Minneapolis contends with differing laws and equity issues as it moves to add cable competition

MinnPost photo by Peter Callaghan
State law requires that all providers — both the so-called incumbents like Comcast and new entries like CenturyLink — reach the entire city within five years.

Pick your plaintiff.

That might be the choice for the city of Minneapolis as its considers an application to bring the first competition to the cable market. CenturyLink has applied to compete with Comcast for cable customers but its application might force the city to choose between following state law or following federal law.

The issue relates to how quickly CenturyLink would be required to offer its cable service citywide — known in regulator language as “build out.” State law requires that all providers — both the so-called incumbents like Comcast and new entries like CenturyLink — reach the entire city within five years. But federal law and rules consider such requirements for new entries to be anti-competitive. That is, building citywide before it has enough revenue from customers keeps rivals out of markets. Federal law favors policies that encourage new competitors that give customers choices of providers.

Monday, the City Council Ways and Means Committee forwarded to the full council a direction to city staff to begin negotiating a franchise agreement with CenturyLink. But the staff must wade into this seeming conflict between state law and federal law.

“Does the city [err] on the side of caution and require a five-year build-out commitment from CenturyLink and risk thwarting a competing cable operator that will bring benefits to consumers and jobs and investment to the city?” a staff report to the council asked. “Or does the city [err] on the side of competition?

“Litigation may be inevitable either way,” the report concludes.

Staff, along with a private attorney hired for his expertise on cable law, think there might be a way to hammer out a deal with CenturyLInk that meets both federal and state laws, at least in spirit. Federal rules are pretty clear that rigid five-year build out demands would likely be preempted by federal law. “Due to the risk associated with entering the video market, forcing new entrants to agree up front to build out an entire franchise area too quickly may be tantamount to forcing them out of — or precluding their entry into — the business,” the FCC wrote in 2007 order.

But the FCC does allow local governments to create alternative means for pushing new entrants to bring the benefits of cable competition — specifically better service and lower prices — to everyone. CenturyLink, for example, proposed a method that would require it to expand beyond its initial plan of covering 30 percent of the city once it attracts a certain percentage of customers. That is one of the methods the FCC has said would be reasonable.

Build out is not just a legal issue — one, for example, that Comcast could use to try to block any new franchise agreement with CenturyLink. For some council members it is also an issue of equity. If CenturyLink isn’t required to offer its service citywide, it could avoid low-income areas so as to maximize revenue from wealthier neighborhoods. Council Member Elizabeth Glidden said Monday she would not vote for a franchise agreement with CenturyLink without specific benchmarks for making sure all neighborhoods benefit from competition. These concerns are exacerbated by CenturyLink’s refusal to say exactly where it would build first, citing competitive pressure for the secrecy. But how, several council members asked, can they judge the equity of the new service without knowing where and when it will be offered?

CenturyLink’s lawyers are confident that federal courts will void any attempt to enforce the five-year build out provision of state law. They are so confident that the company’s application offers to cover all of the city’s legal costs should Comcast or any other entity take the city to court.

If the full council gives staff the go-ahead to negotiate with CenturyLink, it would still retain control of the issue. Any franchise agreement would come back to the council for public comment and council approval or rejection.

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Comments (10)

  1. Submitted by Gerald Abrahamson on 03/17/2015 - 10:04 am.

    Not even a *hint* mentioning US Internet

    which has been laying fiber Internet access from Nicollet–on both sides of Lake St–to Lake Calhoun.

  2. Submitted by David Hanegraaf on 03/17/2015 - 11:52 am.

    Anything but Comcast

    let’s have some competition. As anyone who has it knows, Comcast’s service is inconsistent and spotty at best. When you to report a service problem you can expect to be on the phone at least 1-2 hours and referred to at least 4-5 people who know nothing. The advertised X-1Platform has so many bugs it’s maddening. Anything is better than Comcast.

  3. Submitted by Jonathan Ditlevson on 03/17/2015 - 12:09 pm.

    US Internet isn’t a cable operator

    so this law wouldn’t apply to them. However I’m guessing that in this day in age most people would agree that universal internet access is a better goal than universal cable access, so maybe the law needs updating.

  4. Submitted by Matthew Steele on 03/17/2015 - 12:46 pm.

    The concept of a “cable operator” is antiquated

    We have IP service providers. Cable, DSL (all varieties), fiber, wifi, etc. The idea that a distribution technology equates to a franchise-regulated service (POTS on twisted copper from CenturyLink, CATV modulated on coax from Comcast, etc) is antiquated thinking.

