Cable is the leading provider of both multichannel TV and broadband access in the U.S. It is now an essential "lifeline" to the digital age, delivering hundreds of channels, on-demand content, and interactive online applications. LA's citizens, consumers, nonprofits, and businesses will increasingly rely on the infrastructure--the upgraded cable plant--that will be developed as part of the franchise renewal process. Given the city's diverse population and leading role in media production, it is incumbent upon Los Angeles to negotiate an agreement that genuinely reflects the region's varied demography and dynamic economy.
The cable industry has not always been a willing partner in meeting these several needs, however. Cable operators have often fallen short in providing communities with networks of sufficient capacity for two-way interactivity, for example, failing to deliver system upgrades in a timely fashion and limiting the amount of fiber in their hybrid fiber/coax (HFC) systems. Much more capable, "next-generation" set-top boxes are long overdue, and broadband Internet connections have been less than robust (reflecting the industry-wide decision--which speaks volumes about the vision of the field--to devote less than 1 percent of total system capacity to Internet transport).
On the regulatory and legal front, the cable industry has proved even more recalcitrant. It has fought to prevent any "open access" provisions that would permit Internet Service Provider (ISP) competition, and has similarly opposed nondiscriminatory transport guarantees for Internet traffic. In communities such as San Jose, CA, cable has rejected the city's request for a set-aside of up to ten percent of system bandwidth for public use, and for an institutional network for city buildings and schools, the basis for a range of digital services that other cities have used to foster public expression and civic participation. In light of the industry's unfortunate record at the franchise bargaining table, then, the Los Angeles City Council should be fully prepared to confront the cable incumbents' likely objections to a franchise that will make Los Angeles a national leader in providing 21st century cable-related benefits to its residents.
In this critical period of transition--from analog to digital, from dial-up to broadband--the stakes are even higher for local governments when dealing with cable franchise renewals. As more Americans--citizens and consumers alike, nonprofit organizations and commercial enterprises--rely on cable broadband connections, the city must ensure that the network is both robust and readily accessible, so it can foster the full range of civic, educational, and cultural applications that are essential to the growth of the community.
Listed below are ten areas of concern--five overarching themes and five specific franchise requests--that hold the key to realizing the full potential of cable in the broadband era.
1. Digital Democracy: Growing numbers of citizens are engaged in civic activities online. From license renewals to voter education to legislative and regulatory affairs, LA's citizens will rely on the cable network for interactive access to government-related services. The public should have easy access to this "online civic sector," everything from candidate profiles and electoral issues to discussion forums and interactive town meetings.
2. Economic Development: Small neighborhood businesses and entrepreneurs are the lifeblood of the local economy. In order to survive, let alone prosper, they will need to utilize online services for marketing and purchasing. Commercial start-ups from diverse groups are especially vital to LA's well being. Cable must provide all neighborhoods with a network and a service model that supports the growth of community commerce.
3. Independent Media Production : LA's role as a global center for production and distribution will be affected by the cable franchise. First, the City must ensure that fiber connections are available to support high-bandwidth applications for the myriad of production centers. Second, LA's cable systems must support independent production and distribution by ensuring they have access to video servers, electronic program guides, set-top storage devices, and other network elements essential to broad consumer access.
4. Non-Discrimination: Cable has sought favorable rulings at the FCC that shield it from competition in the broadband Internet's critical "last-mile" connections (as have the former "Baby Bells" for their DSL networks). Leading scholars and media companies--including Amazon, Microsoft and Disney--have urged for a policy of "network neutrality" that would ensure all applications are treated fairly. While these issues are the subject of litigation and federal debate, LA should receive written assurances from every cable company that they will treat all applications in a wholly "neutral" fashion.
5. Capacity: Today's cable plant can deliver hundreds of channels and broadband access. But cable has traditionally devoted just a single channel to broadband transport, clearly insufficient for LA's advanced communications needs. Cable operators must make additional bandwidth available to ensure a robust platform for Internet applications. In addition, cable companies should provide video channel capacity for programmers offering city-based services who are unaffiliated with the cable industry.
If these are the broad outlines of a cable system that finally fulfills its civic potential, the basic elements of a successful franchise renewal (covered in greater detail by other speakers today) are as follows:
1. The PEG Platform: While public-, education-, and government-access channels have long been at the heart of franchise negotiations, this platform must now be brought into the 21st century, taking full advantage of the new capabilities--including digital multicasting, video on demand, and interactive data services--that are part of modern cable systems today.
2. Spectrum Flexibility: One of the keys to the reinvigoration of PEG is the shift in our thinking from discrete video channels to a more flexible bandwidth set-aside--75 MHz to 86 MHz. Such capacity (representing some 12 to 14 analog channels or 60 to 80 digital channels) can be put to a variety of public-interest uses, including traditional video programming but by no means restricted to that paradigm.
3. Institutional Network: A high-speed institutional network can be used to link more than municipal departments and buildings. Such networks can encompass a wide range of community resources--from schools and libraries to social service agencies and cultural organizations--adding much needed civic, educational, and cultural content to an online world that is fast becoming merely another outlet for the entertainment conglomerates.
