1983-07-20 Public Hearings and Regular Meeting

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• • SUMMARY OF PROVISIONS OF 5.66 0 JURISDICTION State and local authority. Broad federal guidelines are estab- lished for state and local regulation of rates, access set asides, services, facilities and equipment, franchise fees, fran- chise renewals, and ownership. States and localities are specif- ically granted residual authority by section 2(c) over local matters such as "terms and conditions for the granting of a fran- chise, the construction and operation of a cable system, and the enforcement and administration of a franchise." In addition, states and localities are authorized to grant "one or more cable franchises "(Sec. 604(2)), clarifying the authority of cities to franchise and thereby eliminating the possibility of antitrust challenges to the franchise process. Federal authority. Stringent federal privacy standards are estab- lished and state and local authority over privacy is preempted. OWNERSHIP Crossownership. Existing authority of the Federal Communications Commission (FCC) under the Communications Act of 1934 to restrict the ownership of cable systems by other media interests such as networks, broadcasters, and newspapers and by telephone companies • is not in any way affected by the bill. States and localities are, however, prohibited by section 605(a) from establishing crossownership restrictions in addition to those imposed by the FCC. Municipal acquisition of a cable system. When a city buys back a cable system on the expiration of a franchise or requires the sale of a cable system to a third party on the expiration of a franchise, it is required by section 605(c)(1) to pay fair market value, defined as the ongoing business value of the system and therefore including intangible assets such as good will. If the parties are unable to agree on that value through negotiations, the matter is submitted to arbitration. When a city condemns a cable system or terminates a franchise for cause at any time during the life of the franchise, it is not required to pay a minimum price and may pay whatever price is specified by the franchise (e.g., depreciated book value) or determined in a condemnation proceeding. The cable operator, however, is entitled under section 605(c)(2) to receive due pro- cess protections such as notice and a reasonable opportunity to remedy the breach. Municipal ownership. Municipal ownership of cable systems is permitted. Under section 605(d), however, an independent board • or separate management company must be established to determine