International Municipal Lawyers Association - Local Government Blog

Federal Stimulus – The Time is NOW for Broadband.

March 5, 2009
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Posted By: Nick Miller, Partner, Miller & Van Eaton 

The federal stimulus bill contains $7.2B for broadband projects to “unserved” and “underserved” populations.

You should push your IT and City management to apply for this money.  This race will go to the swift.  All local governments are defined as eligible entities for grants, either directly in combination with others in a joint application.

The money is split $4.7B in grants by the Department of Commerce, National Telecommunications and Information Administration (NTIA), and $2.5 B in grants, loans and loan guarantees by Department of Agriculture, Rural Utility Service (RUS). 

The statutory mandates are different for the two agencies, with RUS money limited to projects that serve at least 75% “rural” areas, and NTIA grants intended to address “unserved” and “underserved” areas which don’t overlap with areas receiving RUS funds.

The NTIA money specifically is available to

1.      Provide broadband education, awareness, training, access, equipment, “support” to schools and libraries, healthcare providers or “other community support organizations”; or

2.      Facilitate greater use of broadband service by low-income. unemployed, aged, or “otherwise vulnerable populations; or

3.      Improve access to, and use of broadband service by public safety agencies; or

4.      Stimulate demand for broadband, economic growth and job creation

NTIA (not RUS) must award all of its money by September 30, 2010.  And the NTIA projects must be completed within 2 years of grant award.

NTIA and RUS both anticipate working with the States to identify priority of the competing proposals.

On March 10, at 10 AM EST; Obama Administration officials plan a public meeting to discuss details and plans for seeking grant and loan proposals from eligible entities.  The meeting will be streamed live over the internet.

More information is available at

http://www.pti.org/index.php/ptiee1/more/451/

If you download that presentation, you will see a full page of useful links for more information.

So get your folks going now, coordinate with your governor’s office, and be the first in line.


Another Cable TV Bankruptcy?

January 22, 2009
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Posted By: Nick Miller, Partner, Miller & Van Eaton 

Change may be coming to your community. And it won’t be from Washington DC. Instead, it will be from your friendly local cable operator—if the operator is either Charter or Broadstripe.

In a reprise of the Adelphia bankruptcy filed in 2002, two major national cable operators may be headed toward Chapter 11 bankruptcy court protection from creditors. Broadstripe and its affiliates filed for bankruptcy protection on January 2, 2009 in the United States Bankruptcy Court for the District of Delaware, (Case No. 09-10006 (CSS)). Last week, Charter reported it missed an interest payment and had hired counsel to try to renegotiate its debt, signaling that a bankruptcy filing may follow before the end of this week January 23, 2009.

If your city has granted a franchise to either of these cable operators, pay attention. And share this warning with colleagues in neighboring communities that have either Charter or Broadstripe as their cable operator.

The treatment of cable franchises in bankruptcy is neither simple nor straightforward—particularly if your community benefits from a franchise that contains significant in-kind or financial benefits. Most attorneys think the only issue presented by a bankruptcy is whether amounts owed have been paid—classic creditors’ claims. This is an important issue. But there is another and more important issue created by the unique legal character of a cable franchise agreement.

A bankrupt debtor may assign executory contracts of a bankrupt estate even if the contract contains an anti-assignment clause and the counterparty objects to the assignment. See, 11 U.S.C. § 365(f). But this authority is not available when “applicable law” excuses the counterparty from accepting performance from the assignee. You should not assume a bankrupt debtor has a right to assign your cable franchise without your City’s prior, independent consent.

The Adelphia bankruptcy court recognized that a municipal ordinance could be “applicable law”. Further, it drew a distinction between an anti-assignment clause in a franchise agreement, and one found independently in an ordinance of general applicability and effectuated legitimate regulatory concerns for the benefit of the public. The court concluded that where the anti-assignment clause was contained in an ordinance of general applicability, it would not compel Adelphia communities to recognize the assignment of the Adelphia franchises to Comcast or Time Warner. In re Adelphia Communications Corp., 359 B.R. 65 (Bkrtcy.S.D.N.Y., 2007)

This important principle preserves your community’s right to take an independent look at the proposed restructuring or transfer of the franchise to a new operator.

