Law firm hired to fine-tune cable franchise

Law firm hired to fine-tune cable franchise by David Lias The Vermillion City Council secured the services of Moss & Barnett, a Minneapolis-based law firm with expertise in cable television franchises, for assistance as it attempts to fine-tune the city's new cable television ordinance.

The council agreed to seek the law firm's assistance at its meeting Monday as it considers a request to transfer the cable television franchise currently held by Zylstra Communications, the city's sole cable TV provider, to Mediacom LLC.

Mayor Bill Radigan said the city's utility committee came away from a June 15 meeting with the opinion "that we should have this law firm which does this work constantly, and also has worked with other transfer requests for Mediacom, so it is familiar with the company."

Radigan said the committee also discussed the letter of rejection from Dakota Telecommunications Group (DTG), and agreed that this, too, is an issue that should be reviewed by the Moss & Barnett law firm.

"We'd like to recommend that the council hire the firm to review the five points of main concern from DTG and give us another opinion on where they feel our franchise is as far as those points are concerned," Radigan said.

In a June 1 letter to City Attorney Martin Weeks, William P. Heaston, an attorney for DTG, said the telecommunications company based in Irene could not accept Vermillion's cable television ordinance.

Accepting the ordinance DTG claims, would not be a prudent business decision because of five sections of the ordinance:

? Definition of cable services. According to DTG, the words "high speed data service", Internet access", "interactive services" and "or data access" should be deleted. DTG contends that those terms describe services which DTG believes are outside the scope of cable television service and which should not be regulated by the city.

? Signal input points. Heaston wrote June 1 that "although there has been some restriction on the breadth of this provision, DTG is not prepared to accept the conditions in this section until all of the details have been completed.

? Institutional network. DTG provided a memo on April 1 that it requested be adopted by the city for this section of the ordinance. According to Heaston, it is a more concise rewrite of the amended language.

? Liquidated damages. Heaston noted June 1 that one section of the ordinance covers issues regarding the unauthorized transfer of ownership. He wrote that if the transfer is unauthorized, it is of no effect, and that is the penalty. Another portion of the ordinance spells out violations of insurance provisions and other areas. Heaston wrote that if those provisions are violated, damages would be reasonably ascertainable, thus a penalty provision is not appropriate.

? Covenants. DTG provided a proposal, dated March 18, which it believes is more appropriate for this situation. The services provided, DTG the service provider and the city of Vermillion (the franchising authority and municipal entity) are subject to significant federal and state regulation, Heaston wrote. This portion of the franchise, DTG contends, in effect requires the telecommunication firm to give up its First Amendment right of free expression.

"Neither party should give up its constitutional rights to be heard in appropriate federal and state legislative, regulatory and judicial forums regarding matters which impact the regulation and provisioning of cable services," Heaston wrote. "Additionally, the incumbent provider (Zylstra Communications) has yet to come to the negotiation table. DTG cannot allow itself to be locked into an agreement which potentially could be competitively harmful."

Radigan told the council that the utilities committee is striving to be fair to everyone.

"The committee constantly works to try to make certain that the franchise ordinance treats everything and everyone equally as possible for anyone who is interested in coming here and seeking a franchise on cable television," he said.

Councilman Frank Slagle indicated that a recent court decision in Oregon will likely prove to be helpful to Vermillion.

"There has been a court decision (in Oregon) that in fact would support the position being taken by the city," Slagle said. "So we now have additional legal authority in addition to our own legal counsel suggesting that we are in fact proper."

This court decision may impact the Vermillion franchise's section that defines the cable services that can be regulated by the city, and therefore be subject to cable franchise fees.

Simply put, DTG is contending that only cable television is subject to franchise fees. Additional services, such as Internet access, interactive services and data access should not be part of the ordinance, according to DTG, because they are beyond the scope of cable television service and should not be regulated by the city.

"They (DTG) are saying because Internet is different from the traditional one-way television that we're all used to, that we have no authority over the Internet access. We're trying to say the ordinance would apply to that as well at the TV," Slagle said. "In the Oregon case, the city council actually took steps to actually regulate the Internet. They charged franchise fees based on the Internet.

"We're not trying to regulate it, but in Oregon they did and the courts said it was within the scope of their authority," he said.

City Attorney Martin Weeks said the Vermillion ordinance has been bolstered by federal cases.

"The Internet falls under the definition of cable services ? it has a layer effect," City Manager Jeff Pederson said. "At some point in time, DTG needs to admit reality and move on."

Earlier in the meeting, the council heard citizen input from Joel Fagerhaug of Vermillion, who works as a technical support representative at Gateway in North Sioux City.

Much of Fagerhaug's comments dealt with phone service, not cable television. He urged the council to not become over restrictive, however, as it considers future negotiations on its cable ordinance.

"As a consumer, I was a bit disturbed when I saw that you might try to prescribe a specific set of technology that they (DTG) would have to follow," Fagerhaug said, "because if you're too specific in technology, and I say this as a technician for a computer company nearby, I know that things are changing very rapidly.

"Three weeks later, if someone has a better idea, then you are locked into this ordinance, because ordinances are slow to change while the free market is very fast to change."

He urged the council to simply renew the ordinance that's in place for Zylstra Communications for all cable television companies that wish to come to Vermillion.

"We have a new phone company that's offering cable services, and is already offering Internet services in Vermillion, and if it stimulates the other existing cable company to perhaps offer phone services or Internet services as well, that's exciting," Fagerhaug said. "If that stimulates US West to take a greater concern in this area, maybe they'll offer something."

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