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  1. 1. Texas Community Media Summit University of Texas Austin, Texas March 1, 2008 Gabriel Garcia Assistant City Attorney City of San Antonio
  2. 2. Topic for Discussion <ul><li>The impact of Texas state video franchising legislation on municipal PEG programming and operational budgets. </li></ul>
  3. 3. Why State Video Franchising Reform? <ul><li>To encourage the entry of telecommunications companies into video market. </li></ul><ul><li>Support telco business model: </li></ul><ul><ul><li>Network Architecture: FTTX (FTTC, FTTN, FTTH) </li></ul></ul><ul><ul><li>Business Plan: Triple Play (Bundled voice, video and internet access) </li></ul></ul><ul><ul><li>Video Technology: IPTV </li></ul></ul><ul><ul><li>Providers: AT&T and Verizon </li></ul></ul>
  4. 4. Integration of Video Into Telco Network
  5. 5. SB5 Supports Telco Business Plan <ul><li>One regulatory authority for entire state </li></ul><ul><ul><li>Texas PUC </li></ul></ul><ul><li>Ease of certification process </li></ul><ul><ul><li>PUC must approve certificate within 17 days </li></ul></ul><ul><li>Access to municipal rights-of-way </li></ul><ul><ul><li>Provider pays 5% of gross revenues as franchise fee </li></ul></ul><ul><li>No build-out requirement </li></ul><ul><ul><li>Provider may select market area for network deployment </li></ul></ul>
  6. 6. SB5 Supports Telco Business Plan <ul><li>No restriction on use of video technology </li></ul><ul><ul><li>IPTV integrates video programming into telco service delivery network </li></ul></ul><ul><li>Provide network capacity for PEG channels </li></ul><ul><ul><li>Provider may not alter PEG content </li></ul></ul><ul><li>Cities responsible for PEG channel operations </li></ul><ul><ul><li>PEG signal must be compatible with provider’s technology </li></ul></ul><ul><li>Pay 1% of gross revenues as PEG fee to cities </li></ul><ul><ul><li>Cities entitled to same number of PEG channels that were in effect on September 1, 2005 </li></ul></ul>
  7. 7. Transitional Planning <ul><li>SB5 provides for a 120 day transition period from city’s written request </li></ul><ul><li>City transitional budget should allocate funds for taking over PEG channel operations: </li></ul><ul><ul><li>Funding for capital and operational expenses </li></ul></ul><ul><ul><li>Personnel decisions </li></ul></ul><ul><ul><li>Studio facilities </li></ul></ul><ul><ul><li>Equipment needs </li></ul></ul><ul><ul><li>Other considerations -- video streaming of City Council meetings </li></ul></ul>
  8. 8. PEG Programming Requirements <ul><li>City must provide daily PEG programming: </li></ul><ul><ul><li>At least 8 hours of daily programming </li></ul></ul><ul><ul><li>Failure to provide daily programming may result in loss of PEG channel </li></ul></ul><ul><ul><li>PEG channel may be restored upon certification that city will provide 8 hours of daily programming </li></ul></ul><ul><ul><li>Restored PEG channel need not be listed on basic tier </li></ul></ul>
  9. 9. PEG Channel Branding Concerns <ul><li>Under SB5, city is not entitled to same channel designation for PEG channels </li></ul><ul><ul><li>In San Antonio, Education Access Channel is listed: </li></ul></ul><ul><ul><ul><li>Grande Communications – Channel 19 </li></ul></ul></ul><ul><ul><ul><li>Time Warner Cable – Channel 98 </li></ul></ul></ul><ul><ul><ul><li>AT&T Uverse – Channel 99 </li></ul></ul></ul><ul><li>PEG channel must be carrier on basic tier </li></ul><ul><ul><li>AT&T has no basic tier (all digital network) </li></ul></ul><ul><li>If PEG channel is removed for under-utilization , when restored, the channel may no longer be carried on basic tier </li></ul>
  10. 10. Connectivity Considerations <ul><li>Under SB5, provider is responsible for the transmission of PEG channels over its network </li></ul><ul><li>Provider is responsible for providing connectivity to each PEG channel distribution point up to the first 200 ft </li></ul><ul><li>City must provide PEG signal in a manner or format compatible with the provider’s technology or protocol </li></ul>
