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County could permit new cable tv provider |
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Written by Andrew Powell
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Friday, 16 October 2009 |
A majority of the Fiscal Court voted Tuesday to open the local cable television market up to more competition. In a 4-1 vote, Highland Media Corporation was approved for a local cable franchise, despite objection from Access Cable, a provider currently serving the county.
A majority of the Fiscal Court voted Tuesday to open the local cable television market up to more competition. In a 4-1 vote, Highland Media Corporation was approved for a local cable franchise, despite objection from Access Cable, a provider currently serving the county.
Highland, the local telephone provider, approached county officials recently in regard to expanding services. Highland, which also provides internet access locally, provides all three services in their Tennessee service area, and wishes to expand into the local cable market. Company officials said Tuesday they have acquired $48 million in federal funding to build a fiber-optic cable network in the local area and upgrade or install services.
“This is an exciting new initiative with Highland wishing to launch cable and internet services in the area equal to the most advanced services available,” said Dan Coen, Highland Communications Legal Representative. “Our intent is not to replace existing cable operator, but to offer an alternative and offer residents a choice.”
Roy Baker, owner of Access Cable, challenged the move of Highland and court officials questioning how a company “can use public money to compete with private enterprise.” Baker has operated the local cable company since 2005 and has made extensive upgrades to the network, including fiber cables, digital service and high speed internet.
“McCreary County is the most important system I have,” Baker told court members. “I have poured more money and effort into that system than any other one I operate.”
Baker signed a 10-year agreement with the county prior to providing the service, but nothing of that agreement prevents the county from allowing a competing provider to come to the area. Federal law prevents a provider from having an exclusive right to a service area, but leaves authority to grant rights to a provider with local government.
Baker told court member he made a commitment to improve the service, and asked them to stand by their 10-year commitment, which would allow him to recoup some of his investment. Baker added his complete system upgrade is around 60 percent complete with work taking place daily to expand services. He also touted his internet service as being superior and cheaper than that offered by Highland; service Highland’s officials say would be bettered with the system upgrade and implementation of cable services.
Highland officials, in essence, argued the county had no choice but to allow them a franchise to operate a cable system in the county. If their franchise was not granted, the county essentially was giving Baker exclusive operating rights, something prohibited by law.
“The decision should not be made as to whose service is better,” Coen said. “That is up to the resident and customers to decide that. Also, federal law prohibits an exclusive franchise and the county cannot refuse a reasonable franchise.”
Coen added that typically, when competition is entered in an area, rates drop.
Michele Wilson, County Attorney, said the county could do as it pleased. Nothing in federal law predicated they had to grant a franchise to operate to anyone.
Coen countered by stating that typically, including this situation, when competition is entered in an area, rates drop.
“It is supposed to work by offering a level playing field for residents by offering a choice,” Coen added.
Baker speculated Highland would enter the service area, compete directly for his base customers by offering much lower rates and once he was driven out of business, raise rates dramatically. Baker alluded that instead of competing with him, Highland should purchase his cable system.
“I have been in this business for 30 years and two cable operations in a small area like this won’t work financially,” Baker said. “If the county and the people want Highland as their provider then I will sell it to them. That is how it should work.”
Baker said the competition between the two parties would not be on a level playing field.
“We will not disparage Access Cable,” Coen said. “That is not how we do business or ever will do business.”
On a motion of Magistrate Roger Phillips and a second from Raplh Murphy, the court, less Judge-Executive Blaine Phillips, voted to take the steps to grant Highland a franchise. Judge Phillips, who said he voted against the measure because he wanted to honor the commitment made to Baker, said the procedure to grant the franchise “got one step ahead” and would be addressed again, most likely during the November court meeting.
If the franchise is implemented, Highland officials gave no indication as to how long it would take to “build” the new system and offer service. Their service area, according to documents provided to the court would extend generally three miles north and south of their Whitley City office along U.S. 27, KY 1651 from Pine Knot to Marshes Siding, three miles down Sandhill Road and KY 92 West and Polar Springs Road North and East Appletree Road.
Baker said his system extends beyond those areas with 200 miles of line in front of 4,000 local homes. Baker added his complete system upgrade could be completed within the next 6 months.
Both companies also have to compete with satellite television providers, services not regulated by the local government. Prior to final approval of the contract with Highland additional meetings must be held and the ordinance regulating the franchise agreement published. The Fiscal Court will next meet on Tuesday, November 9 at 9 a.m.
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