Time-Warner, revisited

Time-Warner, its relationship with the town of Chapel Hill, and cable TV agreements are the subject of two CH Herald stories this morning.

 1. "Time Warner Cable, town to break ties March 31" Daniel Goldberg:  "Time Warner Cable has notified the town that a local franchise agreement between the two entities will be terminated effective March 31 . . . [Under] the Video Service Competition Act ... all cable franchise agreements instituted after Jan. 1, 2007, will be licensed by the N.C. secretary of state and agreements like the one between Time Warner and the town of Chapel Hill could be terminated if a competing cable provider were authorized to offer services in the same area."  http://heraldsun.southernheadlines.com/orange/10-1124138.cfm (regis. needed)

 2. "Town opposed cable service legislation" Daniel Goldberg - a history of town opposition to the legislation.  http://heraldsun.southernheadlines.com/orange/10-1124120.cfm (regis. needed).

 I wish I understood the ultimate implications here clearly (especially what may happen specifically to TV and cable bills in my household, of course); but at first blush it does seem to fall under the heading of:  "Fixing Something by Making It Worse."  Do please correct me if I'm wrong.  In any case, the timing - in the same era as the switch away from free broadcast TV - seems either significant or unfortunate or both.  Is it?

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Follow-ups on the story appear in today's CHHerald, raising questions about the future of town revenue from TW cable fees.  There's also a nice juxtaposition of a Time-Warner statement professing belief in competition with Mayor Foy's characterization of TW as an archetypally big-footed monopoly. Does anyone know how AT&T's service is working out in Charlotte?(I've posed a number of questions here and in the original post - either I'm hopelessly ill-informed or naive, or else other people are having the same trouble figuring out the implications.)

Priscilla, You're neither ill-informed nor naive and I am also having trouble figuring out the implications (as I believe most other people are).  For now I guess it is wait and see and try to stay vigilant.

I am not sure where state vs local control is headed.  Apparently it means less dollars for localities and no local say in public channels.  Will it mean no service in lower density areas?  But could there be an upside if there really is increased competition?  Will there really be a choice between more than one cable service?  Could that lead to lower rates and/or better customer service?Interesting enough there was no mention of Verizon anywhere.  Verizon has been busy building out and delivering their FIOS service in other areas of the country and Durham is Verizon  territory.  Their FIOS service is fiber to the home (in contrast AT&T has been building fiber to the curb) and is know for delivering high quality uncompressed video.  However they may not be the low cost provider.

Full disclosure, I strongly apposed the Video Service Competition Act and worked hard to help fight and reform it during the last 3 years.  Just so you know where I’m coming from.  Of course, part of my role as the Executive Director of The Peoples Channel, is to help advocate on behalf of our community members to have access to all types of electronic media.  The original version of this bill when introduced in the 2005/6 session, almost eliminated the existence of Public, Educational, and Government Access channels like The Peoples Channel.  We were able to save some of the components that keep access channels alive, but the bill is far from what it claims to be.

 

This bill was introduced in part of a large campaign by AT&T and Verizon.  In 2005/6, these companies attempted to lobby the feds to create a federal franchising system.  For 30+ years, wire line video service providers (cable companies) were required to negotiate with every city, town and county individually in order to gain access to the Public Right of Way (public streets, sidewalks, etc.).  When cable companies started offering telephone service, phone companies realized that they needed to also offer “triple play” (phone, internet, TV) packages if they were going to compete.  However, phone companies did not want to play by the same rules as cable companies and argued that local negotiations/franchise agreements were a barrier to entry in to the marketplace.

 

They asked the feds to pass a bill that would create a one size fits all federal franchising system.  This action failed at the federal level, so the phone companies started attacking state by state claiming that this was in the best interest of consumers.  It would create competition, thus reducing cable rates and creating better service.  In their authoring of these bills, they tried to strip any public service requirements in order to, of course, make more money.  The first state to pass a statewide franchise bill was, not to surprising, Texas.  The phone companies then ran across the country trying to pass these bills.  The state franchising bill came to NC in the 2005/06 session and became law 1-1-07.

 

So…we all love competition and of course we all love lower rates, so what’s the problem?  Let me see if I can explain just a couple of the reasons that this bill is harmful to our community.

