signals, is not automatically available to every-
one throughout the franchise area. Because cable television is
a de facto monopoly, there are no alternative service providers
that have similar capacity for such a broad range of services or
public service potential. Without local oversight, cable fran-
chises could pick and choose whom they would serve. . Thus, the
poor, minorities, and disadvantaged in a franchise area could
be excluded from the myriad of benefits, including public ser-
vices, that cable television can provide. Many of the potential
public services would not be. possible if the system werestruc-
tured to serve only selected neighborhoods.
Loca lovers i ght is the key to ens uri ng tha t cab 1 e sys tems meet
the communications needs and interests that are unique to each'
locality. The local franchising process, which is administered
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6
by 1oca1 officials and which permits the free flow of informa-
tion between local officials and the public, is the most approp-
riate framework for negotiating franchise standards that best
serve' the' c'ommunity initially and through'outthe franchise term.
Local franchise standards are also most effectively enforced at
the local level. Local officials can re'spond; on a knowledge-
abl'e basis, more quickly to subscriber complaints, problems
wi th frarichi se comp 1 i1m'ce', and problems ra i sed by the, franchi se.
1 N - WHAT'S THE EVIDENCE OF ABUSE OF THE LOCAL FRANCHISING AND'OVER-
SIGHT POWER?
There is no, pervasive pattern of abuse by' lo'cal governments of
th~franchising and oversight of cable tel~vislon. 'en the con-
trary, it is this basic oversight power which ensures: that the
implementation of the franchise is being done properly and con-
sist~nt with the public interest. '
1 0 - H'OW'LONG ARE CABLETELEVisrON FRANCHISES AWARDED FOR?
Usually about 15 years.
1 P - WHAT HAPPENS AFTER THAT?
Like any lease or contract, they expire and have to be renego-
tiated or the parties are free to seek other arrangements.
Under existing circumstances,'a city can seek' another company or
negotiate conditions for renewal with the existing company:
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1 Q ~ BUT ISN'T'THIS UNFAIR TO THE'EXISTING COMPANY?
Some cable companies would like a "presumption or' expectancy" of
renewal to provide' long-term security and to shield them from
competition with other cable companies during the renewal process.
Theywould like the "burden of proof" to be on the local govern-
ments to prove that in one area or another they did' not perform
adequately. This could lead to lengthy court proceedings.' Cable
companies are protected by the fact that considerable profit has
'been accumulated in those 15 years to ensure' return on invest-
ment when the franchise expired. Competition must be the standard
by which the renewal process is undertaken. However, even under
the current system, most franch,ises are renewe'd. "
\
7
1 R - OVERALL, HOW ARE CABLE COMPANIES AND CITIES DOING TOGETHER?
Overall, cable companies and cities are doing well together.
Cable companies are getting the franchises, beginning to bring
about the wiring of America. Cities are enjoying the service
and the entire community is enhanced by the promise of this
technology. Generally, both sides have conducted themselves
well. Given this fact, it is fair to conclude that the case
for federal legislation in this area which impacts this deli-
cate relationship has not been made,
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, J - ; ." PART II '
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< DEVELOPING AN APPROPRIATE CABLE 'TV POLICY ~ :
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II A - IS FEDERAL LEGISLATION INJTHE~CABLE:'TELEVISIDN AREA
A BAD IDEA?
II B - WHAT HAS BEEN THE EFFECT OF THE ABSENCE OF FEDERAL
LEGISLATION TO DATE?
II C - HOW COULD A NATIONAL LEGISLATIVE INITIATIVE BE
HELPFUL?
II D - HOW COULD A NATIONAL LEGISLATIVE INITIATIVE BE
HARMFUL? AND, TO WHOM?
11 E - WHAT COULD BE AN APPROPRIATE COURSE OF ACTION FOR
THE HOUSE WITH REGARD TO CABLE LEGISLATION?
8
9
PART II - DEVELOPING AN APPROPRIATE CABLE TV POLlCY
II A -IS FEDERAL LEGIS.LATION III THE CABLE TELEVISION AREA A BAD
IDEA?
