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Franchise renewal opportunities are just around the bend.

Many municipalities will be facing the decision of whether or not to renew their cable television franchises in the coming years. Now is the time to look carefully at what you have, what you want for the future and what you can do to prepare for this renewal process.

The Cable Act of 1984

In the area of renewals, the Cable Act addresses two basic issues: "procedure"--the time frames and processes that franchising authorities must follow in deciding whether or not to renew an existing franchise; and "substance"--the kinds of requirements and obligations a franchising authority may impose on a renewal applicant and the requirements it may not impose.

The Cable Act contains some very important provisions that allow local governments that pay attention to what they are doing, the right to say "no" to renewals or to invite competition in the form of additional operators or a replacement for the incumbent.

Getting Organized

Three years prior to the franchise expiration you need to begin getting organized. Over the years you've acquired many documents dealing with your cable franchise, especially if the franchise has been transferred from one cable operator to another. Assemble all of these documents.

Decide who will handle the city's negotiations. One person needs to be in charge so that all steps are completed in the detailed process. Make sure you have the necessary expertise on your side, because you can be assured that the cable operator will have the expertise on theirs. Outside consulting services can be brought in to give the city or town the expertise they don't have on staff.

You need to have expertise in technical, financial, and legal aspects. Your technical expert will not negotiate, but will advise on the state-of-the-art capacity your operator does or should possess, use of city right-of-ways, and future technical needs. Your financial expert will need to be fluent in franchise fees, which are limited to five percent of gross revenues from the cable operator (Congress allows this, so take advantage of it).

The most important expert to have is the legal expert. The renewal process is legally intense (and may contain pitfalls) because the rules of the game are constantly changing, whether it be in the courts or Congress or at the FCC. Make sure the city can do everything it wants to do. Take advantage of every change. For example, the FCC is now allowing some rate regulation under certain conditions. Protect the community if something should go wrong. Most of all, your experts should work as a team.

The Renewal Process

The Cable Act gives the operator the right to trigger the renewal provisions of the franchise. Two renewal tracts exist within the Act. In non-technical terms they are the "formal" and "informal" tracts. Whichever tract you choose, make sure it moves forward. In most cases, at the end of either tract, you negotiate the renewal. However, if the city is dissatisfied and chooses not to grant a renewal you must follow the Act very carefully. The "formal" tract can lead to a non-renewal.

It is a public process that should involve the community. Choosing to use the "informal" tract means you are happy with the present situation. The "informal" tract is obviously the simpler process. However, it is recommended, that unless you are experiencing absolutely no problems, the city should follow the "formal" tract for renewal.

Once the city receives a letter from the operator to begin the renewal process, the city is responsible for conducting a needs assessment study to look at future needs and documenting past performance of the operator. Past performance can only be used against the operator if the operator has been formally notified in writing of the problem or complaint. The operator has to have the opportunity to know and cure the situation.

The next step is the negotiation phase. Request a proposal from the cable operator to meet the needs you've outlined in your study and remedy the mistakes in their past performance.

Information for this article was obtained from a workshop held at the 1991 Maryland Municipal League annual convention. For more information contact Rene Winsky at NATOA in the Center for Member Programs at (202) 626-3160.
COPYRIGHT 1992 National League of Cities
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:cable television
Author:Winsky, Rene M.
Publication:Nation's Cities Weekly
Date:Apr 6, 1992
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