Amendments

A M E N D M E N T S

HB6456 - several amendments were offered on the Senate floor the day of the vote, but only two additional amendments were adopted on December 12, 2006

Amendments made - satisfactory additions and changes to HB6456

1) Up to 2% PEG fee that not all communities get (some communities will get less because the bill states that this fee is to either match existing contracts (up to 2%), or in the absence of a current contract with a cable provider, it would be up to 2% of gross revenues from each provider).

2) The PEG fee can now go to operations, not just capital outlay costs.

3) Each video/cable provider must provide/continue to provide a local Emergency Alert System, not just the federal EAS.

4) There was language added that indicated a 45-day deadline within which cable/video providers must pay fees to communities.

Amendments that did not make the bill - Without these items being included in HB6456 it remains unsatisfactory to a variety of groups for a variety of reasons. Proposed amendments that did not have the cable/video providers dealing with all communities in a uniform fashion were rejected.

1) Preservation of contracts with existing providers or, at the very least, until such time that new providers begin penetrating a market. 41 Michigan municipalities that have competing providers today will be subject to immediate loss of contracts by those providers, to be replaced with the uniform statewide law. (The law's title: "Uniform Video Services Local Franchise Act" was adopted after the cable providers received the ability to break their existing contracts, in exchange for dropping their opposition to the originally proposed law. Therefore, we fully expect that cable providers will use their prerogative to opt out of existing contracts whenever most profitable to them. The abrogation of contracts amendment was voted down by a 22-11 vote. This amendment, proposed by Senator Nancy Cassis, was debated more than any other as she attempted to gain a 5% buildout from any new provider in a community before the existing provider could pull out of their contract. Hundreds of communities could have benefitted from this sensible approach.)

2) Net Neutrality - the Senate decided that it would attempt legislation in 2007 to protect the content-neutral nature of the Internet as we know it today from telecommunications companies deciding to charge service providers and search engines premium fees to use their networks, thus thwarting access by users.

3) PEG channels on basic tier -- cable and video companies are now able to move channel designations for access channels from single digit channels to upper tiers where programming will be more difficult to find. Local franchise agreements providers protection to PEG channels location on the cable system's lineups.

4) Consumer complaints handled at the local level. Consumers from now on will have to contact the Michigan Public Service Commission (we hear that it will be a 1-800 number where people can leave messages). For decades, local government cable departments have assisted consumers with problems with cable providers in the public easements and with service issues that have been lingering. This service now goes away at the local level, even though it is a valued service for the residents.

5) Franchise fees protection from a portion going to future funding of the MPSC as the administrative arm of the statewide franchises for 1,100 Michigan communities.

i6) Protection of existing I-Nets - These are institutional networks, connecting emergency agencies, schools, and municipal buildings in many communities. Upkeep of I-Nets is no longer protected, making future operability unknown.

7) METRO Act tax and property credits - language is still weak. The new law will allow telecommunications companies to seek a credit against franchise fees for METRO Act fee payments made to the State, which are forwarded to communities based on line installation footage statements submitted by the providers.

8) Rights-of-way controls very weak - the "spirit" of this law will have telecommunications and cable companies saying that any regulation by municipalities is thwarting the competitive climate that this bill is suppose to create. Because of this, the existing bill doesn't firmly state the rights municipalities have in infrastructure placement issues.

9) Build-out, investment, job creation - weak or no language at all. All expectations are based on promises; in fact the language of the law has provisions for "factors beyond the control of the provider".

10) Lower cable prices - impossible to legislate

11) Choice - exists today with the willingness of companies to build/upgrade infrastructure in communities and obtain available non-exclusive local franchise agreements per federal law.

12) Up to a 2% PEG fee for all communities that previously negotiated less than two-percent was not addressed. These communities and their access channel will never get the full 2% PEG fee, even if their costs justify it, because the bill says that which is in the current contract gets matched, up to 2%. This lack of uniformity among communities was not addressed, but on all other matters involving the cable and video service providers, uniformity of provisions was top priority.

MML & MTA
SUMMARY OF COMPROMISE AMENDMENTS
MML & MTA testified to support HB 6456 if these issues are addressed:

Termination of Contracts Amendment:

This amendment would create a trigger to allow the current cable provider to terminate contracts when competition exists in a community. HB 6456 allows that all contracts can be immediately terminated regardless of competition.
Cable and phone companies agreed to a competition trigger in California, Virginia and in the federal legislation. Texas legislation did not abrogate any contracts.
According to experts, this compromise amendment would save local communities $25-35 million annually.

Build-out Amendment:

This amendment would create a reasonable standard guaranteeing a majority of local residents receive service within a reasonable time frame. This is consistent with current law which guarantees all local residents receive service within a certain population density.
HB 6456 allows cable and phone companies to cherry-pick local neighborhoods and serve only high-value residents.

In-kind Services Amendment:

This amendment would prevent a negative local revenue impact of $25-35 million due to the loss of in-kind services because of abrogation.
Without in-kind, local residents could lose a number of critical services, including local emergency alerts and services for schools or libraries.

METRO Act Credit Amendment:

Section 6 (11) of HB 6456 allows phone providers to take local revenues if they do not receive a state property tax credit. Why should a private company take local revenue if the state does not give them a property tax credit?
This amendment would save local communities approximately $20 million.

Local Enforcement Amendment:

This amendment would serve as a consumer protection amendment by protecting local rights-of-way regulations that are eliminated by current abrogation language.

Community, Education and Governmental Channels Amendment:

This amendment would prevent community, school and public access television from being slowly eliminated or cut back due to revenue and in-kind service reductions. It would also reverse the provisions that will increase operating costs on these facilities.