Local Governments Oppose State-wide Franchise

Louisiana local governments are begining to trumpet the danger that HB 699, the state-wide cable franchise bill, presents to local communities. Alerts have been issued by both the Police Jury Association and the Louisiana Municipal Association.

It’s the “hot topic” on the Police Jury’s current legislative report where they debunk the idea that this bill will benefit rural areas. The Police Jury also has an information page which details their objections point by pont. Of particular interest is their conviction that this law’s build out prohibition is particularly bad for rural areas and the concern for the exemption from franchise fees. From the Police Jury info page:

2. HB 699 prohibits local build-out requirements.

• Without this provision, local government will not be able to ensure service to the citizens in rural, less developed areas, or poor areas.

3. HB 699 specifically exempts “information services” from franchise fees.

• AT&T/Bellsouth is litigating around the country that video programming over internet lines is “information services” which, under the bill, are not subject to franchise fees.

The Louisiana Municipal Association’s most recent newsletter has yet to make it to their online archive. Here’s their lead article on the franchise bill. It emphasizes even more strongly the hidden “loophole” that allows the phone companies to evade paying franchise fees:

House-Passed Telecommunications Legislation
Set for Senate Commerce Committee Next Wednesday
“A very real economic threat for municipalities, local governments”

The Senate Commerce Committee is the next stop for the LMA-opposed HB 699 by Rep. Montgomery, the “Competitive Cable Services Act.” The committee hearing will be held Wednesday, May 31. HB 699 proposes to allow providers, such as BellSouth, to enter the cable television business (with Internet Protocol Television, or digital television delivered through fiber optic service lines) in a municipality without negotiating a franchise agreement with the local governing authority or making franchise payments directly to the municipality or doing “build-outs” of services in rural areas.
On Monday, May 15, the House voted 73-26 to send this measure to the Senate. This bill poses grave concerns for LMA and local governments in Louisiana, and LMA and its allies have conducted several meetings with telecommunications and cable television providers to discuss concerns over HB 699.
The LMA, the Police Jury Association of Louisiana, and the cable television industry all oppose HB 699, which would create a loophole enabling telecommunications companies (like BellSouth and AT&T) to escape payment of franchise fees, a significant source of revenue for local governments. That loophole is created by exempting revenues from “information services” from the definition of gross revenues covered by the bill. AT&T, the company that will utilize the provisions of this legislation, has adamantly stated that its new video service is not a cable service but is an information service. By exempting information services from franchise fees, HB 699 would give AT&T sole discretion for payment of any fees to local government. What this means is that HB 699 would leave local government subject to economic threat and intimidation by the largest telecommunications company in the nation. This threat is very real and will leave local governments defenseless against AT&T/BellSouth.
A May 23 Shreveport Times editorial states that the broadband TV proposal raises issues of competitiveness fairness. According to the editorial, “Tinkering with the current cable TV landscape could put a cloud over the future of franchise fees paid by cable providers to local government, which is a chief reason organizations such as the Louisiana Municipal Association oppose the BellSouth bill. Local government also would lose leverage that now ensures cable operators provide service to all residents.” It advises lawmakers to tread carefully with HB 699, stating “They must keep an eye first on the short-term economic and governmental impact, as well as creation of a fair playing field. But they must also divine the long-term effects in making our state competitive for both entertainment consumers and industrial prospects.”
ACTION CALL: The AT&T/BellSouth alliance has a very strong and well-financed presence at the Legislature and has placed advertisements in many Louisiana newspapers urging consumers to contact their legislators in support of HB 699. The LMA and its allies believe this is an attempt to overhaul the Local Government Franchise Act, and mayors and other local elected officials should demand fair play and insist that the new video services be subject to the same franchise agreement and fee requirements that are imposed on telephone and cable services. Your presence at the Senate Commerce Committee on Wednesday, May 31, would be a convincing demonstration of the importance of franchise fee revenues for all local governments in Louisiana, and the need for a level playing field for ALL telecommunications and cable operators in the state. If you cannot be present, please call or email your Senators immediately and urge their opposition to HB 699. The Senate switchboard is (225) 342-2040.

It’s the fundamental dishonesty of presenting a bill to the legislature that will allow the company to avoid paying local governments altogether while arguing to legislators that the bill might in fact increase their revenues that is so disturbing. Its hard to avoid the conclusion that BellSouth and AT&T are dealing dishonestly and are simply not to be trusted.