Laserfiche WebLink
����� <br />Moss & ��rnett <br />A Professional Association <br />iii. While the franchising debate generally focuses on competition <br />between telephone companies and traditional cable operators, <br />there are several start-up companies approaching municipalities <br />seeking authority to construct facilities in the rights-of-way to <br />provide triple play options. These start-up companies present the <br />greatest danger to municipalities in that they often lack the <br />technical expertise and financial capability to properly restore <br />rights-of-way leaving residents and other right-of-way users to pick <br />up the pieces. <br />�, Under the Order, the 5°/Q franchise fee and the definition of "gross revenues" will <br />be limited to exclude certain in-kind obligations, although the press reports have <br />mixed information regarding exactly what limitations will apply and whether this <br />new gross revenues definitior�/i�terpretatian will modify recently adopted state <br />statutes. <br />a. Why the FCC chose to address this issue is confusing as it was generally <br />not a point of contention between AT&T/Verizor� and local governmental <br />units around the country. Typically, the Bell companies have offered a <br />5% franchise fee with an additional 1°/a or more to support local in-kind <br />obligations. While this may still be insufficient funding to meet obligations <br />currently provided by incumbent cable operators i n large metropolitan <br />areas, it generally was more than sufficient to meet in-kind obligations for <br />smaller jurisdictions. The Order apparently will cap franchise fees at 5% <br />and allow new competitors to deduct any additional in-kind obligations <br />from the 5% franchise fee. Such deductions could include any free <br />services mandated for local schools and public buildings (i.e. police, fire, <br />city hall) as well as capital support for local PEG channels, institutional <br />networks connecting municipal buildings and related costs. <br />b. Possible impacts. <br />i. To the extent a new competitor will no longer be providing any in- <br />kind obligations, incumbent operators will likely seek relief from <br />existing franchise obligations. <br />ii. Many local franchises contain "most favored nations" provisions <br />which allow relief if a competitor is granted authorization on more <br />favorable terms. Moreover, this provision conflicts with Minnesota <br />Statutes 238.p8(1} (b) which requires the franchise fee payments <br />and PEG requirements must be substantially the same in local <br />� <br />