4. Support Structures: Without the rich programming resources to flow through them, cable's PEG pipes mean little. But such operations cost money, and serious consideration must be given to expanding PEG support beyond the traditional sources (which include up to 3 percent of gross cable revenues for PEG equipment and facilities, and whatever share of the 5 percent franchise fee that is earmarked for PEG programming) to include entirely new funding structures that draw on public and private sources alike.
5. System Extensibility: Although cable franchise agreements are normally measured in 10- to 15-year segments, the technologies involved mature much more swiftly. Thus local franchise authorities should build provisions into their agreements for ensuring that PEG and other public interest aspects of the system can take full advantage of the technological advancements that occur during the term of the franchise.
With a concerted effort at the upcoming franchise renewal negotiations, and with adequate funding thereafter, Los Angeles' new digital PEG platform could prove to be a model for the field. These new facilities could serve, in effect, as laboratories for the exploration of community, educational, and municipal services using the new broadband technologies that the cable industry will be introducing over the next several months, including video on demand, interactive television, streaming media, voice over IP, wireless networking, and whatever other new applications that will become possible once cable upgrades to DOCSIS 2.0 and PacketCable implementations (the networking and interface protocols and specifications for delivering advanced, real-time multimedia services over two-way cable plant).
Traditional PEG programming, offered over analog video channels, has served communities well for some three decades. While such programming will continue to be important during this time of transition, it is not too early to begin planning for the next generation of public service programming--both interactive and archival, with real-time, on-demand transactions and other residential, business, and mobile services transmitted by a variety of wired and wireless devices.
As the cable industry and others in the media marketplace actively seek thenext "killer apps," in other words, we should be no less ambitious in discovering their public-interest counterparts, online applications that place the power of advanced telecommunications squarely in the hands of citizens and the community organizations that serve them.
Proposal for Daily Local News and Information Programming in and about each Local Franchise Area
Good afternoon. My name is Adam Clayton Powell, III, and I am presenting this testimony as a Visiting Professor at the USC Annenberg School and as an outgrowth of my work on the Annenberg School's Local News Initiative, which began in 2002. My background in news and technology is set forth in the attached biography.
The purpose of my testimony is to propose that the city require each local cable franchise area to arrange for the production of a daily local news, information and community service television program.
One possible arrangement for such a program service is presented below but we have no doubt that other arrangements could be formulated by the city, the companies, and various local partners.
First, a word of context: At the Annenberg School, we have been examining local news and public service and thinking about ways to improve it. Some of our studies have examined television coverage of politics and government which, as the members of this committee know well, is generally given very short shrift. In fact, up until the 2003 recall campaign, coverage of state and local political campaigns, which offers one useful measurement of localism, had been declining dramatically. If the members wish, we would be pleased to present studies that document that decline in detail.
Similarly, it seems that news coverage by mainstream media in California have tended to make people feel less connected and more alienated from their communities. That is one finding of a multi-year, in depth study of eight local communities, identified by region and ethnicity, which we call the Metamorphosis Project. By contrast, that study has found that community news outlets tend to make people in Los Angeles feel more involved and more connected and to increase their sense of belonging. Again, we can supply those studies to the committee if you would like to see them.
Based on those studies, the Annenberg School decided in 2002 to create what it called a Local News Initiative or LNI. Our goal was to help identify and create new forms of local news that would help people become more knowledgeable about, more connected to, and more involved with their communities.
As a first step, the school asked me to spend a year examining best and innovative practices in the United States and around the world. My study, which covers broadcast television, radio, cable and broadband technologies, is now available in draft form.
As I was developing my study, it became increasingly clear that the most exciting and important developments around the world are at the very, very local level, what we now call micro local news, information and public affairs. Especially in large cities such as Los Angeles, there is no way for television stations to cover the many communities where people live in any sustained way.
With a regional audience of well over ten million television viewers over the age of 12, a station in Los Angeles naturally cannot spend too much time on the city of Los Angeles, which accounts for fewer than four million people, much less on a neighborhood that is a small fraction of the city. Yet we found that people are most interested in news about their own neighborhood and are most interested in becoming involved at that level
Importantly, we also found that there are places in the world where micro local communities are being covered well; at very little cost; and with substantial audiences.
With that background, my colleagues and I at the Annenberg School began to think about what might be done in Los Angeles. At the moment, we think that cable offers the most exciting platform for micro local news, information and public affairs. Moreover, we think a model could be developed that would be enormously useful for the people of each part of this city; bringing greater civic engagement for local schools, parks, cultural institutions, public safety and health clinics.
As an added bonus, a micro local news and information program could also serve the economic interest of cable operators by increasing penetration, by decreasing the expensive churn of customers disconnecting and reconnecting to cable service, and by providing new reasons for customers to use broadband.
For an illustration, we looked at the area where USC is located, the region known to franchise officials as Area K. To make this presentation clearer, a map of Area K is appended. The borders are not very even, but as you will see, it runs from I 10 at the North to Watts at the South, and from Baldwin Hills and Culver City on the East to the Harbor Freeway on the west.
Much of the area is known as South Los Angeles, which has a population of 260,000, according to the 2000 census. Watts has another 35,000. So altogether Area K has a population of approximately 300,000 people and perhaps many more. To put thaty in perspective, Area K has the same population as the city of Tampa, Florida, which is served by eight television stations, 91 radio stations and 24-hour local cable news channels in English and Spanish.
