One of the most expensive lobbying efforts in Tennessee history resulted in passage of the Competitive Cable and Video Services Act, T.C.A. § 7-59-301 which took effect on July 1, 2008. Following is a brief summary of the salient points of the legislation with which city officials and employees should be familiar.
Current franchise holders — The current holder of a city franchise may apply for a state franchise, whether or not the local franchise agreement has expired.
Current franchise agreements — The terms of a current local franchise agreement may be adopted by any other cable company that wants to provide services in the city.
Notice — The applicant for a state franchise is required to provide notice of filing an application to the mayor of each city in the proposed service area.
City action required to preserve PEG channels — After receiving notice that an application has been filed, a city must notify the state of any public, educational, and government access channels provided by the incumbent cable company.
City action required to preserve free cable service — If an incumbent cable provider offers free cable service to schools or government offices, the city must provide a list of locations at which free service is provided to the incumbent cable company. If the cable company applies for a state franchise, any cable service provided free must continue until the termination date of the local agreement.
This legislation is part of the national trend to diminish or eliminate the franchising authority of cities by granting cable companies the right to provide services without negotiating agreements with local governments. In recent years, several cable companies operating in Tennessee permitted local franchise agreements to expire and refused to negotiate contracts with cities in anticipation that legislation would be adopted that would give cable companies great advantages in negotiating new agreements. This tactic has paid off, as this law essentially grants a statewide franchise to these companies. Current franchise holders may now terminate their local agreements and seek a state franchise. A city that has previously negotiated a franchise agreement with one cable provider may be forced to permit other cable companies to serve its area under the same terms and conditions of the existing agreement.
The Tennessee law is actually more favorable to cities than competitive cable laws passed in other states, thanks in large part to the efforts of the Tennessee Municipal League. Tennessee cities may receive public access channels through the state franchise, and may receive financial support for public access channels. Unlike similar legislation in other states, the Tennessee law requires that franchise fees be paid directly to cities rather than routing such funds through a state department. The 5 percent franchise fee cities will receive is much higher than fees set by legislation in other states, and it is higher than the fees most cities received under negotiated franchise agreements. Considering the numerous laws passed as a result of the nationwide effort by the telecommunication industry to eliminate local control over cable services, Tennessee cities actually fared better than their counterparts in other states.