A different problem may confront your community if your state has recently adopted one of the state-wide franchise laws pushed by at&t over the last few years. There may be no transfer of a franchise involved if the purchaser of the assets in bankruptcy already holds a state-wide franchise in its own right. In that case, your strategy for protecting your community may devolve to assert liens have attached to the existing facilities in the right-of-way, or other legal arguments tied to your right-of-way property interest.

Obviously your community’s specific rights will vary depending on the language of your franchise and local ordinances. But stay alert, and plan both to file a creditor’s claim to preserve your financial claims and to file an objection to preserve your authority to reject a franchise transfer if you are not satisfied by the promises of the new operator.


Obama’s Hurricane Katrina?

January 7, 2009
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Posted by: Nicholas P. Miller, Partner, Miller & Van Eaton, PLLC
 
Watch for February 17, 2009.  It will be a big day in your community, and for the entire nation.

You may have heard.  On February 17, 2009, ALL of the nation’s analog television broadcast stations go black simultaneously.[1] [DOC-280586A1.doc ]

Euphemistically called the “DTV Conversion”, 2/17/09 is D-Day for an estimated 15 to 20 million households which receive their TV “over the air”.  These tend to be the most vulnerable and isolated citizens in your community: those who are elderly, poor and foreign language dependent. 

Characteristic of so much else in the last 8 years, the Bush Administration has done it again—left a big pile of trouble for the Obama Administration to clean up.  But there will not be enough time for the Obama folks to have much impact.

In the words of FCC Commissioner Jonathan Adelstein,  “In your community, a lot of people are going to need help, but it’s not yet clear where that help is going to come from….  The DTV transition isn’t ready for prime time.” [Click Here]

Like a hurricane, this event was predictable for the last 20 years, as soon as the Federal Communications Commission and Congress determined that all television broadcasters should convert from analog to digital format signals.  [FCC-08-56A1.doc]  And the 85% of households “on high ground” should be OK, if still disrupted.  Their major televisions are hooked to a cable television system or to a satellite television network and will not be directly affected.  However, even in these households, multiple TVs may not be connected to the cable television system and they too will “go dark” if they can’t receive digital TV signals.

The remaining 15% of ALL households which do not subscribe to any cable television or satellite TV are going to have problems.  Only a small percentage of these over-the-air households own a digital television.  These households are least likely to be aware of the coming change, to have the technical savvy to equip their old analog TVs to receive the new digital signals[2], or to have the financial capability to buy the digital converter or to improve their antenna.

A prior “early roll-out” of the DTV conversion in Wilmington NC indicates the scope of the problem your community will experience.  You should expect your share of 2.2 million households nationwide to seek help in the first days after the national transition deadline.  And that’s the optimistic scenario.  Again, in Adelstein’s words, “[In Wilmington] the problems led viewers to need either phone or direct technical assistance, which could take upwards of 40 minutes on the phone for each household.” 

You need to alert your City leadership and to get local DTV assistance volunteers ready to go.  A reasonable set of steps for your community:

1.            Encourage tech savvy individuals to assist family members, friends, and neighbors with converter box installation. 

2.            Create a local phone bank with sufficient capacity to handle your share of the predicted 2 million phone calls in the days immediately following February 17. 

3.            Send speakers to Churches, community groups, and others serving the foreign-language and elderly communities.

4.            Ask your local telephone company, cable and satellite employees to get involved on a local level with local phone banks and help people to install converter boxes and new antennas in homes. 

Good luck to us all, and especially to President Obama on February 17. 

[1] Some temporary emergency exceptions are possible in the so-called “Analog Nightlight” legislation.  See Short-term Analog Flash and Emergency Readiness Act (“Analog Nightlight Act”), Pub. L. No. 110-459, 122 Stat. 5121 (2008).  The bill, S. 3663, was signed into law on December 23, 2008

[2] Three things are needed to receive the new digital TV signals:

1.        A NEW converter box that allows an analog TV to receive a digital signal;

2.        A strong digital signal from the local broadcast tower;

3.        Technical ability to self-install the converter box and make any needed antenna improvements.

 



DIGITAL TRANSITION’S LEGAL HEADACHES FOR LOCAL GOVERNMENTS

November 26, 2008
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Posted By: Joesph Van Eaton, Partner, Miller & Van Eaton, PLLC

After February 17, 2009, full-power television broadcast stations must transmit only digital signals and may no longer transmit analog signals. 47 U.S.C. §§ 309(j)(14) and 337(e). Cable operators, however, are not bound by this statutory deadline, and many plan to convert the broadcast signals back to analog and deliver them to subscribers. This has several advantages for the cable industry: it means that cable operators can advise consumers that, as long as they subscriber to cable, they can receive service without being required to obtain a digital converter box. Several are doing just that.