This is not entirely comparable, because Tampa is the hub of a regional television market. But it is undeniable that no Los Angeles TV station or cable channel covers the news of Area K every day as intensively as any one of those eight television stations covers the city of Tampa.
To see what kinds of stories might be covered by an Area K local news outlet, last summer we conducted a community ascertainment project with the terrific assistance of a team of five USC student interns. In the fall, more Annenberg students went into the field with video cameras to document some of the issues identified over the summer. Some of those students are with us today.
With that background, we would like to suggest that the City Council explore ways of creating a micro local news and information initiative in each franchise district. This could be done by creating or partnering with a local non-profit institution that would use some or all of the resources and some or all of the channel space now set aside for local PEG channels.
Such a model might take any one of several forms. It could be funded by the cable company, a local partner, revenues from public service advertising, foundation grants, subscriber contributions or some combination of these funding sources. But in any of its forms it would serve the people and the communities of the city and create a new model that would be studied and emulated around the world.
If the city decides that it wants to explore this option, my colleagues and I would be more than delighted to work with the city and with cable operators to design a viable plan to take advantage of this exciting opportunity.
Thank you.
A. Informal Procedures
- Most franchises renewed through informal negotiation process set forth in Sec. 626(h).
- Congress anticipated that most renewals would be through the informal process. House Report at 72.
- Informal proceedings can be conducted at any time and do not affect the rights of the cable operator to proceed under the formal procedures if an appropriate renewal notice has been sent. TCI of South Carolina, Inc., v. The City of Bennettsville, 4.89-0334-2 (D.S.C. filed July 17, 1990).
- Once a successful franchise renewal has been negotiated, the franchising authority must notify the public and provide an opportunity to comment on the renewal before it is finally granted. Sec. 626(h).
B. Formal Renewal Procedures
A. Background
- If the cable operator has timely requested its formal renewal rights, the City cannot deny renewal cannot without recourse to the formal process (unless the operator defaults on the process).
- It may be possible to revoke a franchise even after renewal proceedings have begun.
B. Needs Ascertainment
- First stage in formal renewal process>. Process intended to give public and franchising authority opportunity to identify future cable-related community needs and interests and review past performance of cable operator (Sec. 626(a)).
- Ascertainment can be accomplished through a variety of tools, including public hearings, surveys, focus groups, interviews, and reports and audits of the operator's past performance.
- No Time Limit. The Franchise Authority determines when the Ascertainment Process is completed. No single study or report automatically concludes the Ascertainment.
C. Renewal Proposal
- Second stage of renewal process. Proposal submitted by operator either upon request of franchising authority or upon cable operator's initiative after the Franchise Authority completes the Ascertainment Process.
- A request for proposal issued by franchising authority may establish requirements for facilities and equipment that are related to operation of system, including proposals for an upgrade, subject to Sec. 624(b).
- Franchise fee is limited to 5% of cable operator's gross revenue "related to cable services". However, not all payments made by the operator are franchise fees, e.g., funds contributed by cable operator as capital costs of PEG are not considered part of franchise fee (Sec. 622(g)).
- A franchising authority can establish deadlines for submission of formal proposal (Sec. 626(b)(3)). Such deadlines must conform to state and local law and must be communicated to the cable operator in writing. See Eastern Telecom Corporation v. Borough of East Conemaugh, et al., 872 F.2d 30, 35 (3rd Cir. 1989).
- Third stage of renewal process. The franchising authority must decide to renew or preliminarily deny within four months of receipt of proposal.
D. Administrative Proceeding for Denial
- Fourth Stage of renewal Process. If preliminarily denied, the cable operator can request administrative proceedings, or such proceedings may begin upon franchising authority's own initiative. Sec. 626(c)(1).
- Cable operator must be given adequate notice and fair opportunity for full participation, including the right to introduce evidence, to require the production of evidence and to question witnesses. A transcript of the proceedings must be made.
- A grant of renewal upon terms unacceptable to cable operator may be treated as denial. House Report at 75.
- ANY FINAL DECISION NOT TO RENEW MUST BE BASED ON AN ADVERSE FINDING WITH RESPECT TO ONE OF FOUR FACTORS:
- Whether the cable operator has substantially complied with the material terms of the franchise and applicable law. Any violations cannot be held against cable operator unless it has been given notice and opportunity to cure. Sec. 626(d).
- Whether the quality of the cable operator's service, including signal quality, response to consumer complaints, and billing practices, but without regard to the mix or quality of cable services or other services provided over the system has been reasonable in light of community needs. Any violations cannot be held against cable operator unless it has been given notice and opportunity to cure. Sec. 626(d).
- Whether the cable operator has the financial, legal and technical ability to provide the services, facilities and equipment as set forth in the cable operator's proposal. Past performance is relevant and may be considered in reaching decision on cable operator's technical ability. See Rolla Cable System, Inc., v. City of Rolla, 89-211C(2) (E.D. Mo. April 15, 1991).
- Whether the cable operator's proposal is reasonable to meet the future cable-related community needs and interests, taking into account the cost of meeting such needs and interests. The franchising authority may not deny a proposal on the basis of a comparative bid, but "a court should defer to the franchising authority's identification of the community's needs and interests except to the extent necessary to weigh the needs and interests against the cost of implementing them." Union CATV, Inc. v. City of Sturgis, 107 F.3d 434 (6th Cir. 1997).