 

This bill has not created real competition:

            Last checked, there were a little over 100 state franchises filed, and almost all of them were filed by incumbent cable providers.  So far, except for the three communities that AT&T claims it will serve soon, what the bill has done is basically created unregulated monopolies.  Once a local franchise expires, companies are able to apply for the state franchise.

 

It has led to less consumer choice:

            Some cable operators are reducing the size of service areas previously served under local cable franchises (eliminating obligation to serve lower density, lower income, and potentially competitive areas); (e.g., Nash County). These consumers have less video choice.  I would bet, based on where I have seen AT&T place its service boxes, that they will not serve all of Chapel Hill.  Right from the beginning, AT&T has stated that they are interested in “high value” neighborhoods, and fought very hard to make sure that how they defined their service area could be very vague. 

 

Less accountability for the consumer:

            Used to be that if you had a problem with your cable provider, you could just call up the Town and the Town had legal authority to remedy problems.  The company dug a huge hole in your front yard, or you were being overcharged, whatever the problem, the Town could fine the cable company or revoke the franchise entirely.  Under the state provisions, no one has that kind of authority.  The Secretary of State is called the “franchising authority” and under the federal definition, they have these rights.  But, the SOS states that they only have authority to approve franchise requests and nothing greater. 

            If the consumer has a problem with their cable bill or construction, they can call the Consumer Complaints Division of the Attorney General’s office.  However, they can simply take complaints, but do not have authority to actually do anything.  If you have a problem with Time Warner or AT&T, you have to take them to court.

 

Cable Rates Will Not Decrease:

            My philosophy:  a duopoly, rather than a monopoly, does not create real competition.  My guess would be, in the first three to six months of offering service here in Chapel Hill, there will be some awesome deals.  After that, the companies will go neck and neck, and slowly but surely as they have done for decades, raise rates.  At least that’s what we’ve seen elsewhere like Texas and California.

 

Public, Education, and Government Access Channels:

            We were able to get some “do not harm” language in the legislation to help protect funding and capacity for these channels.  However, there will likely never be a well funded, new channel in the state.  If you start a new channel, you can get a maximum of $25k a year under the state model.  The Peoples Channel is a small operation, but we still scrape by with an annual budget of about $160,000-$200,000. Durham for instance, used to have in their local agreement that Time Warner operated their Public and Government Access channel.  Once their local agreement expired and TWC got a state franchise, they basically told Durham that the City would have to operate the channel.  The City invested a ton of tax payer dollars to purchase necessary equipment and shift staff around. 

The Public Access was about to go dark, but because of strong support in the community, the City and County promised $110,000 for a service provider to operate the channel.  There will be no equipment, a very meager facility, and it really only allows for community members to submit programs.  The Peoples Channel will operate this channel, but there is no guaranteed funding beyond this coming year.

            AT&T’s system treats these local channels in a very discriminatory manner.  If you have AT&T’s system, and you turn to channel 8, you will not see The Peoples Channel.  Instead, AT&T’s system places all the local access channels on channel 99.  On that channel you will see a sub menu which then lets you get to the access channels.  It can take up to 5 minutes to navigate there, you cannot DVR them, they do not support closed captioning, and they are shown at a resolution very close to You Tube.  The City of Raleigh, among a lot of other groups, recently filed a petition with the FCC because of this discrimination.

 

So, is this bill good for our communities?  No.  Cable rates will continue to rise, video service providers have less accountability, and PEG channels are treated like dirt.  There are many other issues, believe me, but this is at least scratches the surface.  I will not be online over the rest of the weekend, but will check back Monday or Tuesday to see if others have questions.  You can also contact me offline:  johnston@thepeopleschannel.org

Chad Johnston - Executive Director

The Peoples Channel

The Alliance for Community Media - Board Member/SE Regional Representative

 

Thanks for the information and analysis.  It sounds like these laws were written to protect telecom/cable corporate interests and not the public's.  

PS

If you are interested in telecommunication policy, as you probably should be, here's a link to a great resource.

