Franchises Generally
Cable franchises are the agreement or ordinance setting forth the terms on which a cable company is given permission to provide cable service in a municipality. By state and Federal law a cable company has to have such a franchise to use the public rights of way for its lines and to provide service.Franchises cover several types of issues, such as:
- What services are to be provided
- Which company is authorized to provide cable service (and what happens if the company changes)
- Where the cable company has to provide service
- The fees and other compensation the company provides the municipality and the public
- Protections for use of the rights of way
- Extensive customer service protections (such as answering the phone on time)
- Channels for use by the municipality, schools and the public, and financial support for such channels.
We represented national municipal groups, the Michigan Municipal League and municipal leagues from three other states before the 6th Circuit Federal Court of Appeals in obtaining the most important court decision to date on cable franchise renewals. It held that a municipality's decision about what should be in a cable franchise to meet the municipality's future cable related needs must stand if there is any evidence in the record to support it. Union CATV v City of Sturgis, Kentucky, 107 F3d 434 (6th Cir. 1997). This case has helped many municipalities achieve their goals in cable franchise renewals.
Extensive Experience
We have represented well over one hundred municipalities on cable franchise renewals and franchise transfers. All were resolved successfully through negotiations. We have a proven track record in these negotiations of obtaining good results for our clients. Some results from recent franchise transfer and renewal negotiations include the following:- Franchise fees effectively in the 5.25% to 5.5% range by having the "five percent" federal franchise fee applied to as broad a definition of revenues as is legally possible.
Prepayment of franchise fees, which can significantly increase franchise fee revenues during the first year of the franchise.
Improvements for municipal, school, and public access channels by having fiber optic feeds from them to the cable company (improves quality of signal). Also, adding the ability to broadcast live from remote locations. - Increases in funding from the cable company for municipal, school, and public access channels of from ten cents to thirty cents per customer per month.
- The cable company providing at no charge an "I-NET" which is a fiber optic network connecting municipal buildings for video, voice, data and other applications.
- Strict customer service provisions with significant liquidated damages if (for example) the cable company does not answer the phone on time.
- State of the art emergency alert systems where the municipality can use the cable system to instantly notify its residents of emergencies.
- Comprehensive indemnity and insurance provisions minimizing the municipality's financial exposure should accidents occur.
Cost Effective Alternatives
We offer several different ways to assist municipalities, so they can pick the approach that is best for them and their budget. In general the goal is to give the municipality the best blend of both worlds—(1) Their municipal attorney's knowledge of state and local law and the local situation, and (2) Our knowledge of Federal cable and telecommunications law and experience with it in many similar situations.The alternatives include (examples given are for cable franchise renewals, other situations are similar):
- Municipality obtains model cable franchise from us (see more details below).
Least expensive, but provides least guidance on tailoring the franchise to the municipality's situation and responding to cable company comments. - Municipality obtains from us the model franchise plus initial advice on tailoring it to fit that municipality's situation and negotiations with the cable company.
Low cost, and very cost effective as often some of the most important guidance and advice we provide is at the outset. - Municipality drafts and modifies the franchise (using our models or others) and conducts negotiations. We comment and provide assistance "in the background" as needed (no contact with the cable company, which is not aware we are assisting).
Best blend of cost containment and cost effectiveness as it provides our knowledge and expertise throughout the franchise drafting and negotiations, but costs are kept low by the municipality and its attorney doing the actual drafting and negotiations. - Working with the municipality we prepare and revise the franchise, negotiate with the cable company, and revise the franchise as negotiations proceed.
Most effective, as our expertise is right there "at the table" in the drafting and negotiations, but also more expensive. - On costs, municipalities should note that in most cable franchise transfers and in most initial grants of cable and telecom franchises the provider pays the municipality's legal costs.
Model Franchises
To assist municipalities and their attorneys, we have prepared two forms of Model Cable Franchises. These reflect much of the experience we have gained. The model franchises are available in two versions, a longer version (PDF, 32 KB) (see its table of contents), and a shorter version (PDF, 119 KB). Each comes on disk and as a hard copy, includes a memo on how to use the franchise (commenting and explaining on certain key sections) and a memo on cable TV franchise renewals generally. Often municipalities combine the models with options 2 or 3 above to get the most effective and cost-effective result.For general information on the model franchises and how to obtain them, see our Model Cable Franchise Paper.
We update the franchises from time to time, to reflect improvements that have come to our attention and changes in the law.