- Upon completion of the administrative proceeding, the franchising authority must issue a written decision stating the reasons for denial. Sec. 626(c)(3).
E. Judicial Review
- Cable operator must appeal in federal or state court within 120 days of receipt of the notice of the decision. Secs. 626(e)(1), 635.
- The court grants "appropriate relief" if
- The franchising authority does not comply with the Cable Act; or
- The cable operator demonstrates adverse finding was not supported by a preponderance of the evidence. Sec. 626(e)(2).
1. I understand that the federal law has a complicated formal process, and also an informal process. My operator wants me to ignore the formal process and just enter into negotiations. Is that a good idea?
It is generally not a good idea. Federal law does allow two ways to work a renewal: through a formal process, or by negotiated agreement. But the two processes can and should work in tandem.
The first step in the formal process is to identify future, cable-related needs and interests of the community and to review the past performance of the operator. By taking this first step, a community will obtain the information that it needs to be successful at the bargaining table, and it will be in a position to comply with the formal procedures if bargaining fails.
2. Why can't I just kick my operator out of town and seek bids from others?
Federal law doesn't allow it. Under the federal Cable Act, the incumbent cable operator has special rights to consideration. If the operator activates the formal renewal process, it is protected against an arbitrary denial of renewal. A community has to go through certain steps and conduct certain proceedings before renewal can be denied. The process is not competitive. Renewal cannot be denied simply because someone else might be willing to offer more. An incumbent operator's past performance and proposal for future renewal must be evaluated on its own merits (or demerits).
3. Can a renewal request be denied?
Yes, both legally and practically. Although most communities do renew the incumbent's franchise, several communities have successfully denied renewal.
The Cable Act permits a community to deny renewal under any of the following tests.
- Past performance has been inadequate.
- The operator is legally unqualified.
- The operator is unwilling or unable to devote the necessary technical skills and financial resources to the community.
- The operator is unwilling to satisfy the future, cable-related needs and interests of the community (considering the cost of meeting those needs and interests).
4. What can I get through the renewal process?
Among other things, as part of the renewal process, a community can insist on the following.
- Ensure that the cable system is properly upgraded.
- Require the operator to set aside system capacity for public educational and government use of the cable system.
- Require capital support for those channels (studios and equipment, for example).
- Require the operator to provide an institutional network providing, for example, a modern telecommunications link for schools, libraries and government.
A community can also ensure that any construction of the cable system proceeds in an orderly fashion, that all parts of the community can obtain service, and that the system is rebuilt in a reasonable period of time.
The franchise term can also be established through the renewal process--renewals do not have to be for 15 years, and often are far shorter.
Communities often will establish customer service standards; franchise fee requirements; procedures for reviewing operator performance and for ensuring that the operator continues to satisfy community needs throughout the franchise term.
There are some things that communities cannot do through the renewal process. Perhaps most importantly, a municipality cannot (1) require the operator to provide specific programs (a community should be able to establish channel capacity requirements); or (2) require the operator to provide service at certain prices (other than rates for basic service and equipment established consistent with federal regulations).
5. The operator tells me that anything I ask for will be passed through in rates. Is that right?
No, it is not.
In communities like Los Angeles that are regulating cable rates, an operator can pass through increases> in its external costs to subscribers. Some franchise requirements, such as PEG and franchise fee requirements, are external costs, but not all are.
In addition, the operator is only entitled to pass through the increase in those costs. Modern franchise requirements do not necessarily result in increases in costs to the operator, depending in part on what was required under the prior franchise. In several recent renewals, for example, operators have agreed that only a small part of the total renewal franchise requirements are eligible for rate pass-through under FCC rules.
If the operator claims a pass-through is necessary, ask for detailed information on its revenues and expenses. It is often rather simple to show that the community's needs and interests can be satisfied without raising rates.
1. The "level playing field" demand
Almost all operators are now demanding a renewal clause that requires anyone who provides cable service within the community to satisfy the same conditions as those imposed on the incumbent operator.
These clauses are very dangerous. A community should approach level playing field clauses with extreme caution and skepticism. The typical "level playing field" clause proffered by cable industry negotiators can easily put a community in breach of its contract, and require the community to give up some of the benefits for which it bargained.
These clauses become more and more critical as new cable providers ask for franchises that contain far different provisions than existing franchises.
The debate over these clauses will be contentious, but can be resolved in a way favorable to the community.
2. How should cities regulate in a more competitive environment?
While cable service remains a de facto monopoly in most neighborhoods, Los Angeles is beginning to face questions as new companies seek "overbuild" cable franchises; as incumbent cable companies begin to provide advanced cable services; and as cable companies begin to enter non-cable markets.
Some communities have suspended certain requirements once two cable companies begin to compete head-to-head throughout the community (the Tacoma franchise provides an example of this approach).
Some communities have established requirements designed to prevent cable from using its market position to control high-speed Internet cable services. Some communities establish generic requirements that apply to all users of the right-of-ways, such as OVS operators and companies leasing lines to video service providers. As critically, consider how to review and audit franchise fee payments under circumstances where an operator may be providing a bundle of services--telephone, Internet and cable service--for a consolidated price. Is the entire package subject to a fee? Or only a portion of it?
