A state law designed to increase competition among cable-television providers and give customers more choice may bode ill for public-access channels and broadband Internet service in outlying areas. It could even leave some residents with no cable service at all, critics say.
The law, which takes effect Jan. 1, "puts at serious risk the possibilities of expanding existing public, education and government access channels [known collectively as PEG] and of new channels being started," said Wally Bowen, executive director of the Asheville-based Mountain Area Information Network.
State Sen. Tom Apodaca, who joined the rest of the Western North Carolina delegation in voting for the bill, said: "It presents another option, to provide video service over telephone-company lines. I have a home in South Carolina, and when a similar plan went into effect there, it improved the cable service and reduced rates."
For cable companies, the law means relief from the PEG funding requirements that have become more common in cable contracts in recent years. URTV board member Beth Lazer told Xpress: "This law permits no negotiation for what the cable companies pay for public right of ways. In the past, in order to be granted their monopoly, they had to negotiate with municipalities and spend some money to live up to whatever the agreement asked of them. Now they don't have to do any of that."
Up till now, funding for PEG channels has been included in the exclusive cable franchises negotiated individually with cities and counties. But once the current contracts expire, that funding will be lost. "I tried in committee to add the PEG funding in the House, but others didn't want anything to get in the way of passage," said state Rep. Susan Fisher.
The law does provide some funding for such channels, but Bowen says it won't be nearly enough to establish new operations. "There will be an additional $40 million in fees paid by satellite services, and that will create a little additional funding for grants for PEG channels," he notes. "But the small grants of $25,000 per channel [per year] don't amount to much help for startups, because you can spend that much on one camera."
To obtain a franchise for a given area, a potential provider simply files paperwork and pays a fee to the secretary of state. The company must begin offering service within 120 days or the franchise will be revoked, the law states.
The bill was approved unanimously by the N.C. Senate and 111-5 in the House. Gov. Mike Easley signed it into law in July.
In essence, the state is eliminating the old system of cable contracts with individual cities and counties. Instead, cable, satellite-TV and phone companies will compete for customers, who will be able to choose from among whatever services are available in that area. But because there's no provision-of-service requirement in the new law, providers can pick and choose where they want to offer their wares -- though they're not allowed to pick and choose among individual customers within a given service area.
Phone companies will be granted regional cable franchises, just as they now provide phone service in specified areas. Current cable contracts will remain in effect unless another company obtains a franchise for that area. Charter Communications, for example, has an exclusive contract with Buncombe County through 2010. But if BellSouth decides it wants to compete for that business, the contract will be canceled, and Charter will be forced to obtain a franchise as well, said Bowen.
BellSouth, which provides local phone service in WNC, could not be reached for comment. But Verizon spokesperson Bob Elek told Xpress: "We supported the bill and embrace it, but at the moment we haven't installed any fiber-optic cable in North Carolina, and that's a necessary first step. We hope to do so in the future." The company provides local phone service in parts of WNC and elsewhere in the state.
Asked the reason for the new legislation, Apodaca said: "You see the mess we have here in Henderson County, where Mediacom and Channel 13 can't reach an agreement about service. This will provide another option for consumers." Sinclair Broadcasting, which owns WLOS-TV, has been negotiating a new contract with Mediacom (the cable-service provider in Henderson County) and is reportedly ready to walk away from the deal. That could leave Mediacom subscribers without access to local programming from WLOS.
Bowen, meanwhile, said, "BellSouth and Verizon argued that it wasn't economically feasible for them to bid on cable service county by county -- like all of the cable companies have had to do in the past." The veteran Statehouse activist said he'd never seen as many lobbyists in Raleigh as he did when this bill was being considered.
Lazer, who attended a meeting hosted by the North Carolina Rural Internet Access Authority in mid-November to educate PEG providers about the law, said many elements of the new approach are confusing to people throughout the system. For example, she noted that the law as written and originally interpreted overlooked the fact that many PEG stations are run by nonprofits. "It only provided funding to government channels," she said. Also, the law imposes a sales tax on franchisees which will be used, in part, to fund PEG channels. "But what happens if no other competitor comes into Buncombe? The cable contract will continue in effect, but what happens with the funding?
"I'd like to think that means we will get double the funding," she added with a laugh, "but I doubt it."
Bowen, who testified during the hearings on the legislation, says he has serious doubts about the law, though he does see some positives. "The good thing is, we got the existing funding grandfathered in, but there was no funding for expansion," he told Xpress. In addition, he said, it "will be good for consumers in very affluent neighborhoods. Because there are no requirements to extend service to all residents, the state franchisees will be able to cherry-pick wealthy neighborhoods and ignore low-income neighborhoods. This will apply to broadband Internet access as well."
Supporters of public-access channels are seeking alternative ways to finance such operations. "We are working on a House bill that would provide a separate funding stream for community media centers," said Bowen. "A version of the bill passed the Senate, with a good deal of help from Martin [Nesbitt]."
Fisher voiced support for the bill, noting: "Because it passed one chamber, it isn't dead. I'll be working on it in the next session."