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LET Charter has fulfilled franchise requirements

By Gary Neumann

Some recent letters to the editor have indicated a misunderstanding of the city of Rochester's role in the regulation of cable television service.

The city of Rochester has entered into a non-exclusive franchise with Charter Communications. The city has never had an exclusive franchise with any cable company that would prevent another cable provider from starting service in Rochester.

In 1999 the city of Rochester entered into a 15-year cable franchise renewal with Bresnan Communications, which was later transferred to Charter Communications. This non-exclusive franchise was the result of three years of work by the City Cable Television Advisory Board to determine whether the provider, TCI at that time, had provided a reasonable quality of service and had the legal, technical and financial capability to provide cable service in the future. The board also held extensive discussions concerning the future telecommunications needs of the community.

The ability of a city to deny the request of a cable provider for renewal of its franchise is limited under federal law and cannot be arbitrary and capricious.

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The city's franchise allows Charter Communications to utilize the city rights of way to provide a private business service for cable television purposes.

A similar franchise agreement is available to any other cable television company that wishes to provide cable services in the city. If another cable company believes it can effectively compete with Charter, there is nothing that will prevent it from entering this market.

Prior to 1984, cities did have authority to regulate rates under cable franchises. In 1984 Congress deregulated cable rates, freeing cable operators to increase rates at will.

During the '80s and early '90s, cable rates increased but so did the amount of cable programming offered. In 1992, under pressure from consumer groups, Congress re-regulated the cable industry, utilizing a benchmark formula.

In 1996 Congress modified the rate regulation laws and determined that in 1999 rate regulation of the expanded basic tier would end.

Under the 1996 law, Cable providers are permitted to charge rates for the basic service tier up to a maximum permitted rate as established by the FCC. There is nothing that the state of Minnesota or the city of Rochester can do to modify the federal regulatory approach for basic cable television service.

The items still subject to city regulation are limited primarily to the overall capacity of the system, customer service standards, and public access requirements.

The city does not have authority under federal law concerning the specific channels to be included on the basic or the expanded tiers or the rates for those services.

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Under federal regulations, the "Basic" tier of cable service must include all over-the-air broadcast stations, all local must-carry stations, and all of the public access channels. The cable provider can add additional channels to the basic tier at its sole discretion.

In Rochester, Charter added, and is now removing, the Discovery, Travel, and National Geographic channels. It was Charter's choice to add those channels and it is solely within their authority to remove them.

The city did contact Charter Communications in December to advise them that a reduction in the number of channels on the basic tier should result in a reduction of the fee for basic service under the FCC benchmark rate provisions.

Charter subsequently confirmed that the city's position was correct.

During franchise renewal negotiation, the most significant issue that was discussed was whether TCI, later Bresnan, would make significant investments to improve the local cable system.

The city's goal was to increase the channel capacity of the system to a "state of the art'' system, which would also provide capacity for high-speed data and Internet transmission for business and residential users.

When TCI was unwilling to make such a commitment, the city investigated other options such as a municipal cable operation under Rochester Public Utilities. A consultant study for the city concluded that the public investment needed to establish a municipal cable and high-speed data transmission system would cost an estimated $32 million in 1998.

Subsequently, Bresnan Communications agreed to franchise terms that required an upgrade to make the Rochester cable system comparable in capacity to the best systems in the country.

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According to Bresnan, the cost of this upgrade was over $6 million. In light of this agreement to upgrade the system, and the high cost and risk associated with developing a municipal cable system, the city discontinued discussions concerning a public cable operation under RPU.

The city has received complaints concerning the price for cable services or the specific channels provided on each tier. However, congressional actions have removed those areas from the city's review authority.

Complaints relating to the quality of the signal or the service provided by Charter, which are areas that remain subject to City regulation, have been relatively few since 1999.

Gary Neumann is Rochester's assistant city administrator.

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