3. Can a community establish detailed system rebuild requirements?
The cable industry argues that 1996 changes to the Cable Act prohibit communities from requiring a company to install fiber optics, or from requiring any particular system design.
The FCC has stated that there are some limitations on local authority. According to the FCC, a community may not dictate "whether a cable operator uses digital or analog transmissions [or to] determine whether its transmission plant is composed of coaxial cable, fiber optic cable or microwave radio facilities ...." However, the FCC went on to state that "[w]hile the 1996 Act imposes some specific limits of the role [local franchising authorities] play with respect to subscriber equipment and transmission technology, it does not diminish the [local franchising authorities'] important responsibilities in determining local cable-related needs and interests and seeing that those needs are met through the franchising and renewal process. Although local authorities are limited in dictating the use of transmission technologies, other facility and equipment requirements can still be enforced..." The FCC decision is a formula for confusion and trouble, and will undoubtedly lead many operators to continue to argue that any design requirements are prohibited. However, many operators recognize that it is useful to both sides to specify what sort of system will satisfy local needs and interests, and remain willing to agree to carefully crafted renewal provisions that require rebuild systems with fiber optics.
4. Institutional Networks
Communities commonly require operators to provide institutional networks to link schools, libraries and governments for video, voice and data communications. These are powerful tools to a community. With the "information age" it's a small percentage of the cost of building a separate information system.
I-NET language needs to be crafted so that both parties understand what is required to assure that the resulting network will be useable. Typically, I-NETs must be individually tailored to local needs, and integrated with the community's existing information systems. One common error is to agree to restrictions on use which seem inoffensive but which have the effect of preventing interconnection of the I-NET to other networks, or which prevent a community from providing services to the community (such as transmission of GIS information) for a charge. To get a good I-NET, a substantial amount of planning, organization and negotiation time is required.
5. PEG Requirements
Communities have required operators to set aside subscriber network capacity and channels for public, educational and government use for some time now - and communities that have obtained adequate financial support for those channels generally have found them to be an invaluable communications asset to the community. As companies move into a new digital world, however, new questions arise: can the community control the new digital capacity for PEG purposes and use this digital capacity to provide multiple channels of video and non-video information to subscribers' homes? If the operator controls all of the digital capacity, will PEG be precluded from digital use entirely, or limited only to the bandwidth required to send a one-way video channel to the home, thereby limiting the type and amount of information that can be provided via PEG channels?
6. Scope of the franchise
The operator will seek to include language in the franchise which effectively authorizes provision of telecommunications services without obtaining any additional license or franchise. Operators will often argue that the 1996 amendments to the Cable Act require cities to allow cable operators to provide telecommunications services without such additional authorization.
An operator wants a cable franchise that requires no further authorization to provide telecommunications services. If the cable franchise is authority to provide telecommunications services, the operator will claim that the fees and charges it must pay are limited to those specified in the cable franchise, which in new franchises do not reach telecommunications services.
Renewal should not be used as a tool to prevent telecommunications competition, but communities should ensure that the cable operator does not use renewal as a tool to gain an advantage over potential competitors.
7. Scope of Authority Over Internet Services
The Federal Communications Commission has declared that cable modem service is "an interstate information service" and neither a "telecommunications service" nor a "cable service." The 9th Circuit has found to the contrary--twice. In the 9th Circuit, cable modem service is part "telecommunications service" and part "cable service". Recently, the FCC is moving in the direction of declaring that Voice over Internet ("VoIP") is also an interstate information service, not subject to state or local authority.
If Internet service is treated as a cable service, issues as to the scope of the franchise are irrelevant --the cable franchise by definition permits the operator to provide cable services, and no other authorization would be necessary. Accordingly, several operators have agreed to rebuild systems so that the cable systems have the capability to provide high-speed, two-way communications to and from the home. Currently, all operators refuse to pay a franchise fee on Internet service revenues, claiming the FCC declaration insulates the service from franchise fees.
If the service is a "telecommunications service", the Cable Act and California statutes creating the Public Utility Commission largely preempt local regulatory authority. If the service is an "information service", then the City may retain very broad authority since the FCC's own authority to regulate or to preempt is unstated in federal law and California Home Rule authority empowers the City to assert all authority not reserved to the State. This subjects the cable operator to independent City regulations over competition, customer service, and Right-of-way access/compensation/construction rules.
Cable has become the dominant form of broadband communications to residences. Owing to its physical capacity, it can carry a wider range of communications services than a copper telephone wire or power line.
As the largest communications “pipe” entering a residence or small business, it has the theoretical capability of simultaneously transporting:
Cable has evolved since its inception in the 1950s and 1960s and continues to evolve. The original systems served tens of thousands of homes and provided improved reception of regular off-air television. Later systems also offered satellite channels (HBO, TBS, pay-per-view, CSPAN).
“Bandwidth” refers to the speed or capacity of the cable. Older systems carried 40 to 60 TV channels (330 to 450 MHz of bandwidth). Upgraded systems have 750 to 860 MHz of bandwidth, now including about 30 MHz from the subscriber to the system. The new bandwidth enables the system to have more channels and more advanced services.
“Analog” refers to traditional television or voice technology. If an analog signal becomes weak, it may appear snowy or distorted.
