AGENDA #7
TO: Roger L. Stancil, Town Manager
FROM: Catherine Lazorko, Town Information Officer
SUBJECT: Update on Cable Legislation
DATE: September 27, 2006
The NC General Assembly passed the Video Service Competition Act (HB 2047) in July 2006 establishing a statewide cable and video franchising process. This takes effect on January 1, 2007. The NC Secretary of State is designated as the exclusive statewide video service franchising authority. The Consumer Protection Division of the NC Office of the Attorney General will become the agency responsible for handling consumer complaints.
We are providing a brief report on these legislative changes with attached documents from the League of Municipalities: Southern Cities Article (Attachment 1) and Legislative Bulletin (Attachment 2).
The Video Service Competition Act will allow telephone companies to enter the video programming market by filing for a state franchise. Service would have to begin within 120 days after filing the notice of service. Current local cable franchise holders can opt out of their franchises as soon as a competitor offers service to one household within the local franchise area. The local franchise holder then can apply to receive a state franchise. If the local franchise holder does not opt out, the local cable franchise would continue, but it may not be renewed at the end of its current term. The Town of Chapel Hill currently is in the 10th year of a 20-year franchise with Time Warner Cable.
Under the state franchising system, municipalities retain the right to control public rights-of-way. They will still receive revenue, although in the form of sales tax. Under the state provisions of the law, local governments will receive monies approximately equivalent to what is now received from local franchise fees. By March 15, 2007, the Town must certify to the Secretary of State the amount of cable franchise tax and subscriber fee revenue that it imposed during the first six months of the 2006-07 fiscal year.
We will continue to monitor developments and review the implications of this new legislation, along with the Triangle J Council of Governments, which is also conducting a review of rights-of-way issues and is expected to produce a report shortly.