It is if the legislation is as broad and comprehensive as that
contemplated by S.66. Legislation which reaches down from the
federal level to the local level, substantially alters negoti-
ated conditions and wounds the integrity of contractual rela-
tionships is a bad idea. Defining a federal policy towards
cable and establishing some broad criteria is not necessarily
a bad idea if it avoids major pitfalls. But the case for a
broad, sweeping federalization of cable policy has certainly
not been made.
II B - WHAT HAS BEEN THE EFFECT OF THE ABSENCE OF FEDERAL LEGISLATION
TO DATE?
The cable industry has flourished to become an industry with over
$8 billion in assets, with each year's growth expanding over
60% from the year previous. Localities are negotiating and re-
newing franchises across the country and most franchises --
almost 98% -~ are being renewed.
II C - HOW COULD A NATIONAL LEGISLATIVE INITIATIVE BE HELPFUL?
Federal legislation could be helpful to the users and viewers
of cable TV if it established minimum standards and clearly
set a foundation for communications policy in areas of national
interest such as available channel capaCity through leased
access, guidelines for cross-ownership rights of cable systems
and other media interests; technical standards to ensure high
quality service and no signal interference; and the intercon-
nection of cable systems from city to city and state to state.
II D - HOW COULD A NATIONAL LEGISLATIVE INITIATIVE BE HARMFUL? AND.
TO WHOM? '
A comprehensive federal initiative which removed a significant
role that cities play in protecting and representing consumer
concerns and interests would be harmful. Without an important
regulatory role, consumers -- from the business community, non-
profit groups, provi ders of security, hea lth and pub 1 i c serv ices
to the everyday viewer of cable TV -- would have nowhere to turn
without the help and representation of cities. Subscribers
could have unreasonable and unjustified increases in basic
tll'fS-jt-
10
service rates; users now considered rightful users of cable
channels could be discriminated against and denied access.
Franchise provisions carefully negotiated at arms-length
with franchise applicants in order to reflect specific local
needs could be destroyed by one nationwide standard that
could not be exceeded.
11 E - WHAT COULD BE AN APPROPRIATE COURSE OF ACTION FOR THE HOUSE
WITH REGARD TO CABLE LEGISLATION?
Three.steps should be considered:
1. The Congress should carefully examine the need for legis-
lation at this time -- is there documented evidence of
abuse of local authority? Is there a better structure
in which the public and consumers can be represented in
the franchising and operation of cable TV?
2. Strong policy foundation should be established outlining
national interests and possibly establishing minimum
requirements that ensure such policies may be~plemented.
'3. The Congress should assess if some legislative initiatives
in the area of cahle TV are not better 'left 'until the
industry has grown more, potential-competition has clarifi~d,
and consumers have had the opportunity to understand the
impact of legislation upon their ability to view, use, and
pay for cable TV.
1-
PART II I
THE SENATE CABLE BILL:
UNSOUND FEDERAL CABLE TV POLICY
III A - WHY ARE CITIES OPPOSED TO S.66, THE CABLE TELECOMMUNICATIONS
ACT DF 1983?
III B - WHAT ARE THE MAIN PROVISIONS CONTAINED IN S.66 WHICH ARE
PARTICULARLY DIFFICULT FOR CITIES?
III C - SHOULD CABLE RATES BE DEREGULATED AND CABLE COMPANIES BE
ASSURED OF SOME MINIMUM.ANNUAL RATE INCREASE, AS IS CON-
TAINED IN PROVISIONS OF S.66? .
III D - DO CABLE COMPANIES NEED THE FEDERAL GOVERNMENT TO PROVIDE
SAFEGUARDS TO ASSURE FRANCHISE RENEWAL?
III E - SHOULD EXISTING FRANCHISE CONDITIONS BE NULLIFIED OR
GRANDFATHERED?