“Digital” refers to the transmission or storage of video, data, or voice signals as “1”s or “0” and is a more advanced technology than analog. Conversion from analog to digital is done at the studio or headend. It results in:
The use of digital technology and the increasing power of computer desktops and the Internet may result in Internet technologies replacing television broadcast stations, cable-TV, and direct satellite technologies.
“Fiber Optics” are strands of glass used in new-technology communications cables. Cable companies use fiber optics between their main buildings in failsafe rings. Cable companies generally also construct fiber from their main buildings to neighborhoods.
Fiber optics offer:
Fiber cables are generally lashed to the pre-existing cable-TV cables. Cable systems typically use a hybrid fiber-coax (HFC) design. In HFC, the fiber cable interfaces with the coaxial cable in each neighborhood at a “node.”
Another design type is fiber-to-the-premises (FTTP). FTTP extends the benefits of narrowcasting to individual homes or businesses, providing practically unlimited capacity. Few cable companies use FTTP. Most FTTP is offered by municipal providers, networks installed by builders and developers, and trials by telephone carriers.
Coaxial cable (traditional metallic cable) remains in most neighborhoods and premises. Limitations relative to fiber optics include capacity, signal quality, and reliability.
Per foot, the costs of fiber or coaxial construction are comparable. Most costs are due to labor—therefore in areas of new construction it is optimal to build fiber instead of or in addition to coaxial cable.
Cable is built and maintained in the public rights of way. Cable construction and maintenance pose public safety issues and create burden and expense on the public rights of way.
Video-on-demand (VOD) provides the ability to select between thousands of video programs with rewind, pause, and fast-forward functionality. Cable provides VOD by dedicating a channel between the viewer and the system.
VOD is stored on disk drives and streamed to the viewer from a video file server.
Voice-over-IP (VoIP) delivers voice services using the same channels and technical platform as the cable modem system.
Depending on the configuration of the system, cable VoIP:
Some cable operators use their systems as backbone networks for wireless services and connecting their systems to wireless antennas to provide:
Meeting Summary:
A Symposium on the Los Angeles Cable System
at the
USC Center for Communications Law and Policy
4 March 2004
Co-hosted by the USC Law School and the Annenberg School for Communication, the symposium combined a discussion of the current state and future prospects of Los Angeles’s cable system with a meeting of the Los Angeles City Council Committee on Information Technology and General Services. The city is currently in the process of an area-wide franchise renewal process, covering some 14 geographic franchise areas served by five incumbent cable operators.
Sean P. Treglia, senior policy advisor at the Annenberg School, explained that time constraints in the conference planning process prevented representatives of the cable industry from participating, although these companies (including Adelphia, Comcast, Cox, Time Warner, and Charter) would have an opportunity to share their views on the franchise renewal process at a later date. Cable can play a critical role in enhancing the civic life of LA with active public-, education-, and government-access (PEG) channels and other services, Treglia believed, but the city’s success or failure in this regard will depend in large part on the upcoming franchise renewal negotiations. Today’s meeting was an effort to explore the community’s twenty-first century communications needs, and the ways in which these needs can be reflected in the negotiation process.
Jonathan Taplin, chairman and CEO of Intertainer and a visiting professor at the Annenberg School, offered his vision for a “Digital Dream City,” circa 2007, with the following observations:
Los Angeles, Taplin concluded, should have a state-of-the-art communications system, and the key to such a system is the migration of the existing cable infrastructure to an all-digital system over the next two years, freeing up some 450 MHz of system bandwidth within a 750 MHz Hybrid fiber/coax digital cable system. At least 30 MHz of this capacity should be devoted to broadband Internet traffic, delivering a minimum of 1 MBPS downstream and 500 KBPS upstream (with symmetrical 1 MBPS service available for a premium fee). The system should also include MPEG2 servers at the headend for video-on-demand (VOD) applications (including capacity allocated for PEG programming), and IP/HTML caching servers in the head end to accommodate high-volume streaming media content. Such a system, finally, should include a quality-of-service (QOS) guarantee of a 5:1 service ratio (i.e., capable of serving 20 percent of all subscribers being online at any time). For additional information on cable architecture, Taplin cited the PowerPoint presentation (22mb PowerPoint) and a technical background paper (“Cable Television and Advanced Services”) prepared by Andrew Afflerbach, principal engineer of the Columbia Telecommunications Corporation.
