Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Municipal Regulation! Sorry after you preview a post you can't edit the Subject

I see this city by city franchise agreement as a troubling issue. It would be nice to see the franchise agreement summary for the major markets and when they are up for renewal.

If I have this straight, the cable company owns the plant. They City gives them a franchise to operate the plant. The owners of the cable plant, without the franchise, would not have to give up their plant. They own the infrastructure. Would they have to share the plant? Would the competing company have to install a new plant?

It appears to me that if a City tried to remove a franchisee from operating the plant that the franchisee bought, installed and owns, that we are going to see a court battle. The City had better be ready to show that the Cable company violated the franchise agreement. They better have a pile of cash to go after the likes of AT&T/TCI/ATHM because I don't think they will roll over and play dead.

I predict that if the City of Seattle tries to pull the plug on TCI that they will be headed down the long and costly road of litigation. It is clear to me that the City of Seattle does not have the resources for this type of battle. I think that these franchise agreements may not even be legal under Federal law. So for the Cities to take on TCI because they are behind in the schedule installing or upgrading their plant is foolhardy indeed. When was the last time a City project was done on time and under budget?

As for the situation in Tacoma, I don't think we have the whole story. Ask yourself this: Why did the Cable companies leave the door open to the City owned Cable Franchise? Answer: The plant must not have been profitable. There can be no other reason for it. I know that in the City of Seattle there where many neighbor hoods that the cable comanies did not want to wire. Why? Because they where low income areas where the payoff of the plant would take longer than the lifetime of the plant. In otherwords there was no money in it.

The advent of cable internet has probably changed the economics here. None the less the cable comapnies resisted installing low income areas for economic reasons. Many of the people would not be able to afford the service, and worse the cost of hooking people up and disconecting them for lack of payment can take the profit out real fast.

I'll extrapolate my knowledge of what happened in Seattle to Tacoma. Tacoma has a lot of low income areas. This is changing, but Tacoma has sprung up from a paper mill town working class poor city. There are large parts of Tacoma that you can't walk around in at night. The City is poor. I would be willing to wager that this is the reason that Tacoma was left behind by the Cable comapnies.

What company would walk away from an easy dollar?

All of this is my humble opinion, and some of it is lacking detail and hard facts. I do live in the region and have for more than 35 years, and I briefly worked for a microwave cable tv comany in Seattle that served those areas that the hard wire Cable companies did not want.

Sorry for the ramblins,
LuxSit
Print the post Back To Top
No. of Recommendations: 0
LuxSit,
There are well over 10000 cable franchises in USA alone, so we certainly need to concentrate only on those major markets in which trouble is already looming.

The 1996 Telecoms Act, I believe, specified that in all cases where franchise authority approval for a sale or transfer is required, the franchise authority has 120 days to act upon the request for approval containing such information as is required [snip]...
The request will be deemed granted if the franchise authority fails to render a timely decision within the 120 day period, unless the parties agree to an extension.
(I have taken this information the website of Pepper and Corazzini, www.commlaw.com).

Good news: The merger was announced on 24th June, I think. Even if TCI were slow in submitting the necessary material, I suspect that the 120 days must have expired in almost all cases by now.

Bad news: The FCC apparently acknowledges the right of the franchising authority to require approval, presumably if such a right is stipulated in the franchise agreement.

If I have this straight, the cable company owns the plant. They City gives them a franchise to operate the plant. The owners of the cable plant, without the franchise, would not have to give up their plant. They own the infrastructure. Would they have to share the plant? Would the competing company have to install a new plant?

I can imagine two scenarios: a complete standoff, leaving the area without service (unlikely), or a transfer of the franchise and plant to another cable company, with appropriate compensation to the incumbent. I gather that MSOs trade franchises routinely to streamline their own operations.

However, the potential revenue from every franchise has increased dramatically. Valuation would be difficult, especially since for sure TW would be trying to buy their way into the area. Litigation is indeed the most likely outcome.

As for neighbourhood profitability considerations, I understand that this is precisely the reason the franchising authorities exist: to ensure that the community as a whole receives adequate and proper service. Each franchise proposal, from what I have gleaned from some comparisons, contains specifications for various criteria such as bandwidth, channel diversity, and upgrade plans.

Regarding Tacoma and those areas of Seattle poorly served by TCI, it seems to me that TCI deserves all it gets if it has violated its own agreements wrt these areas, and I am not surprise that the authorities want blood.

