WATPA: FW: PSC Proposed Rules

From: Norm Jacknis (norm@jacknis.com)
Date: Sun Mar 30 2003 - 16:36:10 EST

On his behalf, I've appended Dave Wright's letter on proposed cable rules
for those involved with these issues. You may contact him at


-----Original Message-----
Janet Hand Deixler, Secretary
New York State Public Service Commission
3 Empire State Plaza
Albany, New York 12223-1350

Five Copies Enclosed -- Due 4/21/03

                Re: Proposed Rule-Making Concerning Cable Television Regulations
                        Case 01-V-0381 – Part 890 et seq.

To the Commission:

I write to object to certain aspects of the P.S.C.’s proposed rule-making
concerning cable television regulations. As a private attorney, I am
sensitive to the interests of municipalities -- who appear to be the big
losers under the proposed regulations. Specifically, the proposed rules
purport to give a host of advantages to cable operators, and place many new
restrictions upon the municipalities. The clear tenor of the proposed rules
is anti-municipality, and pro-cable company.

We believe that New York law gives municipalities the right to license
franchises within the public rights of way, and that the P.S.C. lacks
authority to impose, by administrative rule, requirements requiring the
issuance of franchises, or otherwise dictating to municipalities the terms
that must be included within those franchises.

Current regulations provide additional protection to municipalities, and
specify minimum criteria that must be contained within a cable franchise.
Those minimum terms are universally to the benefit of the municipality, and
serve to recognize the fact that many municipalities are not sophisticated
enough to be able to secure such terms on their own. As such, the current
regulations serve a useful public purpose and are not at all inconsistent
with the municipality’s right to manage its rights of way.

However, there are several provisions contained within the proposed rules
which operate in the opposite direction, and purport to impose regulations
and restrictions to the disadvantage of municipalities, and to the advantage
of cable operators.

Section 894.8 Timing and Manner of Award of Franchise

The proposed rules add the following language, in the context of multiple
applicants for franchise:

A municipality may award one or more franchises within its jurisdiction. A
municipality may not unreasonably refuse to award an additional competitive

This new language is, in my opinion, in violation of New York law, which
gives municipalities the power to award franchises operating within the
public rights-of-way. As I understand the intent, the P.S.C. wants to
encourage competition, and reduce monopoly power, in the provision of cable
and telecommunications service.

Section 894.9(b) Alternative Franchising Procedure

The proposed rules virtually eliminate the informal alternative franchising
procedures existing under current regulations, and will require extensive
formalities and unnecessary legal work for municipalities. The proposed
rules would allow the use of this alternate franchising procedure only if
there is no existing cable operator serving the municipality, a virtually
non-existent scenario.

The effect of this change is to disadvantage municipalities, and give
advantage to cable operators.

Section 895.1(f) Required Contents of Franchises

In this section, it is proposed to impose upon municipalities a prohibition
on granting a franchise to one company, unless the ‘public access” terms are
precisely equal to the terms of existing franchises. This is an
unwarranted, unfair and unwise restriction placed on municipalities, and
gives a great advantage to cable operators. The specific language states

“the provisions for facilities, equipment and support for PEG access shall
be competitively neutral when compared to such requirements as may be
contained in such other franchises.”

In my experience, sometimes a cable operator gives more “PEG” support, and
this is made up in another part of the franchise, where they might not be so
amiable. By micro-managing the terms of franchise agreements, the proposed
rule places yet another restriction on municipalities.
Section 895.1(l) Required Contents of Franchises

Yet another example of a new unfair restriction placed on municipalities –
and a corresponding benefit given to cable operators – is found in the
language of 895.1(l), which states that, in adopting an ordinance to manage
its rights of way (a power granted to municipalities by state law), now the
municipality cannot impose any particular rule for cable operators, unless
such ordinance is “of general applicability to all business entities” within
the municipality.

This is a bit ridiculous, since most business entities are not using the
public rights of way, and most businesses are not required to secure a
franchise from the municipality.

Once again, for no good reason, the P.S.C. is acting against the interests
of the municipality that may want to protect its own residents, and in favor
of the cable operators.

Section 895.1(o) Franchise Fee

The P.S.C. proposes to eliminate the basis for calculation of franchise
fees, i.e. “Franchisee’s gross revenues derived from the operation of cable
system within such municipality.” This further erodes the powers of
municipalities, and gives a benefit to cable operators.

Section 895.1(o)(3) Use of Franchise Fee Revenues

The proposed rules add two new restrictions on municipalities, (a) requiring
municipalities to spell out whether they agree to use a portion of the
franchise fee to provide public access (a completely new concept), and (b)
requiring that any PEG support to be provided by the cable operator be
“competitively neutral” compared to other cable operators.

Under current law and practice, a franchise fee is paid to the municipality,
and goes into its general fund. The municipality then decides, during its
annual budget process, how much it wants to spend on public access the
following year. The new rule would tie the hands of the municipality and
suggest that a long-term cable franchise can restrict the municipality to
spend part (or all) of the franchise fee on public access. This probably
violates state law – which says a town board cannot commit town funds for
more than two years in advance. It is also unfair and totally unnecessary.
However, it would appear to give a benefit to cable operators, by requiring
the town to “re-invest” in cable television.

The provision requiring competitively neutral terms again ignores the
flexibility under current practice. A cable operator may give in one area
of the contract, but not in others. You are making the terms “written in
stone,” and destroying that flexibility.

Section 895.3 Level Playing Field

Particularly egregious addition is the “level playing field” language in
Section 895.3. This is now proposed to be required in all municipal
franchises. Basically, this language states:

“No municipality may award or renew a franchise for cable television service
which contains economic or regulatory burdens when taken as a whole are
greater or lesser than those burdens placed upon another cable television
franchisee operating in the same franchise area.”

This is a term that is routinely requested by cable operators during
franchise contract negotiations. Now, however, the P.S.C. appears to be
simply giving it to cable operators – one of the few bargaining points given
to municipalities under the law.

Moreover, by making this law, the issue will arise, who proves competitive
neutrality? How much money will a municipality now be forced to spend to
try to prove the overall economic effect of a franchise burden. The P.S.C.
is dramatically un-leveling the playing field – to the detriment of

Section 895.4(b)(1) Number of PEG Channels Reduced

The new rules would allow for the bargained reduction of the current three
PEG channels – public access, education and government – to one. This
concept is a radical departure from current law, to the detriment of
municipalities and to the benefit of cable operators. The existing
regulations were a great protection for unsophisticated municipalities,
which sometimes bargain away rights given to them by law -- a slip which now
could afflict a municipality for 15 years. The new rules eliminate that
protection for those municipalities.


There are many other examples, but overall, the regulations appear to erode
the power of municipalities, and enhance the position of cable operators.
The rules are unwise, unfair and in many respects, probably illegal. I urge
the P.S.C. to reconsider.

David O. Wright

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