Nicholas Miller, of the law firm Miller & Van Eaton, discussed “The Regulatory Framework: The Federal Landscape,” covering both informal negotiations (through which most cable franchises are renewed) and formal procedures. In either case, it is the city’s responsibility to define its needs and then to negotiate for those needs within the “scope of grant” (i.e., a cable network for cable services only) and the scope of franchise fees/PEG support (i.e., up to 5 percent of “cable service” revenue and capital costs for PEG facilities, but no operating support unless outside of the franchise agreement). A community can also insist on the following items:
Even within this regulatory framework, however, several issues remain in flux, according to Miller, including the ongoing debate over “open access” provisions (i.e., the extent to which cable operators are required to share their data networks with other Internet service providers) and the more recent debate over the manner in which cable telephony service (VoIP, voice over IP) will be regulated. “The Federal Communications Commission,” Miller explained, “has declared that cable modem service is ‘an interstate information service’ and neither a ‘telecommunications service’ nor a ‘cable service.’ The 9th Circuit has found to the contrary--twice. In the 9th Circuit, cable modem service is part ‘telecommunications service’ and part ‘cable service.’ Recently, the FCC is moving in the direction of declaring that Voice over Internet (‘VoIP’) is also an interstate information service, not subject to state or local authority.” It is also unclear whether a local franchising authority can craft privacy regulations that exceed those of the Cable Privacy Act. Concerning PEG requirements, finally,
Communities have required operators to set aside subscriber network capacity and channels for public, educational and government use for some time now--and communities that have obtained adequate financial support for those channels generally have found them to be an invaluable communications asset to the community. As companies move into a new digital world, however, new questions arise: can the community control the new digital capacity for PEG purposes and use this digital capacity to provide multiple channels of video and non-video information to subscribers’ homes? If the operator controls all of the digital capacity, will PEG be precluded from digital use entirely, or limited only to the bandwidth required to send a one-way video channel to the home, thereby limiting the type and amount of information that can be provided via PEG channels?
Diane Mattingly, access services analyst with the Los Angeles Information Technology Agency, provided an overview of the city’s “Public, Educational & Governmental Access Needs Assessment Findings and Recommendations” (260kb PowerPoint). Describing the current PEG environment in Los Angeles, Mattingly cited the area’s 24 PEG channels, which include two interconnected channels (CityView 35 and LACTAC 36), with one local public-access and one local education-access channel in each franchise area. There are 14 public- and education-access facilities, all but two of which are managed by cable operators. Based on community focus groups, interviews, studies, surveys, and public hearings, the needs assessment study identified the following community interests:
Additionally, the study also highlighted interest in a high-capacity institutional network (I-Net) that would enable videoconferencing, interconnected PEG media centers, live PEG programming from community locations, and communication to discrete interest groups. Concerning the study’s recommendations for future improvements in LA’s cable service, Mattingly cited the following items:
Further documentation of the ITA’s needs assessment process (including the Final Needs Assessment Report [PDF] , an Executive Summary [PDF] of the report , and an online Cable Television Survey) can be found at the ITA’s Cable TV Info page.
Francois Bar, an associate professor at the Annenberg School, addressed the issue of “Network Flexibility: Planning for the Future.” Drawing on his collaborative work on such studies as "The Next-Generation Internet: Promoting Innovation and User-Experimentation" (PDF) and "Access and Innovation Policy for the Third-Generation Internet" (PDF), Bar distinguished between the first and second generation Internets (i.e., the early, closed networks such as ARPAnet used by specialists for FTP, telnet, and e-mail, and the open Internet that flourished with the development of the World Wide Web in the early 1990s) and the third-generation Internet that will emerge over the next decade. That network, with speeds of up to 1 GBPS, will feature truly interactive services along symmetrical pathways (as distinct from today’s broadband networks, in which downstream capacity far outstrips upstream), permitting many-to-many conversations in place of the existing one-to-many broadcast paradigm. For these reasons it is important, Bar emphasized, to ensure network flexibility through open design standards that will support multifaceted experimentation and multiple upgrade paths, including explorations of wireless and peer-to-peer technologies.
Peter Roy, a technology consultant involved with the District of Columbia’s institutional network (I-Net), provided an overview of planning considerations for such a network in Los Angeles. Also known as a “metropolitan area network” (MAN), such a system provides a “reliable, high-performance fiber-optic voice and data ‘private’ government communications network” at a “life-cycle cost considerably less than leasing lines from the telephone company.” But an I-Net, Roy insisted, “is not about getting government into the ‘telephone business.’ It’s about government owning the last-mile infrastructure, so that government can invite ‘best practice’ companies to compete for the right to operate the I-Net system. Therefore, an optimum business model is usually a thin layer of government personnel managing a cadre of best-practice contractors providing various services on the system.” Such networks, according to Roy, can save money and support high-bandwidth and high-reliability applications, including the following:
While cities have obtained free fiber-optic infrastructure from cable operators, it is unlikely that franchisees will provide all of a city’s fiber-optic needs precisely when and where those needs arise. Thus Roy counsels cities to ask for “dark” fiber (i.e., cabling and repeaters currently in place but not being used), and to be prepared to install a significant portion of the fiber itself. As with other aspects of the cable franchise negotiation process, rights of way are central to the city’s position, and for a successful I-Net, a single 1.25-inch innerduct is usually sufficient. Operation of the I-Net itself is another matter, however, and Roy emphasized that this will involve functions (including marketing, customer service, troubleshooting and repair, and customer billing) that are not traditional to municipal governments.
Jeff Chester, executive director of the Center for Digital Democracy, contrasted the cable industry’s vision for the future--one steeped in consumer culture and designed to bring an endless stream of entertainment and other products to the household--with the civic and cultural potential of the broadband revolution. Cable television, which now serves as a communications lifeline to some 70 percent of all households, is also the leading broadband Internet provider, and thus franchise agreements like the ones that LA is in the process of negotiating take on new significance. Needed most are agreements that facilitate citizen participation in civic life, Chester declared, by updating PEG systems to take full advantage of cable’s digital upgrade (including advanced set-top boxes and video on demand), securing promises from cable operators not to discriminate in their handling of data traffic, and ensuring that independent and noncommercial producers have access to VOD systems. CDD also issued a statement at the meeting, “Stay Tuned: Fulfilling Cable’s Promise in the Franchise Renewal Process,” which offers further details on the potential of broadband and cable to serve civic, educational, and cultural needs.
