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Qwest floats cable TV bill

Sponsors sought for statewide franchise

Jeff Smith, Rocky Mountain News

Published January 10, 2007 at midnight

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Qwest Communications wants a statewide cable-TV franchise to better compete with its chief rival, Comcast Corp.

The Denver telco has been floating draft legislation in recent weeks that would allow it to provide cable TV in areas of its choosing in Colorado. Currently, the company must negotiate franchises in each municipality.

Qwest says it has lawmakers interested in possibly sponsoring the statewide cable-TV franchise bill, but it hasn't announced any firm commitments.

Qwest Colorado President Chuck Ward took exception to characterizing the effort to get statewide franchising authority as the company's primary strategy.

"We are continuing to try to negotiate with the cities," Ward said in an interview last week. But "we are coming up on the legislative season, and we have been talking to legislators about the need for competition."

The Colorado General Assembly opens today, the first time since 1962 that Democrats have controlled both chambers and the governor's office.

Ken Fellman, attorney for the Greater Metropolitan Telecommunications Consortium, said he and others from the consortium and Colorado Municipal League were briefed on Qwest's draft bill last week and have objections.

Fellman said there are "many things bad about the bill," including how franchise fees would be defined, limited regulatory oversight and the lack of a requirement to provide TV services throughout a community.

Ward indicated Qwest may be open to some tinkering and compromising.

Comcast repeatedly has argued that Qwest will "cherry-pick" the most affluent neighborhoods if it is not required, as Comcast was, to provide TV service throughout a community.

Ward counters that competing telephone providers to Qwest weren't required to build out. He also cited a recent report by the Federal Communications Commission that shows cable-TV rates increased 93 percent from 1995 to 2005, far exceeding the inflation rate.

"At the end of the day, you have to ask yourself how many competitors are in the cable-TV market today," Ward said. "And the answer is, there's the incumbent."

Qwest quietly tried but failed to muster the support for state franchise legislation last year. Several lawmakers interviewed in recent months expressed hesitancy in sponsoring what is almost sure to be contentious legislation.

California passed a statewide cable-TV franchise law last fall, as have a number of other states.

Qwest's pursuit of a streamlined process comes amid struggles to negotiate municipal agreements - even though the Greater Metropolitan Telecommunications Consortium approved a model franchise agreement last spring.

Ward characterized Qwest as being in active discussions with about six municipalities in the area but reiterated its frustration with the pace of the process.

Officials with some municipalities have said that Qwest hasn't seemed to be in a hurry, either.

The FCC is trying to put pressure on municipalities to act faster and more favorably on phone companies' desire to enter the cable-TV business.

The FCC ruled in December that municipalities must decide within 90 days whether a phone company could offer TV service. The FCC ruling also allows phone companies to count costs, such as equipment for public access, toward a set 5 percent franchise fee.

Ward called the decision "absolutely a positive step by the FCC to try to crack open local markets."

But the FCC ruling doesn't entirely relieve telcos of possible buildout requirements. The ruling is expected to be appealed as soon as a formal order is issued.

Fellman characterized the FCC as exceeding its authority, "dramatically pre-empting local authority" and setting an "unbelievable shot clock." He said the ruling also would result in a "huge revenue loss" for municipalities, probably causing some government or educational channels to go dark.

Cable arguments

• Qwest is looking for sponsors of legislation that would enable the telco to get a statewide cable-TV franchise rather than have to negotiate municipal franchises.

• Comcast, Qwest's chief rival, says Qwest would then "cherry-pick" the most affluent neighborhoods to serve.

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