III F - SHOULD A CITY BE ALLOWED TO REQUIRE PROTECTION IN THE
FRANCHISE AGREEMENT FOR LEASED ACCESS?
III G - WHAT ARE THE CITIES OBJECTIONS TO PROVISIONS OF S.66 WHICH
MANDATES PROCEDURES IF A MATERIAL BREACH OCCURS?
III H - HOW, OVERALL, IS S.66 ANTI-COMPETITIVE?
H I I - HOW DOES S. 66 HURT CONSUME RS?
11
I< 11'r.5"'1-
12
PART III - THE SENATE CABLE BILL: UNSOUND FEDERAL CABLE TV POLICY
III A - WHY ARE CITIES OPPOSED TO S.66, THE CABLE TELECOMMUNICATIONS
ACT OF 1983?
The bill, as passed by the Senate, would drastically reduce
the authority of local governments over the negotiation of
franchise agreements and the monitoring of those agreements.
This interference by the federal government would effect not
only current and future negotiations, but would rewrite al-
ready existing franchise agreements which are the product
of good faith bargaining, by cities and towns around the
nation.
III B - WHAT ARE THE ~~IN PROVISIONS CONTAINED IN S.66 WHICH ARE
PARTICULARLY DIFFICULT FOR CITIES? .
Cities generally believe that the case has not been made for
. cable legislation. But should legislation. go forward, it
could be particularly difficult to cities to accept pro-
visions, such as those in S.66 concerning:
. rate regulation;
. franchise renewal;
. grandfathering;
. third party access;
. material breach; and
. basic service definition.
,
. III C - SHOULD CABLE RATES BE DEREGULATED AND CABLE COMPANIES BE
ASSURED OF SOME MINIMUM ANNUAL RATE INCREASE, AS IS CONTAINED
IN PROVISIONS OF S.66?
Cities should have'the power to protect the right of their
citizens to a fair rate for a service for which there is no
comparable alternative. A franchise does create an effective
monopoly and rate increase requests afford an opportunity for
the city, as franchising authority, to discuss the justifica-
tion for the increase and the quality of the service being
provided, and the company's record in implementing the fran-
chise. Not all cities regulate rates or regulate them in the
same way. But it is an important option and the choice to use
it should remain available at the local level.
L_
13
III 0 . DO CABLE COMPANIES NEED THE FEDERAL GOVERNMENT TO PROVIDE
SAFEGUARDS TO ASSURE FRANCHISE RENEWAL?
No, the vast majority of franchises are renewed. There is
no evidence of local abuse to justify the broad sweeping
intrusions embodied by S.66. Many franchise agreements
already contain processes and criteria for renewal. The
presumption of renewal contained in S.66 removes the
competitive environment necessary for the initiation of
meaningful discussions to upgrade a system. Franchises
frequently have a 15 year duration or more. The cable in-
dustry is subject to rapid technological advancement at this
time. It is inappropriate for the federal government to
deny cities the ability to negotiate modernization of a system,
to guarantee that city residents receive state-of-the-art
service. If there is presumption of renewal, there is no
incentive for an operator who has been granted an effective
monopoly to invest in upgrading.
The cable company should prove that renewal is justified, there
should not be any right to de novo review by the courts, and
the federal role should be llmited to promulgating renewal
procedures not dictating criteria for renewal.
III E - SHOULD EXISTING FRANCHISE CONDITIONS BE NULLIFIED OR GRAND-
FATHERED?
'S:66 abrogates many existing franchises prOV1Slons. All
existing franchises, their terms and conditions, and processes
where an RFP has been issued or franchise applications have
been accepted should be grandfathered. Cities negotiated in
good faith over a long perid. The sanctity of negotiated
contracts should not be violated. '
III F - SHOULD A CITY BE ALLOWED TO REQUIRE PROTECTION IN THE FRANCHISE
AGREEMENT FOR LEASED ACCESS?
