Kelley's Big Bill

Politicians get ready to reboot telecommunications law

Erickson's organization is also worried about Kelley's plan to remove cities' cable-franchise contracts. According to Ann Higgins, the league's intergovernmental relations representative, franchise fees generate more than $20 million for cities across Minnesota. Kelley's proposal would allow cities to apply for state reimbursement of the lost revenue, but Higgins says cities would rather just keep the money.

Edie French, the City of Minneapolis's cable officer, agrees. She says that in addition to collecting franchise fees, cities now can prod cable companies to provide services such as municipal electronic networks and public-access channels. Minneapolis, for example, has long been at odds with Paragon Cable (now Time Warner Cable) over the city's share of the cable network's capacity (see "Cable Petty," October 13). If control is moved to the state level, French notes, local officials' bargaining power "would be dramatically hampered."

That prospect might sound sweet to the cable companies' ears. But Mike Martin, executive director of the Minnesota Cable Communications Association, says he has developed a healthy skepticism toward politicians' promises of smaller government. Once the bill has rolled around the Capitol for a couple of months, Martin says, there's a good chance that cable companies will still have to deal with the cities. The only change, he argues, will be that they'll have to negotiate with the state, too.

A bigger concern for the cable companies, says Martin, is Kelley's insistence that they open their networks to local Internet service providers. It's expensive to upgrade the cable infrastructure so it can support Internet access, he argues, and companies need to be protected from competition while they recoup those investments. "In the Internet market, we're the new kids on the block," he notes. "Forced access would greatly slow down the deployment of Internet services."

But telephone companies aren't exactly moved to tears by the cable providers' plight. They have been under orders to let competitors use their wires since 1996--a requirement they claim has cost them money and customers. "We applaud Senator Kelley's effort," says Kim Bothun, spokesperson for US West. "It makes sense that all competitive firms ought to compete on a level playing field."

 

Steve Kelley isn't the only politician with ideas about untangling the wires. The governor's "sweeping strategic plan" for telecom reform is slated to be made public in mid-December; it will constitute one of the first specific proposals to flow from Ventura's Big Plan, says state commerce commissioner Steve Minn. "The governor was criticized for not having specifics," Minn asserts. "Well, the specifics are coming."

Philosophically, Kelley and the Ventura administration seem to be marching almost in lock step: Both agree that deregulation is necessary, both envision similar regulations for companies providing similar services, and both are hell-bent on fostering private-sector competition. And like Kelley, Minn argues that telecom reform will make Minnesota a leader in the field, right up there with New York. "We want to make the state a technological wonderplace," he says.

Still, the commerce commissioner discourages comparisons between the two plans. The administration, he says, has no plan to take franchise fees away from cities. And while his department is pushing for programs that would bring one-megabyte-per-second connections to the farm, Kelley's proposal would start with simple dial-up Internet access for remote areas, with high-speed service to follow later. Fritz Messere, chair of the communications department at the State University of New York-Oswego and a national expert on telecom law, says the Kelley and Ventura plans are similar in one key respect: Both represent "a very aggressive proposal at the state level." In fact, Messere says, both go further than the Federal Communications Commission (FCC), which continues to view the cable and telephone industries as separate sectors. Messere argues that the feds should welcome the Minnesota reform initiatives and treat the state as a kind of lab rat: "The federal government can just sit back and watch how such initiatives pan out."

But Michelle Russo, spokeswoman for the FCC's cable services bureau, warns against such an approach. On the issue of cable monopolies, for instance, she says the FCC favors delaying competition so firms can recoup their digital-technology investments. "We do have a national policy and we think the states should look to the national policy," Russo says.

Earlier this year, when the city of Portland, Oregon, demanded that AT&T open its newly acquired local cable network to competition, the FCC filed a friend-of-the-court brief in favor of AT&T. The case, tied up in appeals after an AT&T loss in the first round, could ultimately decide whether Minnesota--or any other city or state--has the legal authority to mandate open cable networks.

As it stands, the FCC's position remains a suggestion rather than an order, and Kelley maintains that his bill will not run afoul of federal rules. If the cable companies are worried about his proposal, he says, he's willing to listen; the same goes for any of the other interested parties. In fact, Kelley says, he wants to hear as much criticism as possible before he introduces his bill in February. "The biggest obstacle is going to be time," he says. "So we need to get people sitting down together and talking before the legislative session. If it gets moving, it's going to be hot. This is controversial stuff."

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