Yes, the new law allows the companies to compete exactly where they want to, and to not provide service in other areas of town -- read that the less profitable areas.  The current franchise requires that TW provide cable TV service to any area that contains 30 households per mile of wire.  This does not mean however, that TW will discontinue service to homes to which they already provide service and have already installed the wires, but it does mean they could choose to do so.  Though there are individual variations, TW does a good job with Roadrunner, and it is faster than AT&T's DSL, which I have at home.  I know a number of people who have switched to TW telephone with widely varying results.  On a personal note about costs, I thought about dropping BellSouth-AT&T and switching all three services to TW.  Once the dust settled on the teaser rates, the cost was one dollar per month less than what I now pay, so I didn't make the switch.Of course I start to wonder just how important a land-based phone service really is.  My stepson and his wife don't have it, and their cell phones work just fine, though their audio quality is inferior to the 1980s era corded phones, before the move to shrink their size began. How much experience is there on internet service over the cell phone towers? 

Joe, I looked into switching to Clearwire (cellphone based high-speed wireless internet) until I read enough reviews in the Raleigh-Durham area that scared me off.   

This is such a huge issue and really complicated. It deals with Federal laws, State laws, and Local ordinances. Its a confluences of old media and new media. (Forgive me if I repeat what Chad wrote.)

Here are some of the major parts:
1) Robbing Public Access Television
3) Not providing Equal Access to the Internet
4) State Sponsored Monopoly and Duopoly
5) Poor customer service
6) Slow data services
7) Removal of Community Control

As of March 31, 2009 if you have a problem with how Time Warner Cable and AT&T does business you will have to file your complaints with the NC State Attorney General's Office. Previously The Town of Chapel Hill could accept complaints and do something about them. They HAD the ability to negotiate directly with Time Warner on our behalf. Now that power is gone. But frankly they didn't advocate for us very well when they had the power. If they did work for us in this fight the facts are hidden behind a opaque wall of silence.

There are many pieces of public property that are used by Time Warner to provide private services. We now have little power to renegotiate contracts or audit payments from Time Warner. They no longer have to pay Towns directly. They pay the State then Municipalities have to wait for payments. Some of those monies have been promised, by State law, to local non-profits all over the state that run Public Access Television stations. Last year after the State franchise law was passed and new state checks went to municipalities as much as 30% never made it to many small non-profits. (See this article by Fiona Morgan in the Indy. What happens when telecom companies write state legislation? Check your wallet.)

Fact is The Town of Chapel Hill and Orange County fought tooth and nail to keep thousands of dollars from the Peoples Channel. All because powerful lobbyist wrestled local control away from you and put it in the hands of State bureaucrats that they can manipulate. They forced cash strapped Towns all over the state to think twice about handing over money. Our Town thought they had a good legal interpretation of a vague state law that worked in their favor. But when The Peoples Channel fought back, and I mean they had to fight, they kept much of the funds. Primarily because their Executive Director, Chad Johnston, is a leading expert on PEG law. Our community owes him BIG!

Every Time Warner Cable bill in Chapel Hill is supposed to have a fee collected to help pay for Public Access television. But for many years now lots of people haven't had this item in their bill. As a result a lot of money that should have gone to support local media making and education never appeared. The Town of Chapel Hill could have audited this discrepancy but to my knowledge never did.

When cable television business first started our representatives and many community activists negotiated a deal. In exchange for the use of public lands, known as public right-of-ways, to bury cable and raise polls to cary television signal cable companies agreed to pay for it. They did this by providing public, educational or governmental (PEG) TV channels and a system to pay their support. (PEG fees) They have been trying to get out of the deal ever since. In North Carolina they have gone to the State and chipped away at it bit by bit.

Oh yeah... don't hold your breath waiting on more real "competition" from AT&T. So far according to the AT&T website their new service U-verse isn't available to my Chapel Hill Home or my business in Carrboro. I don't expect it will be any time soon. And if it does arrive I will bet money it doesn't match the speed and value of fiber data access that the City of Wilson provides.

Thanks, Chad, Joe, and Brian.  I'm enlightened but not encouraged.

Brian,     Your statement needs clarification:  "Fact is The Town of Chapel Hill and Orange County fought tooth and nail to keep thousands of dollars from the Peoples Channel."     The Chapel Hill Town Council in no way fought tooth and nail to keep thousands of dollars from the People's Channel.   This council supports the People's Channel and knows how valuable it is for our community.    