Yes, S.66 now would allow such protection for public, education,
and government channels, but offers no protection for third
party leased access. Soon, shopping and banking services may
be commonly available over cable. It would be unfair to sub-
scribers to allow the possibility of the cable operator
dictating which provider of such services would be able to use
the cable system. The primary reason to, require nondiscrimin-
atoryaccess is to ensure that service providers who offer
services that compete with those of the franchisee or its sub-
sidiaries or affiliates cannot be unreasonably denied access in
order to prevent competition.
I< IIIIS"'P
14
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III G - WHAT ARE THE CITIES OBJECTIONS TO PROVISIONS OF S.66 WHICH'
MANDATES PROCEDURES IF A MATERIAL BREACH OCCURS?-
. , . ~. .", ' . .
Cities and cable operators should be.able to establis'h in
the franchise agreement the .purchase price of the 'system in
.the event ,of a inaterial breach by the operator. Thede novo
court ~eview upon termination for breach should not be-----
,required. . ,
II I H
HOW, OVERALL, is S.66 ANTI-COMPETITIVE?
,'.. II I 1
. . . t
S.66 has 'several anti -coinpet'i ti ve aspects. ,The presumption
,J ..
o~ renewal severely restricts the ability of the franchising
authori ty to cons i der any othe,r proposals. Thi swill di s-
courage potenti a 1 competit6'rs from submitti ng proposal s.
Without competition in the renewal process, the.franchising
authority has little leverage in obtaining necessary revis-
iDns,inthe franchise agreement or t~e upgrading of the
existing system" and the in'cumbent 'operator has' 1 ittle
incentive to offer such provisions. . ' ..
I" I -, '. <: :.
"
Further, S.66 contains no provision a11owingmu'nicipalities
to require the franchisee to make capacity available to
commerci a 1 ,thi rd-P\ll'~ty users ,on a nondi scriI]1i natory bas is.,
Nondiscriminatory access ensures that service providers who
offer services that compete with those of the franchisee
or its affiliates cannot be unreasonably denied access.
..1 . ,_
Milking leased, access di,scretionary with the franchisee may
ultimately reduce"the diversity of; services available to
subscribers.' .
III I - HOW DOES S.66 HURT CONSUMERS?
Cable teJevision is important ,to consumers because of the
variety of information and public' services which it can
provide. Local governments have been involved in cable
television to protect the interest of all consumers in
obtaining those public services. The prohibition ohbasic
~~ service rate regulation, the anti-competitive' aspects of
S.66" preclude ,effective policing of unf~i~ mar~~t b~havior.
'Since S.66 does not substitute any presence for th~
rQ 1 e performed by 1 oca 1 governments, consumers wi 11. have
" no.governmental authority' to address' the public service
aspects of cable television. The' U.S, 'Conference',of Mayors
believes that S.66 will impede the development '01' cable
television as a public communications resource available
to all residents at a reasonable price. . .
APPENDIX A
RESOLUTIONS
ADOPTED
Fifty':'First Annual Conference
Denver, Colorado
June 11-15, 1983
UNITED STATES
CONffiRENCEOFMAYO~
15
~ //9-~jL
Transportation and Communications
Federal Cable Television
Legislation and the Cities
VVHEREAS, cable tele\1sion is an important communications and information technology for the nation's
cities; and
WHEREAS, pro\1sion of cable tele~sion sernce has already proven t.o be a valuabl~ sen1ce to hundreds of
communities across the country, and holds great potential promIse to all CItIes m the Untted States; and
VVHERLAs, the cable tele~sion industry is thri~ng and growing in the United Stat,:", with large return on
investment and likelihood of even more considerable profit in the future; and . .
