Dear Clients and Friends:
 

            As you are undoubtedly aware, the Ohio Legislature has adopted Senate Bill 117 (“SB 117”) which takes effect on September 24, 2007 and establishes a comprehensive statewide regulatory scheme for the provision of cable/video service in Ohio (i.e., a state cable franchise). 

SB 117 affects any community that has a cable operator (including AT&T), regardless of whether the franchise agreement is in effect or has expired.  In fact, cable operators can even apply for a video service authorization from the Ohio Department of Commerce and "opt out" of their current agreements¹: (1) if there is more than one cable/video provider in the community; or (2) if the FCC has determined that there is “effective competition” between video providers in the community, including satellite (DBS) competition.  In communities where the cable operator is providing service under an expired franchise, the operator must apply for a state authorization within 90 days of the effective date of SB 117. 

What does SB 117 mean for your community?  It means that your community should consider certain actions to protect itself. We suggest local governments consider the following:

1)   Pass legislation doing the following:

(a) determining the percentage of gross revenues (up to 5%) to be charged as a video service provider fee (formerly known as a “franchise fee”);

(b) determining whether advertising revenues are to be included in the base of gross revenues for purposes of calculating the fee; and

(c) authorizing a local government official to deliver notice of these determinations to the service provider within 10 days of receiving notice of the provider’s intent to offer service in the community, as required by SB 117.

Without this legislation and timely notice, the state franchise will set the percentage of fees at zero (resulting in the loss of all franchise fees from that provider) and/or will exempt advertising revenues from the service provider fee (resulting in the loss of significant franchise fees from that provider).  Due to the short 10-day window and the drastic consequence for failure to act timely, it may be best to pass the ordinance before receiving a request by a service provider.

2)   Analyze the use of Public, Educational and Governmental (“PEG”) access channels in your community and prepare for the effects that SB 117 will have on them going forward.  Depending upon your situation and the number of channels that you had in effect on January 1, 2007, the right of local governments and schools to use that channel space, or the location of the channel in the operator's channel line-up, may be adversely affected. 

3)   If the cable operator has provided an institutional network (I-Net) for school and local government use, analyze the effects SB 117 may have on the use of such I-Net going forward, and prepare alternate communications strategies. 

4)  Review your community’s regulations with respect to use of the public rights-of-way (ROW) by video service providers and others.  New video service providers such as AT&T may propose to place various large and unsightly, above-ground facilities within your public ROW.  Without a local franchise agreement to address such concerns, it is important to consider whether an ordinance addressing use of the public ROW may be needed.

By taking action now, your community may position itself to minimize the adverse effects of S.B. 117 and to protect against unintended consequences of this dramatic change in the law.

For more information on these issues, please contact: