Introduction

What began a half-century ago as an effort to bring improved television reception to communities beyond the reach of local network affiliates (back when there were only three networks and cable was known as Community Antenna Television, or CATV) cable today reaches nearly seven out of ten US homes.  And for an average cost of around $45 per month cable brings much more than standard TV to its 72 million subscribers. Premium channels and special-interest networks have extended the range of broadcast entertainment, and modern cable systems now deliver pay-per-view and video-on-demand options, CD-quality audio channels, high-speed Internet access, teleconferencing, and telephone service.

But another, less heralded side of cable may turn out to be even more important than the expanding menu of entertainment options that cable provides, especially as the platform develops into a full-fledged communications system, with two-way transmission capabilities.  "Cable systems," as the Baller Herbst Law Group explains in its "Key Issues in Cable Franchise Renewals" report (PDF), "are no longer simply vehicles for delivering cable television to households but have become highly sophisticated broadband platforms capable of providing voice, video, high-speed data and other interactive services to all addresses in a community. Cable systems can therefore contribute significantly to economic development, educational opportunity and quality of life in the electronic era." 

In exchange for the local monopolies they enjoy, cable operators are required to negotiate for a franchise in the cities they serve, and these agreements include a number of community benefits:

•  capacity, facilities, and equipment for public-, education-, and government-access (PEG) channels.

•  support for the construction, maintenance, and operation of these facilities.

•  high-speed institutional networks (I-Nets), offering voice, video, and data service to local agencies and institutions.

•  customer service guarantees, and discounted rates for seniors, the economically disadvantaged, and the disabled.

In addition to these tangible benefits of facilities, network capacity, and support, franchise agreements may also include a number of other provisions in the public interest:

•  public safety requirements (ensuring that connections to the home are electrically grounded, for example)

•  coordinated use of rights of way (managing construction schedules to minimize the disruption of traffic, for example)

•  consumer protections (establishing refund procedures and ensuring clarity in billing, for example)

•  environmental protections (assessing the impact of cable system construction and rebuilds, for example)

•  local economic development (meeting the needs of area businesses for advanced telecommunications)

•  enhanced telecommunications infrastructure (expanding cable's public interest obligations to include the provision of a high-speed data network)

•  diversity of viewpoints and programming (establishing guidelines for the categories of programming to be included in the cable line-up)

•  responsiveness to future technological developments (incorporating provisions to ensure the adoption of new cable technologies)

Cable franchise negotiations are generally undertaken by paid staff of a city or local franchise authority (LFA), and often with the legal advice of such firms as Miller & Van Eaton or the Baller Herbst Law Group.  The renewal process can take anywhere from one to three years to complete (and occasionally even longer), and the resulting franchise agreements are complex, arcane documents, full of legal disclaimers ("… the promises and obligations herein shall survive the expiration date hereof ") and technical specifications ("… Hub performance is 54 to 55 dB c/n ratio, with B65 dB distortions").  These are normally lengthy documents, moreover, up to a hundred or more pages of dense, often inscrutable prose.  The Austin, Tex., franchise, for example--"An ordinance granting to Time Warner Entertainment company L.P., a franchise for the purpose of constructing, maintaining, operating and using a cable system in public streets, alleys, and rights-of-way in the city of Austin to provide cable service"--covers the following range of items:

•  Providing for the conditions governing the construction, expansion, use, reconstruction, excavation, maintenance and operation of such;

•  Providing for a bond and insurance;

•  Providing for the regulation of work by others, construction by abutting owners and requiring alteration to conform with public improvements;

•  Providing for the provision of public, educational and governmental access channels and an institutional network;

•  Providing for the compensation for the privileges conferred under this franchise;

•  Providing for accounting and other information;

•  Providing for conditions of transfer;

•  Providing an indemnity clause;

•  Providing for a local office;

•  Providing for consequences of franchise violations;

•  Providing for compliance with existing laws;

•  Providing for written acceptance of the terms of this franchise; and providing for an effective date.

