By CLIFFORD E. SINGER
Urbana City Council

Many urban areas will see their present cable TV franchise expire in the next few years. Let's examine the results of cable refranchising in a medium-sized municipality, and see how your community can do as well or better.

There are three critical questions to ask when approaching refranchising. Is your system competitive? Is it obsolete? What do you hope to accomplish? To indicate you are taking the system seriously, your city can apply to regulate the basic tier, which must include airwave and public channels. Since only a few systems are even partly competitive, let's assume yours is found to be uncompetitive.

If your system has less than 50 channels or less than one fiberoptic line per 500 potential subscribers, it is obsolete. To maximize profits by expanding services and escaping present rate regulation limits, an obsolete franchise needs a complete upgrade. All trunks and weathered cable on your rights of way may need to be replaced within a few years. If so, your municipality can have a unique opportunity to meet your community's particular balance of needs.

Your community may want better public service television, easier parental control of children's viewing, and/or a better integrated information transfer system. Which of five routes you choose to meet these needs will depend in part on this balance:

(1) Announce intent to refranchise; negotiate over start time and duration.
(2) Define community needs; seek a franchisee that meets them.
(3) Roll over your franchise short term; negotiate timing of "must carry" video with your telephone company.
(4) Contract construction of a fiberoptic backbone; lease it to all right-of-way users.
(5) Contract for a municipally supervised system; privatize it later as needed.

Urbana's experience is an example of the best you are likely to do if you consider only the first approach. Urbana approved a fifteen-year refranchise after a year's delay for negotiations. It obtained use of up to nine public service channels without restriction on program content, and a 2% public service support fee in addition to a 5% general franchise fee. A simple market analysis indicated that roughly 80% of these combined fees would come from the franchisee's total profits (which a consultant and generic FCC studies indicate are well in excess of 25%). However, the city did not obtain a system which would require active parental unblocking of excessively violent or otherwise inappropriate viewing for children. The city also obtained only a few fixed location public service feed locations, vague guarantees on cooperative use of public service channels, and no prohibitions against public service channel relocation.

A better cable system might automatically lock programming which didn't meet national standards for viewing by children. If subscribers had to take active measures to unblock it, then the system would likely protect a large number of children whose overstressed parents take a passive approach to the average of 25 hours per week children spend in front of the "tube." A better cable system would leave the proportion of gross receipts spent on public service up to the electorate. It would leave use of public service bandwidth unfettered. This would allow municipalities to foster economic development by offering fiberoptic/cable use at cost for information transfer, rather than at monopoly prices. A better cable system would require provision for video origination anywhere within the system within about five years. It would also protect public service channel locations and guarantee compatibility of publicly and privately provided programming on public service channels.

For a city willing to go as far as contracting for construction of a municipally supervised cable system, all these things are possible. Whether your community wants to go this far depends on its goals and the economics of its market. You may be able to meet comprehensive goals, and save your residents money at the

March 1995 / Illinois Municipal Review / Page 9

same time, it you take an aggressive approach in a market where your franchise is exporting a large monopoly profit margin. If your goals are less comprehensive or your system already has some competition, you may want to cooperate closely with your more highly regulated telephone company, and/or consider municipally contracted construction only of a fiber-optic backbone.

Whatever your city's choice, there are six steps which are essential for success:

1. Don't rule out any of the above options until your municipality has a signed and enforceable agreement.

2. Contact alternative contractors for all options at least a year before your franchise expires, if at all possible. If you don't have time left for this, you can still roll over your present franchise to give alternative contractors enough time to prepare a complete proposal. Take public input, set goals, and define procedures before entering into exclusive discussion with an alternate contractor.

3. Obtain a solid legislative majority commitment to using any of the above options needed to meet your goals. If you can't do this, your goals are too extensive and need to be revised. This majority will need to weather a publicity campaign from a strong vested interest, legal action at least against all but the municipally supervised sustem, and any intervening elections.

4. Don't bluff. A monolithic corporate system may be able to project a stronger position than its market economics will support, but an open governmental process is unlikely to succeed at this. Have the economics of your market analyzed. This will help you choose the best option and understand your present franchisee's economic interests. You can save time and money by paying for private or academic services only for well defined technical tasks like market or legal research, not to tell you what your policy should be.

5. Cooperate with nearby municipalities and the many others in your state and hundreds across the country also facing franchise expiration. Use formal agreements, municipal leagues, and/or informal contacts. This can be essential if you

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eventually reject the option of a municipally supervised system. Alternative contractors engaged on an exclusive basis may provide extensive legal research in their proposals, and they can be expected to vigorously defend their legal right to participate in your market once you conclude an agreement with them. Unless you offer them very lucrative terms, however, they may have limited enthusiasm for sharing court costs before you have helped clear the way for their entry. Joint municipal negotiations and sharing legal costs can be helpful, but your municipality must be prepared to proceed on its own whenever joint interests diverge.

6. Obtain majority support for a specific plan and binding commitment for funding, equipping, and managing public service cablecasting before signing any final agreement. Pay careful attention to the fine print in a final agreement, to make sure it is consistent with your goals and this plan.

Following these six steps, your community should be able to avoid the continuing storm of protest that has followed decisions requiring expensive converter boxes under cable franchises approved in some communities, and instead get the best out of your cable system.

'•Urbana's Future," (20 Jan., 1992) 168 pp.

The Steel Plate Fabricators Association (SPFA) is seeking nominations for the oldest steel water tanks in America and each state.

SPFA, a North American trade group representing manufacturers of steel water tanks and other fabricated metal products, will award plaques and certificates to:

• Century Club qualifiers — tanks that have been in continuous service for at least 100 years.

• The tank in each state that has the longest record of continuous service.

To qualify for an award, tank owners or operators merely need to notify SPFA in writing of their historic tank, and to send along proof of first use (e.g., board of directors minutes, engineering drawings, newspaper clippings, etc.). During 1994, SPFA recognized 13 tanks as Century Club members.

Entries can be submitted to SPFA at 3158 Des Plaines Ave., Des Plaines, IL 60018. The nomination deadline is August 1.

Clifford E. Singer is a member of the Urbana City Council and a professor of nuclear engineering at the University of Illinois. Partial lists of equipment contractors and cable franchisees active in the Midwest are available at cost of reproduction and mailing.

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