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FRANCHISING ISSUES UNDER
THE 1992 CABLE ACT
By ANDREW T. FREUND and RICHARD G. FLOOD, Zukowski, Rogers, Flood & McArdle
This is the final article in a series of four articles addressing
municipal regulation of the cable television industry. This
article will explore franchising issues under the 1992 Cable
Act.
In an effort to increase cable television "overbuild"1
competition, the Cable Television Consumer Protection and Competition Act of 1992 (the "Act") prohibits
franchising authorities from granting exclusive franchises or "unreasonably" refusing to award competitive
franchises. After December 4, 1992, a franchising authority may not grant an exclusive franchise. The statute does affect existing exclusive franchises.
Franchising authorities may still deny overbuild
franchise applications, but such denial may not be "unreasonable". In considering franchise application, Section 621(4) of the Act states that the franchising authority:
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(A) "shall allow the applicant's cable system a reasonable period of time to become capable of
providing cable service to all households in the
franchise area."
(B) "may require adequate assurance that the cable
operator will provide adequate public, educational, and governmental access channel capacity, facilities, or financial support."
(C) "may require adequate assurance that the cable
operator has the financial, technical, or legal
qualifications to provide cable service."
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The Act does not necessarily conflict with state
"level playing field" statutes or with the obligation of
franchising authorities to perform reasonable due diligence relative to overbuild applicants, even though the
Act is intended to encourage the granting of competitive franchises. Please note that Illinois has a level playing field statute.
The Act clarifies and makes some minor modifications in the renewal procedural process which you
should review in detail if your system is within three
years of expiration. The Act also allows the level of
cable services provided by the cable operator to be a
consideration in determining whether the quality of
service renewal criteria has been met. Finally, the Act
allows a municipality to require the cable operator to
provide 30 days' advance written notice of any channel
repositioning or any change in video programming service provided over any channel.
Probably one of the most significant franchising
issues addressed by the Act is municipal liability. Over
the past decade, a number of lawsuits have been
launched against municipalities as a result of a denial of
franchise or renewal application or because of disputes
regarding fees and contract provisions. The Act limits
the municipalities' exposure to damage awards arising
from the regulation of cable television. Specifically,
Section 635(a) of the Act provides:
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in any court proceeding pending on or initiated
after the date of enactment of this section involving
any claim against a franchising authority or other
governmental entity, or any official, member, employee or agent of such authority or entity arising
from the regulation of cable service or from a franchising authority's decision approving or disapproving the grant, renewal, transfer or amendment
of a franchise, any relief afforded against the franchising authority under any provision of federal,
state or local law shall be limited to injunctive and
declaratory relief.
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There are two exceptions to this grant of immunity.
First, a municipality when it is sued a second time for
the same violation, could be subject to damages. The
second exception provides that the municipality is not
afforded immunity from liability arising from claims
involving discrimination on the basis of "race, color,
sex, age, religion, national origin or handicap".2
CONCLUSION
The Act and its implementing regulations are broad
and complex. Given the public's perception of inflated
cable rates, it is likely that many municipalities, at the
urging of their citizens, will exercise jurisdiction and
regulate cable rates and services. In order to effectively
regulate cable rates and services, the various Reports
and Orders as well as the Act must be reviewed in detail
and someone acting on behalf of the Municipality must
be able to apply the Act and regulations in accordance
with their spirit and intent.
1. Overbuild is the term used by cable operators to refer to a second cable
operator building "over" the first cable operator in a nonexclusive franchise.
2. 635A(C) of the Act.
February 1994 / Illinois Municipal Review / Page 7
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