As I understand events Chapel Hill Town Staff withheld money from the State of North Carolina intended for The Peoples Channel.

Read this May 8, 2008 story by Fiona Morgan called Legislature to consider future of public TV channels. Here are the parts that I think support my statement. Please read the whole thing. (bold is mine)

... I've spent a year negotiating a contract with my town and I can tell you, it's not the wild West. Every PEG operator in the state is held to very high standards." (says Chad Johnston)

.. But his expectations—and his channel's budget—were confounded by the law's vague language. "We've had a rough year," Johnston says. "I had to lay off people because I didn't have cash." Two of his four full-timers are gone, including his fundraising and outreach coordinator.

... Both Chapel Hill and Orange County received money for Chapel Hill channel 8, on which The People's Channel broadcasts.

Yet neither government has passed that money on to The People's Channel. The law says local governments must spend the supplemental money on PEG channels, but it doesn't specify which channels.

Chapel Hill spokesperson Catherine Lazorko says the town manager and town council have yet to decide how to distribute PEG funding. Chapel Hill operates its own government channel, 18, which broadcasts public meetings.

Orange County, which certified a total of three PEG channels, decided to spend all $29,400 of its supplemental PEG funding on its own government channel, 265, which broadcasts county commissioners meetings. The annual budget for Channel 265 is approximately $40,000.

Fortunately, TPC got part of the money they expected from The Town of Chapel Hill. Here are two other letters that may help fill in the info gap. (I believe the following are part of public record because they are official correspondence with the Town.)

From TPC:

June 19, 2008 By email to: Chapel Hill Town Council Chapel Hill Mayor Chapel Hill Town Manager

Re: PEG Funding Allocation Process; Town Liaison.

Dear Council Members, Mayor and Town Manager:

On June 9, 2008 the Town Council instructed the Town Manager to create a process for PEG channels to plead their case for access to PEG Supplemental and Subscriber Fees received from the state. The Council stated that this should be an expedited process, and we agree.

We are very concerned that the PEG funding provided to Chapel Hill by the state is being withheld and used in a way that is not transparent or complying with the intent of the state legislation. We believe that if the process for distributing this money is to be based on “need,” it should nonetheless be consistent with the purpose of the legislation. The state law was drafted and enacted with the clear understanding that funds received by the Town would go directly to the PEG channels that it had certified in the specified amounts. Raleigh and Greensboro have honored this intent of the legislation. Chapel Hill should do the same. For the two fiscal years ending June 30, 2008, Chapel Hill will have received more than $260,000 in PEG funding from the state. To date, The Peoples Channel (TPC) has received none of this money.

For two years, our Executive Director has sought to have a meeting with representatives from the relevant Town offices and Town cable consultants in order to arrive at some understanding of the process of how this money is to be allocated. This meeting has never taken place. When attempting to communicate with the Town Manager or other officials, we are always directed to the Town Information Coordinator--the same person who is responsible for Government Access channel operations.

We believe this is a blatant conflict of interest, since the Government channel is effectively competing with the Public Access channel for PEG funds. This is the person who is consistently arguing for delaying TPC’s access to funds, and who is negotiating a Performance Agreement that excludes any agreement to allocate funds to TPC. Meanwhile, the Town is allocating state PEG money to the Government channel while the Public Access channel is left asking questions about process. If there is a process for allocating PEG funds, it should apply to all of the PEG channels. We need to have an impartial contact person who is free from this obvious conflict, and we need to know what is being done with PEG funds.

It is important to recognize and acknowledge that the bulk of the state PEG money would not exist were it not for The Peoples Channel and the statewide coalition of Public Access stations who consistently advocated and lobbied in the state legislature to stop the Telecom and Cable companies’ efforts to kill funding for PEG access. The Peoples Channel supports and advocates for the entire PEG community, and ultimately supports the development of all channels.

We hope to restore the positive relationship that TPC has historically had with the Town. Please let us know how we can proceed in a fair and open manner.

