Position Paper on HF 2647 and SF 3146 Communities across Iowa have codified their cable TV needs and interests in the form of franchises. Requiring new entrants to use the same, albeit expedited, franchise framework as current cable providers maintains a level playing field, follows Federal law and FCC standards, does not attempt to establish a new or separate regulatory structure, and adheres to what communities have already established is in their best needs and interests. What is at stake is maintaining what communities have already said they want, while allowing new entrants to offer competition. What is also at stake, from a broader perspective, is cities’ ability to contract for services with a reasonable expectation that the state will not come in and undercut those contracts, in favor of contracts with new entrants with preferential terms. The debate regarding House File 2647 and Senate File 3146 needs to be framed in the public’s interest. For the members of the League of Municipalities, those interests are 1) honoring existing cable TV franchise agreements; 2) local consumer protection and rate regulation; 3) (and perhaps most importantly) protection of cities’ basic abilities to make and keep whole, contracts for services. The first point addresses the fact that communities across the state have already codified their cable TV needs and interests in the form of franchises negotiated by staff, city commissions, and elected City Councils with cable providers. That work is the framework on which any new state telecommunications legislation must be built to ensure competition is fair and no competitive advantage is bestowed on new entrants. Incumbent cable operators and cities have identified and dedicated resources to meet their community needs and interests. To suddenly eviscerate those commitments from new entrants undercuts the requirements for even-handedness and fairness cities must maintain when entering into any contract for a service. Page 2

Our state legislators, and we as municipal leaders, have an obligation to our citizens before any possible obligation to telecommunications companies. That obligation is to honor the work already done, and the commitment that went into it. The work that went into achieving these franchise agreements was substantial and paid for by communities and cable companies, not the new entrants. Claims by new entrants that signing a duplicate of an existing contract would be too burdensome are flatly untrue. Using the framework of the existing nonexclusive franchise represents costs savings to everyone involved. If “Time is Money”, then building on years’ worth of efforts, by using existing franchise agreements as a model, makes sense financially. Using substantially similar franchise agreements maintains a level playing field, follows Federal law and FCC standards, conforms to Iowa law, and adheres to what communities have already established is in their best needs and interests. Supporters of this bill say it will bring competition to Iowa communities. Competition can be a good thing. Iowans want good competition. But good competitors agree to a level playing field and playing by the same set of rules. Communities in Iowa with franchises have set out what is important to them in this area. The process they used is set out in Federal law. To throw out that process and allow new entrants to set new rules would not be in the best interests of the citizens of these communities, or those of the cable providers who worked with these communities through the legal process. What is at stake here, on one hand, is maintaining what communities have already said they want, while allowing new entrants to offer new choices to citizens/consumers. One very important element that local communities have supported is local video

Page 3 programming on their PEG (Public, Education, and Government) channels. With the possible exception of Iowa Public Television, nearly all other television programming, including local broadcast, is controlled by multinational conglomerates. There is only one place left to turn to maintain our sense of community, of awareness and knowledge about local governmental affairs, local information, activities, and events. The FCC established that one place in 1972 in its Third Report and Order, requiring all cable systems to offer PEG channels. Many cable providers recognize the value of PEG channels. Mr. Charlie King, Regional Vice President for MediaCom, quoted in the February 27, 2006 edition of Multi-Channel News said, “I truly believe that satellite penetration is below the national average in Iowa City because we have six access channels that people use and watch.” Iowa City is not alone. Those communities that found PEG channels important required them during their franchise process. Most of the communities that understood that channels, especially public access channels, could not operate without funding either required or negotiated such funding from the cable companies, in many cases, in addition to the franchise fee. New entrants should not be exempt from this commitment to our local communities. To do otherwise would close public access centers doors and wreak havoc on already strained city funding through franchise fees. If new entrants have problems with these fees, one suggestion is to require that such funds be spent on cable TV-related items only. The firms can then know that what is collected from their subscribers’ goes directly to benefit their subscribers. Without such local communication programming, communities’ unique identities will lose their vitality.

Page 4 If the only information our communities receive is from entities that control information and programming for their own commercial purposes, it will shape what our communities are, can and could be. It would not allow us to generate and produce an understanding of who and what we are, what we think, as opposed to what New York and Los Angeles think. Also worrisome is the prospect of having the legal force and effect of a city contract being undercut. If the state undercuts the cities cable TV franchise agreements to allow telecommunications companies to provide the equivalent of cable programming without the same or similar obligations, then what is to stop it from awarding other statewide contracts that undercut other city contracts? Two other important issues – consumer protection and rate regulation – must also be considered. At no other time have consumers needed protection more than now. While companies have grown larger and centralized call centers have multiplied, their ability to resolve local complaints has been minimized. Being on top of a situation in Lone Tree or Red Oak is mitigated by the call center’s location in Minneapolis or St. Louis, Dallas or Delhi. It is no coincidence that those who respond best and quickest to complaints, on most local problems, are local and decentralized in nature: they're our neighbors. There is no effective substitute for local consumer protection and complaint resolution. Many cities and towns in Iowa have established methods of dealing with consumer complaints, whether it is through their Cable Commissions, City Managers, City Councils or City staff whose job descriptions include complaint resolution. Those communities that have chosen to take this route should be allowed to continue this course. New entrants should be required to follow the same rules.

Page 5 Rate control is imperative. Already, cities’ abilities to control rates have been whittled down to one tier, the least expensive tier, that of basic service. For those community members on fixed incomes and those in the lowest economic class the availability of a regulated, low price offering takes on heightened importance. The digital divide, the “haves and have-nots” gap that has steadily grown with company mergers such as AT&T’s proposed merger, promises to grow wider still. Local control of basic rates, where already determined and established by local communities to be in their own best interests, needs to be continued as set out in FCC standards - and again, new entrants should be required to follow the same rules. In the interest of the telecommunications companies, the granting of a franchise to new entrants could take place within much shorter time frames--of 60-120 days--compared to the many more months, even years, for franchises granted originally to cable providers. The same timeframes for build-out that applied to cable companies can be applied to new entrants, which again maintains a level playing field and is no more burdensome a requirement than that with which the cable companies have already complied. In the near future, those telephone companies that have not already done so will upgrade their equipment. In fact, they need to do so to provide video services. It makes sense for them to attempt to recoup some of that expense by offering cable programming over their new facilities and lines. Nevertheless, Federal law and the FCC clearly distinguish between telephone service, cable TV service and information service. Municipalities have been given a primary role with regards to cable TV service through their local cable franchise. The State of Iowa should consider very carefully all the potential legal ramifications to municipalities and citizens in imposing a new, separate regulatory structure atop an existing structure for an identical service. In sum, these bills do not promote fair competition – quite the opposite. They do not provide benefits for consumers, but rather reduce their protections. They do not streamline the franchising process, they eliminate it. These bills are bad for municipalities, bad for consumers, bad for fair competition and bad public policy.