Sunday, May 28, 2006 | 7:38 a.m.
A push by telephone companies for the right to get in the TV business has area cities and Clark County fearing the loss of millions of dollars in tax revenue and their oversight of the cable industry.
Local governments are rallying against proposed federal legislation under which telephone companies could bypass them and obtain a national franchise through the Federal Communications Commission.
If the measure becomes law, even the existing cable provider for the region, Cox Communications, would not have to renew long-standing franchise agreements with Las Vegas, North Las Vegas, Henderson, Clark County and Boulder City to continue providing video services.
Cities are worried not only about losing franchise fee revenue, but also fear losing the ability to require cable companies to provide certain services. They also argue that consumers could suffer if their only recourse to push for improved cable service compels them to complain to the FCC rather than local governments.
In terms of controlling a common, albeit optional, public service, the proposed legislation is another potential blow to local governments, which lost their ability to regulate cable rates with the Cable Act of 1984.
Supporters of bills pending in the House and Senate call the existing franchise control by local governments antiquated, and praise the legislation as a way to foster much-needed competition that ultimately could provide consumers with cheaper and better cable television service. The savings for Nevada consumers, industry officials say, could top $100 million annually.
Both houses of Congress are expected to vote on the telecommunications reform bill this month.
Under the House bill, the FCC would grant a national cable franchise to companies within 30 days of applying. The Senate bill would require cities to approve a franchise within 30 days under rules set up by the FCC.
Ted Olivas, Las Vegas director of community affairs, said a "one size fits all" franchise agreement dictated by the federal government would not work and could establish a precedent that could see other utilities fall out of local control in the future.
"It's like putting NASA in charge of the local (office of the Nevada Transportation Department)," Olivas said. "They are a great organization for space travel, but they know nothing about our roads in Nevada. It would be an odd organizational set and does not appear to make much sense."
The U.S. Telecom Association, led by AT&T and Verizon, is leading the charge for the proposed changes. With 33,000 franchising authorities nationwide, the phone companies complain that going one by one to cities and counties is burdensome and slow, and results in local governments seeking to extract extra compensation in exchange for agreements.
They called for a single set of national rules that would enable them to install a system quicker and give consumers more choices on where they get their cable services. That would open the door for Embarq, the region's local phone provider previously known as Sprint, and other companies to compete against Cox Communications.
Embarq supports the legislation as something that would bring parity among competitors and remove obsolete regulatory obstacles, spokeswoman Vicki Soares said. Cable companies are not required by cities to obtain another franchise to offer phone service, but phone companies must do so to offer cable.
"The video franchising language takes much needed steps toward creating a level playing field among competitors in the video market," Soares said.
Steve Schorr, Cox's vice president of government and public affairs, did not specify a company position on any bill, but said: "All competitors must be treated the same."
The proposed legislation also would reduce the amount that local governments could collect from cable companies in franchise fees. The federally approved 5 percent franchise fee that customers pay to cable providers on their bill would remain, but some cable revenues would be excluded from taxation.
The National League of Cities projects revenue could be reduced 15 percent to 20 percent. Clark County and area cities collect more than $13 million a year in franchise fee revenues from cable service. Some of that revenue pays for broadcasting council and other meetings.
"We are trying to reduce the tax burden on citizens, and any loss of revenue that would go for maintenance, infrastructure or even firefighters is going to be a concern for us," North Las Vegas City Manager Gregory Rose said.
Proponents of national franchising contend local governments could make up for any lost revenue in part by bringing in more cable providers to lure customers away from satellite service. Unlike cable customers, satellite subscribers do not pay franchise fees.
Another concern of local governments is proposals that right-of-way disputes between them and cable providers would fall to the FCC for resolution. That means Clark County, for example, could lose control over deciding when streets could be dug up, decisions based on trying to prevent wear and tear and limit traffic jams, said Jim Spinello, the county's assistant director of administrative services.
But an aide to Sen. John Ensign, R-Nev., said local governments would remain in control over their rights of way under the Senate's version of the proposed legislation.
Local governments are also worried about losing the control over cable companies they now exercise under franchise agreements, including setting customer service standards and requiring the companies to offer the same level of service throughout their jurisdiction.
Ed Merlis, a senior vice president of government and regulatory affairs of the U.S. Telecom Association, called concerns unfounded that phone companies would skip over poorer areas of a community in providing service.
It is impractical to set up a system to skip communities, he said, adding that poor neighborhoods tend to have a large demand for cable service.
The new franchising rules, Merlis predicts, could save Nevada consumers $103 million a year . One Texas city, his association notes, saw its cable rates drop 50 percent when Verizon entered the video business.
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