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:

• Concepts of public access and government communications will have far greater impact in an on-demand digital environment.
• The power of the broadband Internet can facilitate a rich environment of distance learning, political communication, and business productivity.
• This power comes from an open IP platform available to all voices in the community.

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:

• 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 (offering, for example, a modern telecommunications link for schools, libraries and government).

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:

• A flexible, future proof cable system capable of delivering advanced services to all residents, businesses and government facilities;
• A well designed, flexible and accessible PEG system, capable of delivering advanced services to specific communities or neighborhoods and the City at large;
• High quality, timely and easily accessible customer service;
• A competitive environment that benefits consumers;
• A franchise that maximizes franchise compliance and revenue collection for the use of public rights-of-way, while streamlining franchise administration and monitoring; and
• Low rates.

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:

• Address community needs
• Analysis of past problems and best practices   
• State-of-the-Art PEG facilities and cable systems
• Configured to deliver one- and two-way cable related services
• Keep pace with technology throughout life of the franchise
• Enhance the City’s neighborhood service initiatives
• Ample financial support for PEG
• Meet the community’s current and future needs
• PEG channels carried on the same channel location throughout the City
• Public and Educational Access should be managed by an entity designated by the City
• Access for schools, libraries and other public buildings 
• Tools to ensure compliance with franchise and regulatory requirements
• Accommodate people with disabilities

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:

• Public-safety communications (e.g., “backhaul” of two-way radio traffic)
• Education--real-time, interactive video
• Voice--telephony services, including such new technologies as VoIP
• Traffic management systems and cameras
• Regional Emergency 911 system

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:

• Bandwidth for community use
• Funding & resources to support community media centers
• Institutional Networks
• Two-way functionality and capacity
• PEG channels located on same “numerical” location citywide and between multiple cable operators serving the same City
• CMC/PEG programs listed on TV Guide Channel and interactive program guide (IPG)

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:

• Compelling coverage of LA’s diverse neighborhoods
• Live broadcast of cultural, political and local events, including sports.
• Daily & weekly programs framing life in L.A, business, travel, entertainment the arts.
• Local news without the car chase

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:

• Negotiate hard and be as litigious as Comcast if necessary
• Join movement to re-regulate cable prices
• Capture growth areas: high-speed Internet, voice
• Insist on universal deployment
  • Build-out/deployment timetables for low-income areas
• High service quality and safety standards and funds to audit

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.