VVHEREAS, local governments have had the responsibility for franchising cable tele~sion systems in their
cities and for overseeing the implementation of those franchises once awarded; and
'WHEREAS, cable tele~sion, because it will likely enjoy exclusi\1ty within a community and will be the only
telecommunications medium v.1th a direct link to the homes of citizens v.1th its facilities traversing the
public's property; and
\VHEREAS, the presence of a strong local government role in overseeing of franchise agreements has work-
ed to ensure that contractual obligations are carried out and the public interest served; and
\\'HEREAS, the best approach to franchising, qversight of the franchise, and resolution of problems which
may occur from time to time in carrying out franchise elements, has been the direct negotiation be-
tween local governments and cable companies, unfettered by the presence of third parties; and
\\'HEREAS, local governments, recognizing the need for and success of direct relationships between cities
and cable companies, have sought to discourage unnecessary involvement in these matters by the Con-
gress and the Courts; and
\\'HERI.AS, cities, working together and with a broad coalition of concerned interests including represen-
tath'es of labor, education, consumers, telecommunications, rural and utility interests, have helped to
defeat in recent years broad attempts to remove local governments from their central role in the cable
tele\1sion process; and
\\'HEREAS, federal cable tele~sion legislation is again being considered by the Congress: with legislation
pending before the full Senate and hearings having commenced at the Subcommittee level in the House
of Representatives; and
\\'HEREAS, there is a possibility that a strong, bi-partisan effort will be made by the Congress to enact
federal cable television legislation in the coming months: and
VVHEREAS, the proposal currently pending before the full Senate is an improvement over the versions
which preceded it, and
VVHEREAS, members of the House and Senate who have worked closely with the nation's cities in a broad
variety of areas, fully understanding the traditional and appropriate opposition of local governments to
such legislation, will be looking to the nation's mayors for leadership and direction in improving
whatever proposals for forthcoming,
NOW, THEREFORE, BE IT RESOLVED that the U_S. Conference of Mavors reatrmns its ~ew that federal
cable television legislation restricting the traditional responsibilitie; which have been exercised by local
governments in this area is not appropriate; and
BE IT FURTHER RESOLVED that if federal cable tele~sions legislation continues as a possibility, that the U.S.
Conference of Mayors shall work to ensure that, to the extent possible:
.
federal cable legislation not limit the option of local governments to regulate the rates charged by
cable television companies for basic sernce, should cities believe it in the public interest;
federal cable legislation not limit the option oflocal governments to defme by negotiation with cable
tele~sion companies the definition of basic sernces;
.
16
federal cable legislation provide maximwn competition in the franchise renewal process with no
preswnption or expectancy of renewal on the part of the cable company holding the franchise;
federal cable legislation "grandfather" all existing franchises, and their terms and conditions and all
franchise processes in which a Request for Proposal has been issued: and that federal legislation not
apply to renegotiated franchise .agreements, signed within six months of enactment;
federal cable legislation not provide cable companies with the power to abrogate contractual obliga-
tions based on a unilateral assertion of a significant change in circumstances;
federal cable legislation not limit the ability of local governments to mandate public, educational,
governmental, and leased access to cable television;
federal cable legislation not limit the ability oflocal governments to negotiate the purchase price of a
cable system if there is a material breach in the franchise agreement;
federal cable legislation not deftne franchise fees to include taxes, fees, or other assessments, impos-
ed by the franchising authority or other governmental authorities on cable system operators or
cable subscribers; and
BE IT FURTHER RESOLVED by the U.s. Conference of Mayors that Congress is urged 10 closely examine the
possibility of federal legislation in the areas of minirnwn technical standards, minimwn privacy stan-
dards, minirnwn cross ownership provisions, minirnwn third party access standards, and minimum
standards for intercorinect:ion; and
BE IT FURTHER RESOLVED that in working "~th Congress in the whole area of cable tele\~sion legislation,
the U.s. Conference of Mayors shall be guided by the principle of presen~ng existing municipal
authority in the cable tele\~sion fteld, which has greatly beneftted the cable television industry, the
cities, and the nation.
.
.
.
.
.
.
17
!( IIl/SY
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"
ADDITIONALIBACKGROUND'MATER~ALS*
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*Not included in original draft of U.S. Conference of
Mayors publication.
