January 18, 2014 10:56:02 PM
A third-party consultant is hoping to negotiate a contract renewal between the city of Columbus and Cable One, as well as a new agreement with AT&T for providing cable television by April.
Greg Fender, president of Georgia-based Local Government Services, was selected by city councilmen last month to be that consultant. Federal regulations allow municipalities to require compensation of up to 5 percent of gross revenue from cable companies for use of their rights-of-way and infrastructure. City chief administrative officer David Armstrong said the city is currently receiving that amount from customer fees, but there are other sources, including advertising and home shopping commissions, that he said he hopes Fender can assist in bringing into city coffers.
Fender said that will be an objective of his, and he anticipates that will happen provided the companies agree to compensate the city the full amount it is allowed to charge by federal law.
"To us, it's fairly simple," Fender said. "It should include 5 percent on everything that's related to cable service provided in the community. Sometimes cable companies like to negotiate to exclude franchise fees on advertising revenue or home shopping commissions. Generally, we believe all these revenues should be included. The city is looking at trying to incorporate in these documents their rights...to make sure the community is compensated for use of the right of way to the maximum extent provided by the law."
The city's contract with Cable One began in 1989. Since 2008, the city has received at least $200,000 yearly in franchise fees. Of those years, the largest amount collected was $222,830 in 2010. Last year, the city received $219,093.98.
Fender has also worked with Lowndes County to negotiate franchise fees. County administrator Ralph Billingsley said he recommended Fender to Armstrong after working with him in 2011 to negotiate fees disbursed to the county from the profits the company receives from more than 5,000 customers. He said prior to 2012, the county did not receive a franchise fee at all.
"He talked about how a lot of counties did not have franchise agreements with cable and if they did have a franchise agreement, they weren't getting any revenue stream from it," Billingsley said. "We ended up contracting him to redo the franchise agreement and put a franchise fee on it."
Fender said his company has negotiated with Cable One in the past in Mississippi cities including Gulfport and Natchez, so he expected the process to go "pretty smoothly."
"We're doing an audit to make sure Cable One has paid the city correctly in terms of the franchise fees they're required to pay the city in accordance with the local ordinances of the city," Fender said. "In addition to that, we're doing what's referred to as a jurisdiction coding review to determine if they've coded all their city streets correctly in their customer billing records. We examine the past franchise document and the provisions of that document and we look at developing and drafting a new document that will hopefully capture up-to-date legal provisions for both state and federal law. It also addresses local ordinances in terms of how they use the streets and try to address customer service or things of that nature and then when we prepare that draft, we send that to the city officials for their review prior to sending it to Cable One for their comments. That's what we've done at this point."
Since satellite companies do not use public infrastructure, they do not enter into a contract with the city to provide service to the area.
Because of competition from satellite and digital providers, municipalities have no control over cable companies' customer rates. This means the monthly rate of $62 Cable One currently charges customers for standard cable and $29 for "economy cable" cannot be regulated by anyone other than the company. On the flip side, the competition also has a role in cable providers policing themselves on rates.
"Whereas there's still an ability for cities to regulate that lower rate, it seems somewhat futile because the cable company can simply just change its rates to have rate increases on the upper tier," Fender said. "That is outside the purview of any local government. A lot of these companies have filed for effective competition with the FCC to demonstrate there is effective competition within the town so they're not subject any rate regulation whatsoever. If you have at least 15 percent of the homes in the community subscribing to satellite dish, then they're not subject to rate regulation."
Other terms Fender says he includes in agreements is minimum federal customer service standards adopted into federal law in 1993. The standards include customer service and insurance requirements and also ensure that if the company has to disturb infrastructure including streets and wires to install equipment, it restores the area back to its normal operating condition on its own dime. Agreements also usually require the company to pay the city on a quarterly basis.
"We incorporate those standards into document that govern response time for cable companies when someone calls on the phone. It governs installations in terms of time limits when someone calls to request an installation," he said. "The insurance requirements say if someone is injured from their operation of the cable system and the city is sued, the cable company will indemnify the city and make it whole. We want to see these guys be successful and be able to use the right of way to conduct their business, but of no harm to the public. In terms of customer services, we want the services to be provided in a professional and good manner."
The city's contract with Cable One is officially up for renewal in June. The council agreed to pay Fender $12,000 to negotiate with that company and AT&T. Cable One provides cable TV, Internet and telephone service to 730,000 customers spanning 19 states. No service besides cable television is a factor in the city's negotiation process.
Nathan Gregory covers city and county government for The Dispatch.
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