However, many cable operators face another problem: they do not have enough capacity to respond to anticipated customer demand for Internet, phone service and video services. So at the same time some operators are trying to maintain a market advantage by delivering some channels in an analog format, they are trying to free up bandwidth by converting channels to a digital format (analog channels require more bandwidth to deliver).

While localities may find that many consumers are unprepared for the broadcast digital transition, the real legal headaches for local governments are arising as cable operators go through their own, partial digital conversion (caution: in some places all channels are being provided in a digital format, or all subscribers already are required to have converters. In those places, the changes described below have little effect):

— Some operators are converting public, educational and government (“PEG”) channels to a digital format. This means that the channels cannot be received without a converter box, or without a digital TV. A box is required for every set a subscriber wishes to use to view the channels. Subscribers are already paying for the PEG channels through rates, and often pay a fee to support the PEG channels. The result of the conversion: basic local information may be less accessible, or cost more to receive.

–Some operators are converting some commercial channels on the lowest tiers to a digital format. In communities that can still regulate cable rates this is significant, because the rate an operator is permitted to charge for a tier of service depends on the number of channels being delivered to subscribers. The legal question: should channels be counted as “delivered” if a subscriber must obtain special equipment to view them?

— There are reports that some channels are being converted to a digital format without any notice being given to subscribers. Those channels effectively “disappear” on analog sets. What rights does a consumer have to notice before that happens? Note that from a marketing standpoint, if an operator had to clearly notify subscribers as to plans for digitizing channels, some operators might lose marketing points that they are trying to capitalize upon.

The changes have already resulted in legal actions – with good results for many localities. A district court in Michigan issued a temporary restraining order and preliminary injunction that stopped Comcast from changing PEG channels to a digital format. The court recently denied in large part a Comcast motion to dismiss the complaint that had led to the injunction. In that same order, the court indicated that it would refer certain questions to the FCC for determination – including questions as to whether conversion of the PEG channels to a digital format violates federal laws and regulations. That may occur soon. The FCC has already issued one decision imposing penalties on Cox for delivering some channels in a switched digital video format. In re Cox Communications, Inc., Fairfax County, Virginia Cable System, DA 08-2299, EB-07-SE-351 (October 15, 2008); see also Public, Educational, and Governmental (PEG) Access to Cable Television Before the House Subcomm. on Financial Services and General Government, September 17, 2008 (statement of Monica Shah Desai, Chief of the Media Bureau Federal Communications Commission).

The efforts by incumbent operators like Comcast to shift PEG channels to a digital format, while delivering other channels in an analog format is of great concern to many in the municipal and PEG community. However, as troubling, if not more so, is the approach to PEG by AT&T on its U-Verse system. AT&T delivers video using Internet Protocol. Despite the difference in the delivery technology, most commercial channels are delivered in a manner which allows them to be selected and viewed in much the same way that commercial channels are viewed on traditional cable systems.

PEG access programming is not delivered via a channel. It is delivered via what AT&T calls its “PEG application.” When one tunes a converter to “99,” the PEG application starts. After a significant delay, the viewer is presented with a menu that lists all PEG channels for every community within the designated market area served by its system. In some areas, the DMA is large enough that the list could include dozens of channels. The viewer then must scroll through the list, and select a feed: what the viewer then receives is a streaming video feed that many claim is inferior in quality and functionality to regular commercial video channels carried on the system. Among other things, the AT&T PEG application does not support closed captioning services, or other basic functions that are provided for commercial channels AT&T offers for its profit. The California Public Utility Commission’s Division of Ratepayer Advocates issued a consumer advisory and posted a video demonstration of the AT&T system, links to which can be found here.

What is already clear is that local governments will have a significant interest in ensuring that these proceedings result in rules that protect local interests and consumers. The issues surrounding the PEG channel changes and the digital conversion on cable systems will be played out in the courts and before the FCC – and likely very soon. It may require concerted, joint actions by localities to prevail.


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This blog is made possible by the International Municipal Lawyers Association (IMLA), but may include guest bloggers (who are attorneys with experience in local government matters) who might or might not work for IMLA. Their views (and those expressed on this site) do not necessarily express the views of IMLA.

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