  11. 11. PEG Connectivity Model <ul><li>Establish Single Point of Demarcation </li></ul><ul><ul><li>Reduces equipment cost </li></ul></ul><ul><ul><li>Establishes clear demarcation of responsibility </li></ul></ul><ul><li>Select Closes Broadband Connection to City </li></ul><ul><ul><li>Preferably existing fiber connection </li></ul></ul><ul><li>Establish Connectivity at Demarcation Point </li></ul><ul><ul><li>Each party is responsible for PEG signal and equipment on its side of demarcation point </li></ul></ul>
  12. 12. Funding Effects of SB5 on PEG Operations <ul><li>Restriction on Use of 1% PEG Fee </li></ul><ul><ul><li>PEG fee cannot be used for operational expenses associated with running PEG channels </li></ul></ul><ul><ul><li>Under SB5, 1% PEG fee “may be used by the municipalities as allowed by federal law” </li></ul></ul><ul><ul><li>Federal Cable Act restricts use of PEG fee to capital costs </li></ul></ul><ul><ul><li>PEG capital cost items could include: </li></ul></ul><ul><ul><ul><li>Construction of studio and PEG infrastructure </li></ul></ul></ul><ul><ul><ul><li>Equipment with useful life of more than one year </li></ul></ul></ul><ul><ul><ul><li>I-Net facilities used to facilitate PEG transmission </li></ul></ul></ul>
  13. 13. Potential Solutions to Address PEG Funding Problem <ul><li>Build mixed-use studio facility </li></ul><ul><ul><li>Shared resource for City and PEG users </li></ul></ul><ul><li>Community stakeholders can play key role </li></ul><ul><ul><li>University partnerships and community volunteers </li></ul></ul><ul><li>Solicit contributions from area businesses </li></ul><ul><ul><li>Think public television funding model </li></ul></ul><ul><li>City’s General Fund may provide some support </li></ul><ul><ul><li>In many cities, the GF supports PEG operations </li></ul></ul><ul><li>Leverage I-Net facilities </li></ul><ul><ul><li>Incorporate I-Net facilities with PEG operations </li></ul></ul>
  14. 14. Issues Not Addressed by SB5 <ul><li>Quality of Service Standards </li></ul><ul><ul><li>AT&T’s PEG solution has technical limitations </li></ul></ul><ul><li>Customer Complaints </li></ul><ul><ul><li>Under SB5, neither Texas PUC or municipalities have jurisdiction to address customer complaints </li></ul></ul><ul><ul><li>Texas Attorney General has jurisdiction over deceptive trade practices </li></ul></ul>
  15. 15. TeleCommunity Resource Center Comments – Gene Crick <ul><li>Concerns of Community Members & Media </li></ul><ul><ul><li>SB5 urged and lobbied by telephone companies </li></ul></ul><ul><ul><li>Law has resulted in removal of media assets of local communities </li></ul></ul><ul><ul><li>Undermines or eliminates community media resources </li></ul></ul><ul><ul><li>Removes key responsibilities such as universal access </li></ul></ul><ul><ul><li>Specifically allows “redlining” of media availability </li></ul></ul>
  16. 16. TeleCommunity Resource Center Comments – Gene Crick <ul><li>Texas Cable & Telecommunications Assoc. v. PUC </li></ul><ul><ul><li>Update of 5 th U.S. Circuit Court of Appeals Ruling (2/7/08): Appellant court found TCTA has standing to bring suit challenging the constitutionality of SB5 provision which prohibits incumbent cable companies from obtaining state certificates until local franchise agreements expire. Court remanded case back to federal district court. </li></ul></ul><ul><li>Alliance for Community Media v. FCC </li></ul><ul><ul><li>Appeal of FCC’s 1 st Report & Order on Video Franchising </li></ul></ul><ul><ul><li>Update of 6 th U.S. Circuit Court of Appeals Oral Argument (2/6/08): Judge panel focused its questions on the FCC’s jurisdiction over local franchising process showing little interest in actual regulations. If the Order survives legal challenge, cities will have to approve franchise agreements with new entrants within 60 days. Court decision is pending. </li></ul></ul>
  17. 17. Open Discussion <ul><li>Questions and comments. </li></ul>
  18. 18. The Debate Continues … Stay Tuned