Heaston: Internet fees shouldn’t be part of Vermillion’s cable TV franchise

Heaston: Internet fees shouldn't be part of Vermillion's cable TV franchise by David Lias William Heaston, legal counsel for Dakota Telecommunications Group (DTG), hasn't changed his mind since he last met with the Vermillion City Council.

Nothing has happened since that time to make him suggest that DTG change its position on what's turned into a major bone of contention in the city�s new cable television franchise recently offered, and rejected, by DTG.

"My argument is we should only have to pay (franchise fees) on cable TV," Heaston said in a phone interview Wednesday. "That does not include Internet services."

DTG contends that cities have the legal right to regulate cable TV. But Internet services and other transmissions of high speed data, Heaston said, fall outside of the realm of city control.

"Those are subject to federal regulation," he said. "They shouldn't be subject to city regulation."

Heaston said that, other than a phone conservation with City Manager Jeff Pederson, he has had no communication with any Vermillion officials since DTG informed the city June 1 that accepting the city�s new cable TV franchise wouldn�t be a prudent business decision.

"No one has come back at me," he said. "I'm waiting for a call from the city."

Heaston added that he hadn't fully reviewed a recent Oregon court decision that Councilman Frank Slagle mentioned Monday as a factor that strengthens the city's position.

"But I understand that the Oregon case deals with a local cable operator opening up its system like a phone company does, but I don�t know if it allows cable TV providers to pay franchise fees," he said.

The recent announcement that Vermillion's present cable TV provider, Zylstra Communications of Yankton, is in the process of being purchased by Mediacom, LLC, which serves over 725,000 cable and Internet customers in 20 states, won't influence DTG's position.

"That's not going to happen � not that I can see right now," Heaston said. "The franchise expires soon on Vermillion's current cable operator, and I don't think a change in its ownership is going to have an impact on us."

He noted that the city's present franchise holder, and perhaps Mediacom "are only cable TV operators. We offer much more than cable TV."

It's common for cable television companies to pay a percentage of its annual gross revenues to the cities where they do business.

"The idea behind this is that franchise fees are rents paid to cities to use the cities' rights of ways," Heaston said.

Approximately a year ago, the city of Yankton went through a process that's not much different from what Vermillion is facing right now. But the outcome was highly different.

For years, Yankton had been served by Zylstra Communications, the same cable TV firm that is the sole cable TV provider in Vermillion. Last August, however, the Yankton City Commission approved an ordinance to grant DTG a franchise.

The Irene-based telecommunications company is hard at work right now, installing a cable television in Yankton.

"Yankton adopted the existing franchise it has with Zylstra," Heaston said. "But Vermillion went with a consultant that used a 'template.' The end product of that may be more cutting edge as far as telecommunications regulations, but some provisions are the same and some provisions are different than Yankton's. And some are contentious issues.

He added that DTG is willing to negotiate with Vermillion officials to hopefully settle any differences.

"Right now, we're not at a mutual agreement on several things," Heaston said.

He added that it's growing more tempting to put future negotiations on hold, however, until Mediacom's intentions are revealed to all parties.

"I feel like I�m negotiating for the other franchisee," Heaston said. "Maybe I'll wait and see what happens."

Vermillion city officials have many times stated that they are striving to create a level playing field that would be fair to all telecommunications companies interested in securing a cable TV franchise here.

"Vermillion could end up with two ordinances," Heaston said. "I'm sure that Mediacom will claim it offers other types of high speed data. But they may prefer to have it all regulated by the city."

The local regulatory environment could have an impact on future happenings, he added.

"You don�t want to disadvantage one (cable TV company) and advantage another," Heaston said. "That's a concern I've got. Zylstra's successor has not been to the table yet. They may be willing to agree to go along with more than I am. But I have to protect the interests of my client."

The process of negotiation between Vermillion and DTG will be a matter of becoming educated and understanding the dynamics of telecommunications regulations, he said. "We've compromised on a lot of things," Heaston said.

DTG probably will never abandon its attempts to negotiate a cable TV franchise with Vermillion. It may, however, need to direct its attention to other area communities that, like Yankton, are more likely to grant DTG an acceptable franchise.

"There are other communities we can get into now without having to discuss all of these issues," Heaston said. "But we're going right through the middle of Vermillion with our backbone fiber. We eventually will do Vermillion."

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