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Principal Author: Mayor Paul E. Zeltner, Lakewood <
,
ADOPTED UNANIMOUSLY- October 5, 1983 - AT ANNUAL BUSINESS MEETING
11. RESOLUTION RELATING TO 'THE PROTECTION OF LOCAL AUTHORITY, AND
CONSUMER INTERESTS IN CABLE LEGISLA nON
Referred to:
Committee on Administrative Services
WHEREAS,. provision of cable television service has proven to be a valuable
service to hundreds of communities across the country and holds great promise to all
cities in the United States; and
WHEREAS, a large percentage of cable television franchises' in California will
be coming up for renewal in the next five years; now, therefore, be it
RESOLVED, by the General Assembly of the League of 'California Cities
assembled in- Annual Conference in San Francisco, October 5, 1983,' that the League
oppose federal legislation on cable television unless it meets the following needs of
California's ciUe's: . 1
* at the time of franchise renewal cities be able to obtain reasonable upgrades of
system hardward to "state-of-the-art" standards, be able to refuse renewal to an
operator which. has given poor service during the life of the franchise, and thlit any
court review of renewal or nonrenewal be the same as that accorded other
legislative decisions;
I
* that the legislation protect cities from antitrust liability for compliance with
federal law;
. ,
* that all existing franchise commitments be grandfathered;
* . that local and state governments not be limited in their option to regulate the rates
charged by cable television companies for basic service, should they believe it to be
in the public interest; ,
* that any limitation- on franchise fees not apply.to fees, charges and taxes charglld to
or through a cable operator as part of a larger class, for example, utility user taxes;
. I
* that federal cable legislation not restrict the ability of cities to require public,
educational and governmental access to cable television; and I
* that cable companies not be provided with the power to abrogate contractual
obligations based on a unilateral assertion of a "significant change in
circumstances";
* that local government not be restricted from municipal ownership and operation; and
be it further
RESOL VED, that the League introduce a resolution at ,the National League of
CIties .Congress of Cities which requests the National League to modify its cable
television policy to. the extent it is inconsistent with. the points brought forth in! this
resolution. . ,
, o.\J~';'!"...o
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. ./IVANCe.'
CITY OF TORRANCE
3031 TORRANCE BOULEVARD. TORRANCE CALI,ORN'A 90503
.JIM A.RMSTRONG. ......VDA TCLEPHONE [%13) 328-5310
September 2, 1983
Honorable Timothy E. Wirth
Chairman
Subcommittee on Telecommunications
House of Representatives
2454 Rayburn Building
Washington, D.C. 20515
Re: CABLE TELEVISION LEGISLATION
Dear Congressman Wirth:
The members of the Torrance City Council and I are gravely
concerned about some of the provisions of S. 66, the Goldwater
Bill, which if adopted by the House, will seriously erode the
benefits of the franchise which we awarded to Group W Cable last
year. Your attention is particularly directed to those provisions
which permit a cable operator, where there is a "significant
change in circumstances", to delete (subject to arbitration)
required services, facilities or equipment which are "economically,
technically, or otherwise impracticable." (S613(d) (e)) It is
the intent of the Senate that changed circumstances includes a
"significant increase in the cost of providing a particular
service, facility or equipment." (Sen.Com.Rpt. p. 29)
This changed circumstances provision also has a pervasive
effect on public, educational and governmental access obligations
in existing franchises. In accordance with the NLC-NCTA compromise,
subsection (f) was added to Section 613 to validate provisions in
existing franchises requiring programming, services, facilities,
equipment and channels for access use. But the validation is
nullified by the changed circumstances rule.
