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April 22, 2007

More on Ohio Senate Bill 117 --

Today's Cleveland Plaindealer carries a front page story on the so-called State Franchise bill in front of Ohio's Senate (SB 117).

About a month ago I posted a note on a coalition formed to fight against the AT&T sponsored legislation. A number of States across the country have negotiated state-wide franchise agreements on the basis of the assumption that such a negotiated arrangement removes the cumbersome (and costly) jurisdiction by jurisdiction negotiation that informed the first set of cable television negotiations 20+ years ago. Of course, in the Internet age the triple play of data, voice, and video makes the "market" for these services a matter of plenty of opportunity and big money. AT&T with the tacit consent of Time Warner are sponsoring SB 117 which will allow the State to negotiate the terms of a "master agreement" that will, as currently written, supersede all local franchise agreements.

AT&T and Time Warner are both saying that "master agreements" will lead to more competition and lower costs to consumers. Hmm... this kind of consensus among the competitors should make all consumers think twice about the promise of structured duopoly arrangements leading to lower bills for services. More important, all of the States who have concluded state-wide franchises have NEGOTIATED the terms rather than taking the first draft from the industry ghost-writers.

According to some insiders, "AT&T has the votes" in the Senate. There is some important coalition building between City Managers and Mayors and many grassroots players, and the mostly insightful blogsphere.

Missing from almost all the analysis is the single most important part of existing franchise agreements and those are the provisions that relate to so-called I-Nets (Institutional Networks). In the first round of franchise agreements with Cable providers, the City template franchise agreement for providing rights to lay out fiber included a public set-a-side of 6 or more fiber pairs to be used to connect public institutions like schools, government buildings, public health care services, and other public institutions. The provision was slightly ahead of its time but in the past 10 years or so, enlightened Cities (and Counties) are significantly leveraging their negotiated rights to use I-Net infrastructure.

The current language in Bill 117 is entirely silent on the right of the State or any local jurisdiction to conclude a franchise agreement that will provide public set aside access of fiber pairs to enable communities and their elected officials to use fiber to create connected communities around the country. Make no mistake about it, while cities like Cleveland and Dayton stand to loose $250,000 per year or so through certain changes in the proposed formulas for the franchise agreements, the real economic loss will come from giving up the provisioning of I-Nets as part of the entitlement of cities and the State of Ohio. The long terms impact will be measured in hundreds of millions of dollars not to mention public capacity to participate in framing a public agenda for public benefit in the Internet Age.

Make no mistake about it, neither AT&T or Time Warner are going to volunteer to serve up I-Net fiber. On the other hand, there is more than 15 years of legislative precedence all across the country which should be leveraged as our legislators negotiate the terms and conditions of the final Bill as it moves through the legislature.

Looking back 20 years from now, a decision to miss bringing forward the provisions of I-Nets will be seen by future pundits as the key legislative miss (while cable television will likely be a largely irrelevant issue). While Europe, Asia, and many other countries in Latin America, Canada, and elsewhere are leveraging public access to fiber to position their countries to be leaders in the emerging Internet Age, U.S. and Ohio legislators are loosing the opportunity to leverage legislative authority in the public interest. A decision to remain silent on the need to bring forward the provisions of I-Nets into SB 117 will be a most unfortunate outcome.

It's not too late. The last couple of public hearings are coming up in the next two weeks. Cleveland City Council has a chance to lend its voice to the growing number of cities in opposition to the Bill. More important, City Council, and key media outlets, are in a position to make sure that if we negotiate a state-wide agreement that we do not loose the I-Net provisions of any legislation that might emerge through the negotiation process.

Lev Gonick
Cleveland April 22, 2007

Posted by lsg8 at April 22, 2007 03:25 PM and tagged

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