V. PRESENTATION BY ACTION AUDITS ON THE DUTIES AND RESPONSIBILITIES OF A LOCAL GOVERNMENT DURING
THE FRANCHISE RENEWAL PROCESS.

Dr. Robert Sepe made the following presentation, which provided a concise description of what local governments can and cannot require of cable television operators.

BACKGROUND

Once a Local Franchise Authority (LFA) has granted a cable television franchise to company to provide Cable Service to residents, Federal law (1984 Cable Act) presumes the franchise will be renewed in perpetuity unless the LFA follows strict federal guidelines to terminate a cable television franchise. Termination or non-renewal must be predicated on a finding of fact resulting from an administrative hearing process. With rare exception, a local government is able to gather sufficient evidence to sustain a franchise termination non-renewal decision. The fact a franchise has expired does not mean the cable operator has to terminate service to its customers. The old franchise continues to control month-to-month or until it is replaced by a new franchise agreement.

REGULATORY AUTHORITY AND ENFORCEMENT

The LFA's authority is derived from the provisions contained within the 1984 Cable Act, the 1992 Cable Act and the 1996 Telecommunications Act as well as its own Cable Standards Ordinance and the franchise agreement (contract) between the LFA and the cable company.

The aforementioned set out specific requirements which allow the LFA to enforce the provisions of federal and local law. To do so, the LFA must have an active franchise monitoring and compliance program. Monitoring the performance of a cable operator is not unlike monitoring the performance of a paving contractor or the general contractor issued a contract to construct a water treatment facility. Both require due diligence on the part of the LFA.

If the franchise agreement contains performance provisions which hold the company accountable for the delivery of clear pictures and sound, then the LFA can hold the company accountable. Likewise, if the franchise agreement contains penalty provisions, the LFA can fine the company for willful performance failures.

LIMIT OF AUTHORITY

A Local Franchise Authority can:

• require delivery of clear crisp clean pictures and sound to cable subscribers.
  
  
• monitor (audit) the basic service tier rate to make certain the rates are only adjusted for actual penny-for-penny increases incurred by the cable operator. The Basic Service Tier (BST) is the lowest A life-line service level; it contains the off-air broadcast television stations and public access channels.
  
  
• adopt and enforce customer service standards, such as requiring the cable operator to answer phones within 30 seconds when measured on an annual basis. This means that from the time the phone begins to ring, it must be answered and the caller must be able to speak to a live person within 30 seconds.
  
  
• require the cable operator to bury cable drops within a reasonable time period so it does not lay on the ground for weeks and weeks.
  
  
• require to cable operator to adhere to construction schedules and other construction-related requirements, including construction-related performance requirements.
  
  
• monitor the operator's biannual performance tests to insuring that the system is designed, installed, and operated in a manner that fully complies with the FCC's requirements. The operator of a cable television system must conduct complete performance tests at least twice each year to determine the extent to which the system complies with all the technical standards set forth in FCC § 76.605(a).
  
  
• require the cable operator to provide Public, Education and Government access channels, electronic "green" space for public expression. This right can only be exercised by the LFA during the initial grant of a cable television franchise or its subsequent renewal.
  
  
• require the cable operator's system to comply with federal and state Emergency Alert System plans to facilitate early warning of a pending natural or man made cataclysmic events.
  
  
• enforce laws protecting subscriber privacy.
  
  
• award an additional competitive franchise.
  
  
• enforce federal rules requiring the cable operator to provide notice to cable subscribers regarding unsolicited sexually explicit premium service programs that might be offered without charge to cable subscribers who do not subscribe to such premium channels.
  
  
• require cable operators to give 30 days written notice before adding, deleting, or repositioning any video programming service. LFAs also may require a cable operator to inform subscribers, in writing, that written or e-mailed comments received by the operator regarding programming and channel positioning changes are being forwarded to the franchise authority.
  