Sue Buske, president of The Buske Group, offered “A Look at Innovative PEG Programming in Other Jurisdictions” (500kb PowerPoint). “With the convergence of all media into digital formats,” Buske observed, “cable systems have become broadband communications networks for voice, graphics, video and audio. To adapt to these technical changes, and the changes in media culture they bring about, community access centers are becoming Community Media Centers.” These centers use a variety of media--including cable, I-Nets, Internet, radio, SAP (secondary audio programming), over-the-air television (both low-power and public TV), and videotape distribution--to disseminate community content. Such programming includes content created by community-based organizations, educational institutions, neighborhood groups, local government agencies, and individual residents. In addition to production equipment and facilities, these media centers also provide a wide range of training opportunities, including video production, computer literacy, job training, media literacy, and effective communication.
Among the more innovative public access media centers around the country, according to Buske, are the Grand Rapids Community Media Center, with its Mobile Learning Lab for Information Education (MOLLIE); Access Monterey Peninsula, which serves as a “media librarian” for its coastal California community by offering streaming media on demand over Internet and I-Net; Iowa City Public Access TV, which offers selections from the City Council agenda as a VOD service; and the Community Media Center of Santa Rosa, renowned for its mentor-based approach to developing new community programming.
In concluding her remarks, Buske listed several of the positive outcomes that communities should seek in their franchise negotiations:
Further information on successful cable TV franchise agreements and a chart of recent cable franchise renewals and other pertinent data is available on the Buske website.
Adam Clayton Powell III, visiting professor of journalism at the Annenberg School, offered a “Case Study for Local Community Programming.” Drawing on the work of the Annenberg School’s Local News Initiative and the Metamorphosis Project, Powell proposed “that the city require each local cable franchise area to arrange for the production of a daily local news, information and community service television program.” These would be community-based “micro-news” operations, partnering with local nonprofit organizations to identify the “key storytellers” in the community. Powell thus suggested that “the City Council explore ways of creating a micro local news and information initiative in each franchise district. This could be done by creating or partnering with a local non-profit institution that would use some or all of the resources and some or all of the channel space now set aside for local PEG channels.”
Stephen Grace, president of the Los Angeles Cable Television Access Corporation, provided a PowerPoint presentation entitled “Local Programming & Cable TV: Vast Wasteland or Vibrant Medium” (275kb PowerPoint). in which he debunked such broadcasting myths as the claim that “people don’t watch local TV,” or that “local programming is too expensive,” or that “local issues are of no interest.” What is missing from local television, according to Grace, is serious coverage of LA issues; a focus on neighborhoods; long-form coverage of politics, the arts, community events, and high school sports; and niche business and lifestyle programming. The cable industry has become a leader in providing these local programming options, Grace explained, citing such efforts as Time Warner’s all-news channel in New York, NY1; Comcast’s local mixed-use channels under the CN8 banner; and Comcast-Hearst’s regional all-news channels, New England Cable News. Such ventures as these meet what Grace described as the “basic requirements” for successful local programming: local in nature, sufficient capital investment and dedicated annual funding, launched on a commercial model, and maintaining high production values. Los Angeles has failed to meet these basic requirements, Grace explained, and in the face of growing competition from satellite systems has achieved only 45 percent cable penetration, far below the national average of 69 percent. Adding 50,000 new subscribers would represent some $30 million in cable revenues each year, with $1.5 million in franchise fees to the city annually. With a successful cable franchise negotiation, Grace believed, “The opportunity exists to nurture a growing civic life of Los Angeles as you build the cable subscription base,” with the possibility of achieving the following programming goals:
George Kohl, director of research of the Communication Workers of America, presented “A Look at the Economics of the Cable Industry” (300kb PowerPoint), which vividly illustrated the extraordinary financial power of that sector: an average $3,820 value per subscriber (with Comcast leading the pack with over 21 million subscribers); a 29-40 percent operating cash flow margin (which is increasing every year due to declining capital expenditures); average labor costs 20 percent below the telecommunications industry standard; and cable prices increasing at five times the rate of inflation over the last several years. During the eight-year period in LA from 1995 to 2002, for example, prices for AT&T (now Comcast) increased over 70 percent. Although the cable industry attributes these increases to rising programming costs, Kohl pointed out that cable advertising revenues have actually outpaced programming costs by $2.6 billion over the period 1996-2002. High-speed Internet access, a growing market that cable dominates, and VoIP telephone service, a market that is just starting to take off, will only further expand cable’s ample coffers. In light of such evidence, Kohl offered the following advice as LA prepares for its cable franchise renewal negotiations:
City Council Members Jack Weiss and Bernard Parks of the Information Technology and General Services Committee thanked the participants for their testimony and expressed interest in continuing to work on this issue, as the city seeks the best possible cable franchise agreements. Ray Morales of the Office of Chief Legislative Analyst indicated that his office would attempt to supplement the existing needs assessment study, representing the community perspective, with the testimony offered at this meeting, representing the perspective of technology experts.