Sincerely,
David Kasper, President
Sindhu Zagoren, Vice President
Tana Hartman, Secretary
Robert Cosgrove, Treasurer

cc: The Peoples Channel Board of Directors
Chad A. Johnston, Executive Director
Jeremy Taylor, Director of Programming

Here is the Town Manager's response letter. David Kasper PEG 6 24 08.pdf (I would include this in text form if the Towns PDF didn't lock it up.)

Here are some ways that the Council has shown support for the People's Channel, and very recently so.  I would also add that letters that go back and forth from the staff is one thing, but the fat lady sings when the Council approves the budget and decides where the money goes. Support can be defined financially but also in the way that I mention earlier, by understanding how valuable the People's Channel is to our community and by doing what we can to make sure it continues to serve us.   Here are some examples of recent support:1.     Town of Chapel Hill supports the e-NC Authority Grant (http://townhall.townofchapelhill.org/agendas/2009/03/09/4d/4d-memo-e-nc_...)2.       November 24, 2009 Town Council appropriates $109,962 to People’s Channel as agreed to in the Town’s revised performance agreement (executed on 10/15/2008).  (http://townhall.townofchapelhill.org/agendas/2008/11/24/4b/4b-memo.htm)3.       Evaluating the People’s channel budget really tells the story about who is actually supporting the organization.  According to their October 10, 2008 Annual Report (pg. 5) the government contract from the Town of Chapel Hill makes up an overwhelming percentage of their “Unrestricted Revenue Gains”.  ($122,291 ToCH; Total $182,238).  There is no contribution from Carrboro and OC pays for the People’s Channel to record the Commissioner meetings (user fee setup).   

I appreciate you sharing this information Laurin.

I feel like I don't learn about a lot of stuff done by our local municipalities until people publicly complain about something. Then someone reacts and defends themselves. The era of opaque government must end.

Shouldn't we have more transparency to prevent this sort of thing? Its well and good to publish agendas, have a website, and send out a email. But a more comprehensive plan is needed. It doesn't have to be expensive or require new consultants.

Every local government should create a open data policy. This would mandate that all public data (digital files, emails, etc.) is stored in a open formats online. This could be done by requiring all documents created by staff are stored in the rtf or txt file format instead of the Microsoft Word or Adobe PDF file formats. Then putting it all online on a publicly accessible web server.

if Chad Johnston wasn't aware of this information.

Sorry to be so out of the loop. Been very busy over here…

The issues that Brian and Laurin bring up are touchy subjects for us over here at TPC, but let me at least respond to a couple of the comments brought up. Before I do that, please do understand that the Town has been very supportive of TPC from the beginning and my comments below in now way should be construed as adversarial. The issues around state franchising have been very complicated. Every Town Council member that I have reached out to during this process and in my 5 years at TPC, has consistently been available and supportive of our issues. That being said…

1. Town of Chapel Hill supports the e-NC Authority Grant (http://townhall.townofchapelhill.org/agendas/2009/03/09/4d/4d-memo-e-nc_...)
This is correct. The Town did allow TPC to apply for this grant program. It should be pointed out though that the Town got first dibs on the grant. Only one applicant is allowed per grant cycle, and the Town took the first opportunity. Furthermore, at the time of application, the Town was holding PEG Access State revenue and even though the Town had not yet determined how these funds were to be distributed, the Town used these funds as their matching portion of the grant. That was a little slap in the face given that TPC was not allowed to use any of these funds while negotiating their use, but the town was free to use them. This is, of course, water under the bridge and we were aloud to apply in the last grant cycle.
2. November 24, 2009 Town Council appropriates $109,962 to People’s Channel as agreed to in the Town’s revised performance agreement (executed on 10/15/2008). (http://townhall.townofchapelhill.org/agendas/2008/11/24/4b/4b-memo.htm)
This is also true. There was twice this amount collected from the PEG State revenues. At that time, though the intent of the law was clear to those of us who authored it, it did not expressly obligate the Town to distribute those funds as they were originally intended. If it was to be used as it was originally intended, TPC would have received the bulk of these funds.
Myself and many others had to reach out to the legislature to amend the bill so that it was clearer. Chapel Hill was one of only two municipalities who interpreted the law in this manner. A compromise was met, and the $200,000+ dollars were split between the Town’s government access channel and TPC. The problem was, in my budgeting process for 2007, because I understood how the law was to be implemented at the local level, I assumed we would have received the bulk of that money. Because we did not, and because it took us so long to negotiate, we did have to lay off staff.
In the end, was it fair? Yes. The Town had every right, before the law was clarified, to use those funds on any one of the PEG channels and splitting down the middle was what the Town saw as fair. Did it slow down the growth of TPC? Yes. Such is life with complex issues. You win some, you loose some.
3. Evaluating the People’s channel budget really tells the story about who is actually supporting the organization. According to their October 10, 2008 Annual Report (pg. 5) the government contract from the Town of Chapel Hill makes up an overwhelming percentage of their “Unrestricted Revenue Gains”. ($122,291 ToCH; Total $182,238). There is no contribution from Carrboro and OC pays for the People’s Channel to record the Commissioner meetings (user fee setup).
This is also true. Though technically it is cable subscribers that support TPC. The Town played an essential role in making that happen, but these are not funds that could otherwise go into the general revenue of the Town. It is clearly restricted and is not funded by tax dollars.