  
• enforce federal rules requiring a cable operator to place all indecent leased access programming on a single channel which will be only be made available to subscribers who affirmatively request it.
  
  
• enforce federal rules allowing cable subscribers to take any tier of service other than basic as a condition of access to per-channel and per-program services, this means a resident could subscribe to Basic and Showtime. Cable subscribers do not have to subscribe to A Basic plus A Standard or purchase a "Digital" service package to subscribe to HBO or any pay-per-view services. At a minimum, the customer can be required to rent a digital converter to view a single program service on the digital tier. Such analog or digital program service must be offered as a single channel and not part of a package to be eligible for subscription on a per-channel/program service.
  
  
• establish requirements in a franchise with respect to the designation or use of bandwidth, electronic green space, for public, educational, or governmental use, including an institutional network.

*a cable operator cannot exercise any editorial control over any program telecast on public, education, or government access channels, except by refusing to carry any public access program (in whole or in part) containing obscenity, indecency, or nudity.      *require the cable operator to provide capital dollars for equipment and facilities to support PEG access.      *such support must be bolstered by written need justification for the dollar amount sought.      *the cable operator is permitted to pass PEG expenses through to its rate payer; whether it does or not is a matter which can be negotiated.

• set minimum density requirements for the provisioning of cable television service (high-speed Internet access is defined as a cable service) throughout a service area, such as a city, county, town or village based on consumer need.
  
  A Local Franchise Authority cannot:
  
  
• require a cable company to carry certain channels on the cable system. The cable operator is a publisher; as such it has certain first amendment rights. The operator can pick and choose the program services carried on its system. The LFA can ask the operator to carry The History Channel, but cannot compel the company to do so.
  
  
• require a cable company to reduce the rate paid by cable customers for upper tier and digital services. All services, except the Basic Service Tier (BST) were deregulated by the 1992 Cable Act. At the time the US Congress believed that competition by telephone companies and satellite dish providers would become well developed by the year 2000 and the competitive pressure would result in lower prices for cable services.
  
  
• grant an exclusive franchise to any cable operator and unreasonably refuse to award competitive franchises.
  
  
• require a cable company to deliver cable signals so they can be viewed directly on a standard TV without a box or digital converter.
  
  
• require a cable company to deliver its signals to allow a subscriber to watch a program on one channel while simultaneously using a videocassette recorder to tape a program on another channel.
  
  
• require a cable company to deliver its signals to allow a subscriber to use a videocassette recorder to tape two consecutive programs that are telecast on two different cable channels.
  
  
• require a cable company to deliver its signals to allow a subscriber to be able to use advanced television picture generation and picture-in-picture display features.
  
  
• require the cable operator to fund expenses associated with operating PEG access centers.
  
  

  *the 1984 Cable Act categorizes any funds or grants required by the LFA of the cable operator to pay the day-to-day expenses associated with operating public, educational, or governmental access centers as a franchise fee. The franchise fees are capped at 5% of the operator's gross revenues.      *the 1984 Cable Act does not prohibit the operator from freely providing PEG access operating grants. Such grants are a matter of negotiation between the LFA and the cable operator and as such can be incorporated into the franchise agreement-contract.

  
  Although, the 1984 Cable Act and 1996 Telecommunication Acts impaired the ability of LFAs to terminate the franchises of poorly performing cable operators, close monitoring and enforcement of existing federal rules (when combined with penalty language in cable television franchise agreement) can provide local governments sufficient authority and clout to ensure residents adequate customer service, viable PEG access channels and facilities.
  
  Existing federal rules allow the LFA to monitor signal quality, basic service tier rates, equipment (converter & remote control) rental fees and installation charges. When consistently implemented, these activities constitute substantial checks in a system that on the surface appears to favors the cable operator. Like any other agreement between a local government and a service provider, systematic contract monitoring and enforcement ensure good service.

Back to minutes of 12-11-2002 CCCC meeting

Resolution establishing the Citizens Cable Compliance Committee

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