FAYETTEVILLE — City concerns the local cable TV provider could drop franchise fees paid to the city under a new state law are highly unlikely and would be a very provocative move even if it is possible, the head of the state’s lobby for city governments said.
“I would be really doubtful of that, and if cable companies tried it, it would lead to a lot of ill will with the Legislature as well as cities,” Don Zimmerman, executive director of the Arkansas Municipal League, said in an interview Friday. Creating a way for video service providers to escape franchise fees was never a topic of long, detailed negotiations on changing state law in the last legislative session, he said. Exploiting the change for that purpose would surely get a strong reaction from cities and from lawmakers who represent the residents of those cities, he said.
Len Pitcock, director of government affairs for Fayetteville cable provider Cox Communications, said in an interview Friday Zimmerman was right the company has no plans to stop paying the 5 percent fee to Fayetteville or any other city and the option of doing so, as far as he knows, doesn’t exist. “I can’t completely assure you that it’s not possible because we’ve never considered doing that or checked to see if we could,” he said.
Fritz Gisler, Fayetteville’s director of media services, has warned the city’s telecommunications board the possibility of a dropping of fees might exist. In a Sept. 19 email to board members, for instance, he says in part: As I have expressed in previous meetings of the board, I have a grave concern that Cox will, in the very near future, assert that they are no longer a “cable” company or “video services provider” and are exclusively an “Internet service provider,” “Video services providers” are subject to franchise fees under Act 276 of 2013. “Internet service providers” are not.
“I’m not trying to be an alarmist,” he said in a telephone interview Friday. “I just don’t want anybody to be blindsided.” Those fees add up to about $750,000 a year for Fayetteville. Gisler also said he agreed with Zimmerman the practical, negative consequences of Cox attempting such a change will probably forestall any such attempt.
Telecommunications are in a time of great flux, Gisler said. About 30 states have gone to similar state franchises, but none have yet used the new laws to escape fees so far as he knows, Gisler said.
Arkansas’ Act 276 went into effect on June 30. The act replaced existing city cable franchises, each one negotiated with the city getting cable service, with a single state process. Those companies with existing franchises could choose to continue to operate them by filing one for one franchise agreement with the secretary of state.
“AT&T is getting into our business and we’re getting into theirs,” Pitcock said, as an example of how feeding signals to television has changed since the city-by-city cable franchise model was created. New players such as satellite companies, “Netflix and Hulu” also are factors to consider, he said. The statewide process, in which most “video service providers” operate under the same guidelines, was to almost everyone’s advantage, he said.
“We still have to keep a good relationship with cities,” Pitcock said. “We still need city right of ways, for instance. We still have to work with them.”
Cities had concerns about the first version of the bill but these were addressed after key legislators, including Sen. Cecile Bledsoe, R-Rogers, insisted they be settled before allowing the measure to leave the Senate Insurance and Commerce Committee, Zimmerman said. “When it was over, everybody was happy with it except Fayetteville and Little Rock, who were worried about a PEG (Public, Educational and Governmental Access) channel or two,” Zimmerman said. No worry about the fees came up in the extensive discussions on the bill that he recalls, Zimmerman said.