I will say, that one of the biggest hits that TPC has taken because of these issues was having to lay off our Director of Outreach and Fundraising. TPC’s numbers have dropped since the loss of this position, both in terms of people coming in the door and funding opportunities. I had planned for the last two years to be able to grow the organization and help create a more solid and sustainable funding base. However, when we did not receive any of the state funds, we essentially took three steps backwards. Running a TV station, let alone a community center, on a staff of two leaves little room for growth. I can fundraise, don’t get me wrong, but it’s awfully hard to do when I’m also the volunteer coordinator, engineer, main administrator, bookkeeper, state and federal advocate and instructor.

I hold no hard feelings, but it has not been an easy two years for us. Again, water under the bridge and now that TPC is on the road to recovery, we will start to build up what we had to take down. Onward!

Thank you to all who support us, both in Council, Staff, and community members!

Remember when we were told that cable TV  ("pay TV") would bring a bright new world of commercial-free television and lots of free community channels to facilitate community-building, public information, and local government?Know this isn't a particularly useful comment, but I do think we occasionally need to remember who is supposed to own the "airwaves" (cable, net, etc.) and why.

Yup...that was the original vision.  Hard to imagine given what we now see on cable TV.  Back then, Public, Educational and Government Access was also a selling point for the cable company.  Now, they try everything they can to make sure we get the short end of the stick.I would like to give a little plug for our public access station if I could...If you support what we do, please consider attending the Amy Goodman event next week.  She is an amazing speaker and always puts on a very inspirational event.  Proceeds from the event go to support local community media.  Visit:  www.thepeopleschannel.org for more information.Thank you all!

Back in 1996, when we were doing to refranchising negotiations with TW Cable, we reviewed the Neilsen ratings for CH.  We're not as pure as we think we are -- we don't watch only WUNC-TV and listen only to NPR!  At that time 90 pct  of the viewing was of the four networks, CBS, NBC, ABC and FOX. We managed to negotiate that TW would make a substantial equipment donation to one of the local TV studios (in addition to the financial pass-through to the then embryonic People's Channel).  We toured the studios of the UNC Dept of Radio, TV, and Motion Pictures, and found that the facilities were obsolete, and that our tour guides, its older faculty, were far behind the times and had little interest in improvement, rather were coasting toward retirement.  I then directed the tour to UNC Student Television, an impressive student organization, also in need of contemporary equipment, but at least with personnel who wanted to advance -- they got the grant.  Sadly, my low opinion of RTVMP was shared by the UNC administration, for about two years later, the deparment was discontinued, and (I think) its function absorbed into the then new School of Journalism and Mass Communication.I remember that the TW management was neutral toward the then (approx) 55 cents per customer per month that CH customers would provide for the People's Channel.  They neither fought nor promoted it.  It was the town that promoted the People's Channel, in an attempt to mimic its larger cousin in Raleigh, which we also visited.  In the context of a cable TV bill of  9 dollars per month for basic and 30 per month for basic and standard service (the most frequently purchased level), the council went out on a political limb to require everyone to support the People's Channel.

 

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