    IP service providers may carry legacy products (e.g. CenturyLink analog phone lines) or they may carry new services (e.g. Comcast voip phone lines). But why should this legacy arrangement dictate what services are allowed?

    If anything, the city should be using its franchise authority to ensure third party service providers are given equal footing to residential internet drops across the city, whether voice over IP like Vonage, or live television over IP like Sling TV.

  5. Submitted by Ray Schoch on 03/17/2015 - 01:38 pm.

    Technology gap

    Matt Steele’s comment is substantially beyond my level of technological grasp – which is itself part of a set of problems that any new provider will have to solve.

    I’d love to see Comcast have some competition, mostly from the pricing standpoint. Comcast has one of the worst telephone interfaces on the planet – my experience has been that David Hanegraff is not exaggerating by suggesting 1 to 2-hour phone calls involving several employees who seem to know nothing – so it’s far less hassle for me to simply drive to their Brooklyn Park service center in person to get issues solved.

    Comcast’s city office on Broadway is closer to my house, but feels like going to the DMV office. Readers with time on their hands should visit both the Brooklyn Park and Minneapolis service centers for a very interesting comparison of ambiance and atmosphere.

  6. Submitted by Karen Sandness on 03/17/2015 - 03:11 pm.

    I’m another one who gave up cable TV, even though

    Comcast doesn’t give me a price break for going without TV.

    In my part of Minneapolis, a tabletop antenna brings in beautiful HD without the $10-per-month converter box that Comcast requires unless you want a signal that looks like an impressionist painting. That is sufficient for watching all the PBS channels and a few others that I occasionally tune into.

    For the rest, the combination of Netflix, Hulu Plus, Amazon Prime, Acorn TV, and MHz Worldview brings in more high-quality content than I have time to watch. There’s nothing that I need to see immediately, so if I have to wait a few weeks or a few months to see the latest program or movie, it’s no problem.

    We do need more competition among Internet service providers, though. Comcast’s pricing makes no sense. I dropped one of their services and never signed up for their phone service. I shouldn’t be paying more than I paid for Internet plus basic-basic cable. My only consolation is that I’m not paying for all the sports channels, shopping channels, fundamentalist channels, or “reality” show channels that infest the cable line-up these days.

  7. Submitted by Connie Sullivan on 03/17/2015 - 04:01 pm.

    First of all, CenturyLink is not offering TV via cable. It is proposing to offer fiber-optic cable-to-the-house internet at up to 1 gigabit speed, which enables streaming TV programming via internet connection. That’s why Comcast is turning blue about CenturyLink.

    U S Internet offers fiber optic cable internet and TV only to the wealthy parts of Minneapolis. Those of you who live in South Minneapolis, especially Southwest, have now and have had better service than U S Internet has ever dreamt of offering to the rest of us. To accuse CenturyLink of some kind of inequality of service offerings, in the face of the abuses by U S Internet in that regard, is the grossest of hypocrisies.

    CenturyLink plans to offer fiber optic internet to the Como neighborhood, in Southeast Minneapolis. At least they have one or more new fiber optic cable node boxes in our neighborhood. Look us up: we have lots of U of M students (and other college-age people) and they don’t work full-time. Low salaries. Como thus counts as a “poor” neighborhood. But CenturyLink knows that Como has a web-connected population if ever there was one! They want this population, and apparently we’ll be part of the 30% that gets their fiber-optic internet service.

    Our Council Members can ask CenturyLink to see if their ward is on their build-out maps. Or, just go around and look to see where CenturyLink has already been at work installing the fiber optic cables; it’s not just their offer to pay the city’s legal costs that indicates their confidence that they are a better service than Comcast, hands down, and that the law is on their side. They’re out here, on the ground, putting it in.

    Council should keep its eyes on the ball: competition for a failing cable-
    TV model badly executed by Comcast.

    • Submitted by Joe Musich on 03/17/2015 - 11:25 pm.

      I would….

      agree completely. Let’s get something going before Comcast goes away and the other cable company whoever they are probably Comcast in disguise enters the picture. USI would answer emails from me about their future plans. My neighbor across the alley is paying 30 % less for a faster feed from USI but our ave is undone so Glidden has a point. Questions should be asked, plans should be public, etc. But amend the commitments so follow through can happen.

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