Subsection (f) reads:
"Notwithstanding the preceding provisions 6f this
section, in any case in which a franchise agreement
in effect on the date of the enactment of the Cable
Telecommunications Act of 1983 requires the cable
operator to provide particular programming, services,
facilities, cable related equipment, or channel
capacity for access uses, such requirements, subject to
subsections (d) and (e), shall remain in effect for
I- /I '-/ s-y
the term. of the franchise and in accordance with the
provisions thereof." (S613(f), page 27, lines 13-21)
[emphasis added]
The Senate Committee Report, referring to access provisions
in existing franchises, states that "The committee does not intend
to void these agreements and has specifically grandfathered them
in section 6l3(f) for the term of the franchise." (p. 28). But
notice that what the right hand granteth (the grandfathering of
provisions for access uses) the left hand taketh away. The changed
circumstances rule of subsections (d) and (e) overrides the access
grandfathering provisions, thereby rendering the access provisions
i 11 usory ~
We urge you to reject this changed circumstances escape
provision. The Senate would change the rules of the game after
it has been played. Nearly every major and medium-sized city in
the United States, including Torrance, has already awarded a cable
television franchise and executed a contract with a cable operator.
Typically, the award is made after a comparison and evaluation of
the promises made by the competing cable companies, usually with
the help of an independent expert - the Cable Television Information
Center (CTIC) in Torrance's case. To apply the .changed
circumstances" rule now after the franchising process is completed
would be to retroactively alter our and other franchises.
Retroactive alteration of the franchising contracts is
unjustified. The Torrance City Council chose Group W from among
five cable applicants after a long, fair and democratic process
involving extensive public hearings. A record of that process is
enclosed herewith.* (Our neighboring cities of Gardena, Lomita,
Hawthorne and Lawndale went through a similar procedure. A history
of Gardena's award process is also enclosed~) The procedure and
the desires of the City were spelled out in advance in the request
for proposals (RFP), which even included a draft of the proposed
franchise ordinance-agreement. The requirements of the RFP were
fair to the cable industry, whose members helped our staff and
CTIC write it and they were given the opportunity to comment thereon
in advance of issuance.
The Congress is not restricted by the Federal Constitution,
as are the States, from impairing the obligation of contracts.
However, a simple justice requires that the Congress recognize the
moral imperatives in the contracts clause and abandon them only
where there are emergencies or very strong overriding reasons,
which is not the case here. The cable companies were and are
sophisticated and well armed legally. They made competitive
proposals which were accepted, evaluated and contracted for by
the franchising cities in good faith.
It is unconscionable to enact legislation now permitting them
to repudiate the promises made in their proposals which were the
bases on which the cities awarded them their franchises. The fear
*Enclosures not included in appendix to USCOM material.
2
of the cable companies that they may have offered too much is not
sufficient grounds for avoidance of their obligations.
Group Wand the other cable companies of the nation do not
need a statutory provision to protect themselves from a legitimate
excusable'.failure of'performance. Where performance is indeed
impossible, as where a particular service, facility or equipment
is unavailable, adequate remedies exist under the common law to
relieve them of their obligation. Where performance is not
impossible, but extraordinary circumstances make performance so
vitally different from what was reasonably to be expected as to
alter the essential nature of'that performance, a court may grant
relief. And where, after a contract is made, a party's performance
is made impracticable without his fault by the occurrence of an
event, the non-occurrence of which was a basic assumption on
which the contract was made, his duty to render that performance.
is discharged, unless the language or the circumstances indicate
the contrary. (Rest. Contracts 2d S261)
In any event, if the House accepts the concept of such escape
provisions (which we hope it does not do), Section 613(d) should
be amended to provide that a cable operator can renege on its
obligations because of a change in circumstances only where it can
show that failure to obtain such relief would reduce its overall
net profits derived from the system below an acceptable margin.
Such margin should be equated with the fair return on a fair
valuation test used historically in setting the rate of return
for public utility companies.
A franchise should be considered as a totality. The cable
operator can be expected to make more money than expected on one
part of the system or one service and to lose money on another
part and on another service. But accepting the duty of providing
certain required services at a loss is the correlative of the
right to make an overall profit.
5.66 reads in its entirety as a set of commandments
restricting the authority of cities and counties over cable TV,
rather than being a bill deregulating the industry. The Congress
in adopting a national cable policy ought not to merely negate
the regulatory power of local governments but should impose
affirmative duties on cable operators to ensure that the people
obtain top-grade cable service and encourage .local governments
to help the cable industry achieve its public service potential.