These agreements tend to be long-term affairs, moreover, often covering a decade or more, which means that attention must be paid to crafting a contract that leaves room for the inevitable technological improvements that could enhance both commercial and noncommercial cable services.  Thus Austin granted a nine-year franchise to Time Warner, "with an optional six-year extension if cable company fulfills franchise requirement and if its

performance is consistent with current overall industry technical practices and range and level of services, existing and planned in the 100 largest U.S. cable systems that have been renewed or entered into since December 12, 1997 ("Survey"), taking due consideration of the then current practices and trends in the industry and Grantee has the ability and agrees to perform consistently with the industry practice in the six year extension period by implementing improvements that have been demonstrated to be commercially feasible in the Survey. An expert or experts in the area of cable television shall be designated by the City Manager to conduct the Survey and to assess, in full consultation with Grantee, and advise the City whether Grantee meets these requirements….  In the event an improvement identified in the Survey is requested by the City, then the Grantee shall agree to make the improvement in order to obtain the extension….

In addition to all of the fine print, these documents also contain the building blocks for a genuine community media movement, one that places the power of new technology in the hands of individuals and nonprofit organizations normally excluded from the market-driven mainstream media.  (For examples of such community media organizations in operation, see the Grand Rapids Community Media Center, Boston's Commonwealth Broadband Collaborative, Blacksburg Electronic Village, and Seattle's Reclaim the Media).

However complex the franchise negotiation process might be, there is room for public participation, too, especially in the community needs assessment process, in which the future cable-related needs of residents are ascertained.  (Examples of successful needs assessment reports include those of Washington, DC [PDF], Los Angeles [PDF], and Davis, Calif. [PDF].)  The needs assessment report is one of the tools that cities use as leverage in negotiating franchise renewals with often-recalcitrant cable operators.  As James N. Horwood of Spiegal & McDiarmid explains, "The ascertainment process during renewal is … critical to establishing the appropriate level of PEG access in a community."  More generally, needs assessments efforts are one way that communities can begin organizing for the kinds of noncommercial programming operations that will need sustained support (drawing on a portion of that 5 percent franchise fee that cable operators are obliged to pay) once the franchise agreement has been signed.

Listed below are the key components of a successful cable franchise, with excerpts from various franchise agreements around the country, covering both big-ticket items (PEG channels, I-Nets, and the like) as well as the seemingly minor provisions that often spell the difference between a cable franchise that has room for growth (as cable technology itself evolves) and those that lock communities into more restrictive covenants:

I.   Public Access Requirements

         A.  PEG Channel assignments

         B.  Capacity set-asides

         C.  Facilities/Equipment

         D.  Uplink/Origination sites

         E.  Technical assistance

         F.  Channel positions

         G.  Audio channels

         H.  Independent management

         I.   Additional channels

         J.   Promotion

II.   Technical Standards

         A.  System design

         B.  Interconnections

         C.  Free cable service

         D.  Free modem connections

         E.  Emergency override

         F.  PEG quality-of-service guarantees

         G.  Technical assessment

         H.  Fiber requirements

         I.   Set-top attachments

III.   Digital Upgrades/Advanced Uses

         A.  Bandwidth set-aside

         B.  Digital PEG

         C.  New Technologies (e.g., Video on Demand)

         D.  Narrowcasting

         E.  Web hosting and streaming media

         F.  Advanced, bi-directional links

         G.  Interactive PEG services

IV.   Financial Support

         A.  Franchise fees

         B.  Capital funding for PEG

         C.  Distinction between PEG support and franchisee fees

         D.  A funding partnership

V.   Institutional Networks

         A.  High-capacity and low-capacity sites

         B.  Noncommercial uses of I-Nets

         C.  Interconnections and switching and routing requirements

         D.  Supplemental I-Net services

VI.   Customer Service

         A.  Customer service standards

         B.  Subscriber Bill of Rights

         C.  Privacy

         D.  Continuity of service

         E.  Installations and connections

         F.  Customer service and complaint procedures

         G.  Performance monitoring

         H.  Reports and recordkeeping requirements

         I.    Franchise violations

VII.   Other Requirements

         A.  Types of programming to be offered

         B.  Community programming needs

         C.  Research and development

         D.  Universal service

         E.  Equal employment/affirmative action

         F.  Labor policies

         G.  Competition

         H.  Open access

         I.    Local underwriting guidelines

VIII.   Basic Definitions

         A.  Portland's list of basic definitions

         B.  St. Paul's definitions

         C.  Austin's definition of "gross revenues"

         D.  Austin's definition of "rights of way"