The problem now is how to resolve the dispute satisfactorily.

I wonder if AT&T hasn't seriously underestimated the contempt in which TCI is held by some of the communities it serves. Clearly there is NO time left to change the brand image as AT&T would wish.

Final Good News (it bears repetition): TCI has said that the merger would not be in jeopardy unless one quarter of the franchises failed to approve the change in control.
Print the post Back To Top
No. of Recommendations: 0
The problem now is how to resolve the dispute satisfactorily.

You're right about getting resolution. This is where AT&T needs to get proactive right away. Management should send a letter to the Seattle City Council immeadiately outlining the actions that they will undertake after the TCI aquisition is completed. The letter should state that the new company will complete the upgrades per the franchise agreement within a reasonable time agreeable to both the City and AT&T. That areas heretofor ignored will be installed as part of the plan.

Failure of AT&T to start rebuilding the image of the company at the earliest opportunity could be a costly mistake not only for the shareholders of T and ATHM, but also the City of Seattle who has a lot to be gained by having AT&T involved with upgrading and implementing the new communications revolution in their City.

I can only hope that this is seen as important by the Managers at T and ATHM. They can turn what has been a low point into a public relations coup.

Anyone that thinks the city owned Cable System would be as beneficial to the citizens as a system owned and operated by AT&T is fooling themselves. Letting brand X cable company come in, especially City owned, would certaintly result in a system with far less potential then would be provided by AT&T.

I hope someone at AT&T/TCI/ATHM is reading this!

LuxSit
Print the post Back To Top
No. of Recommendations: 0
Amen to that, LuxSit.

The following article includes an indication that AT&T is already going through active damage limitation:

http://archives.seattletimes.com/cgi-bin/texis/web/vortex/display?storyID=116118&query=TCI

Meanwhile, the City seems to be venting at TCI prematurely:

http://archives.seattletimes.com/cgi-bin/texis/web/vortex/display?storyID=116990&query=TCI

This must be a tactical error by the Council, as it reduces the moral authority they have on the approval and renewal issues.

Meanwhile, it seems that one of Seattle's favourite sons is cosying up to TCI:

http://archives.seattletimes.com/cgi-bin/texis/web/vortex/display?storyID=117220&query=TCI

While this carries the Redmond taint, perhaps there could be a resolution strategy lurking in here somewhere?
Print the post Back To Top
No. of Recommendations: 0
LuxSit,

I hope you don't mind, I took the liberty of making sure that someone at T did see it. I e-mailed the post and link to their corp-com unit.

No guarantee it will get any further, but every little bit helps.
Print the post Back To Top
No. of Recommendations: 0
Luxsit wrote:

I predict that if the City of Seattle tries to pull the plug on TCI that they will be headed down the long and costly road of litigation. It is clear to me that the City of Seattle does not have the resources for this type of battle

Luxsit, don't forget what company is located in Seattle! I won't tell you their name, but their initials are MSFT....Seattle will be wired as well as anywhere, because Microsoft employees will demand it (and rightfully so). With the fishing expeditions into the cable arena the company has done, could there be a little collusion with the city council (or whatever body does this?). If they are going to be @Home competitors, what better way than to stage a diversionary legal battle without the word Microsoft in it? They learn quick, and in this case they are learning from Sun, Netscape, etc., who are the "real" prosecution team in US vs Microsoft.....

What I'd like to know is what effect today's FCC ruling has on these local Franchise deals. Maybe you or Scallag could reply.

Thanks,

nole1
Print the post Back To Top
No. of Recommendations: 0
What I'd like to know is what effect today's FCC ruling has on these local Franchise deals.

My initial thought was that there was no effect whatsoever, but this is a purely procedural interpretation. In fact, the FCC has declined to fight Seattle's battle for them.

Seattle and Portland now seem to have gone a long way out on a limb by attacking TCI so aggressively. Whatever happens next, they will have to live with the consequences.

It seems that only a handful of local politicians are standing in the way of the transfer of their own franchises. The merger will happen, regardless of whether Portland and Seattle see the benefits.

Councilwoman Podlowski, do you feel lucky?

BTW, MS has been using DSL for some time now on their VPN. They have seen the advantages of broadband.

I am still trying to work out the significance of Paul Allen's move. I believe he is something of a Seattlephile and philanthropist, so could potentially be influential. If he is dealing with TCI, perhaps this could help sway our favourite councilwoman?

Print the post Back To Top