For example, the Goldwater Bill makes renewal of a franchise
almost a foregone conclusion. It is stated therein that "the
franchising authority shall grant such renewal or other extension
unless it finds that ... (3) the facilities to be provided by
such operator, including facilities for governmental access, are
unreasonable in light of the community need for and cost of such
facilities: ..." (S609(a)). The franchising city has the burden
of proving such need and cost to the satisfaction of a reviewing
3
~~y"
/
court exercising its independent judgment.
(S609(e))
We submit that, instead, the Bill should require the cable
operator, as a condition of renewal, to show that it has
constructed or will construct a "state of the art" system within
the realm of technical and economic feasibility. In many cases
cable operators continue milking a 12-channel "cash cow" system
for the life of a franchise and expect to do so through a renewal
period without upgrading the system. Section 609 as presently
written would be of little.help to a city government in obtaining
requisite technological benefits for its citizenry.
The Senate's goal of spurring competition in the tele-
communications industry is laudable. But we fail to see how
depriving local governments (as well as the Federal and State
governments) of their rate regulation authority.' increases
competition, assists technological progress or lowers prices.
Assuming that cable operators will have increased profits in a
deregulated setting, there is no assurance that they will use
those extra monies to upgrade their systems and otherwise increase
their competitive edge to the benefit of their communities. On
the contrary, the deregulation provisions of Section 607, taken
in conjunction with the all but perpetual franchise renewal
provisions of Section 609, will have the opposite result by
depriving cities of their leverage in bargaining with the cable
operator at renewal.time for an upgrading of the system. (The
California Legislature has already deprived its local governments
of their authority to regulate rates, but this law may be modified
or repealed in the future.)
S.66 is obviously deficient in its failure to confer an
exemption from the anti-trust laws on franchising cities and
counties. The Boulder case has raised the specter that duplicate
cable franchises may have to be awarded to enable franchising
authorities to avoid liability. This is obviously wasteful and
contrary to the interest of the industry as well as the public.
There can be no .effective national .cable policy until an exemption
is granted to local governments. Although there are other bills
in the Congress dealing generally with the subject of the anti-
trust liability of local governments, we hope that you will address
the specific issue re cable TV in your bill.
It has been widely reported that you consider leased access.
to be a vital part of a national communications policy. We agree;
it would ensure diversity for the viewing public. A franchise
gives the cable operator a de facto monopoly. A leased access
requirement would keep cable operators from exclusively tying
their own programming services into their carrier facilities,
thereby unfairly locking out competing programmers.
In conclusion, we request that. your
changed circumstances provision of S. 66
instead, make the cable industry perform
Committee exclude the
from your cable bill and
the obligations it assumed.
4
".,
in obtaining its municipal franchises and affirmatively require
it to use its monopoly position for the common good.
submitted,
JA:asb
J<.. II'TSr-
An advisory resolution of the ~:ational Association
of Telecommunications Officers and Advisors (NATOA)
to the Board of Directors, the Transportation and
Communications Policy Committee, and the members of
the National League of Cities (NLC) regarding pending
federal cable television legislation.
wHEREAS, local and state governments have tradit10nally
awarded and regulated franchises for cable television
systems in order to ensure the provision of efficient
cable services at reasonable rates to residents; and
WHEREAS, NATOA is an affiliate of the NLC and has an
obligation to advise the Board of Directors, the policy
committees and individual members of the National
League of Cities in areas of NATOA's expertise; and
WHEFEAS, S.66 compromises the protection which existing
franchise agreements and local franchising authorities
provide to cable consumers;
NOW, THEREFORE BE IT RESOLVED that NATOA strongly
advises the National League of Cities to oppose
S.66 and any similar pending federal legislation that
fails to protect the interests of cable consumers and
the rights and responsibilities of local franchising
authorities to serve those interests.
Adopted unanimously by the NATOA membership
SEPTEMBER 27, 1983
I< II Y-S'l