Cable Franchise Now May Depend on State Legislation

By Gene Zaleski, The Times and Democrat, Orangeburg, S.C.

Mar. 20–Orangeburg city officials say the renewal of a franchise agreement with Time Warner Cable is “pending” as state legislators draft a bill that would limit the role of municipalities in cable franchise regulation.

House Bill 4428 titled the “South Carolina Competitive Cable Services Act” would require cable providers to obtain a state-issued certificate of franchise authority to operate within a municipality or county.

According to the bill, cable or satellite providers would need to obtain a franchise application from the secretary of state making the office “the sole franchising authority” and preempting “any ordinance, resolution or similar matter adopted by a municipality or county that purports to address franchising or otherwise regulating cable service.”

The bill was introduced Jan. 12 in the House and was referred to a Senate subcommittee Feb. 21.

City attorney James Walsh said any extension of the city’s franchise agreement with Time Warner Cable will depend on the resolution of the bill. Time Warner in 2005 rejected a city offer and is operating in Orangeburg at present without a franchise extension.

“It is pending because of legislation being considered by the Legislature that might change franchising methods and procedure,” Walsh said. “If it passes, we would not have the authority to franchise. It would be done through a state agency.”

The bill cites the growing competition between cable television and satellite and other providers and the desire to streamline the “policy framework providing statewide uniformity … to allow these functionally equivalent services to compete fairly and to deploy new consumer services more quickly.”

Legislators see the bill as relieving consumers’ unnecessary costs and burdens, encouraging investment and promoting deployment of innovative offerings that provide competitive choices for consumers.

Howard Duvall, executive director of the South Carolina Municipal Association, said that as drafted by the House, the bill is unconstitutional because the cable provider would not need consent from municipal or county councils to utilize streets or rights of way in the establishment of a franchise.

“The bill allows an incumbent cable company once they receive a state franchise to nullify the existing franchise with the city and operate under state rules,” Duvall said.

Duvall said the SCMA is working with senators to ensure new language will give local councils the authority to consent to a franchise establishment.

“I am fairly confident to be able to work out the language that would satisfy the consent requirement and put provisions in place to protect the cities when competitive providers come in,” Duvall said. “I am pretty sure it will pass.”

Orangeburg Rep. Jerry Govan, one of the several sponsors of the House bill, said his interpretation of the draft did not appear to call for usurping county or city rights.

“I think it is a possibility in any law that is introduced for the potential of abuse, but I don’t think looking at the bill from an overall standpoint that will happen,” Govan said. “My attempt was not to take away control from local government but to attempt to provide more competition. I hope that by spurring competition that will hopefully result in a better price break for consumers.”

“It is another intrusion on home rule,” Orangeburg City Administrator John Yow said. “It is taking local control away from local government and local citizens. I think the Legislature is intruding on home rule in way too many instances.”

At present, Yow said, municipalities legally have control of their right-of-ways for any cable or satellite franchise.

Time Warner Vice President of Public Affairs Bud Tibshrany declined comment on bill specifics, saying that it would be speculation as to what the language would be in a final bill.

“Our position, as is the position of the cable industry in South Carolina, is that we are not opposing the bill, and will work with all parties involved to bring a level playing field,” Tibshrany said. “It is essential that it is equitable not only to the video business but equitable to cable operations as well.”

Tibshrany said Time Warner is in discussions with the SCMA.

Yow cited the recent billboard legislation as a good example of the state intrusion into local government.

Legislators approved a billboard bill that makes it more difficult for local governments to regulate that industry after it spent $339,000 to protect sign businesses. Gov. Mark Sanford vetoed the bill, but legislators voted to override the veto and pass the law anyway.

Critics say the legislation will make it harder for local authorities to remove signs, but supporters say it is only fair that billboard companies are paid for income they could lose by removing signs.

In the interim, Walsh declined commenting on specifies of the recent discussions between the city and Time Warner on franchise renewal. All discussions with the cable company over the past few months have been in executive session.

“In the meantime, we are operating as previously,” Walsh said.

With regard to Time Warner’s future in Orangeburg, Tibshany said the company continues to be in negotiations with the city about a franchise renewal.

The three key sticking points between time Warner and city are unchanged from stipulations put forth prior to the franchise agreement deadline of Dec. 20.

City Council has requested Time Warner:

–Extend service, at no extra charge, to residents who request it and reside within 300 feet of a main line. Time Warner wants to make it 125 feet.

–Provide $12,000 a year in grant funds for equipment and capital costs for the public access channel. Time Warner wants to make a one-time payment of $21,000.

–Pay the city a $5,000 transfer fee if the cable business is ever sold.

Council dropped claims for renewal fees. Time Warner wants both fees eliminated.

The city and cable firms have been in an on-and-off battle for years.

Twelve years ago, the South Carolina Supreme Court ruled that Orangeburg could not construct and operate its own cable television system.

In 1990, City Council first agreed to proceed with the establishment of a $3 million public communications system following a feasibility study of the issue.

However, in a 1992 case between privately owned Jones Intercable and Orangeburg, it was ruled that the city had no legal right to enter the cable business.

Four years later, Jones Intercable was purchased by Time Warner Cable, seemingly ending what was called “cable wars.”

In 2002, Orangeburg Sen. Brad Hutto introduced a bill that would authorize municipalities to construct and operate cable systems. Hutto introduced a similar bill in 2005.

Currently, South Carolina is alone in not allowing municipalities the choice of owning a cable system.

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