California Considering Major Changes to Regulating Video Services Providers

CPUC R.23-04-006
The California Public Utilities Commission (CPUC) recently launched a rulemaking (R.23-04-006) to implement SB 28 that authorized and directed the CPUC to adopt customer service requirements for state video franchise holders, adjudicate any customer complaints, and collect granular data about the actual locations served by state video franchise holders.

Before SB 28, California’s state video franchising law severely limited the applicable customer service requirements and penalties for franchise holders’ non-compliance, and put the burden of enforcement on local governments. In initial comments filed on June 1, the industry predictably claimed additional customer service requirements are unnecessary, given the competitive marketplace, and would give online video streaming service distributors a competitive advantage because the rules would not apply to them. Supporters of public, educational, and governmental (PEG) access channels advocated, among other things, for stronger customer service requirements that ensure consumers’ ability to access PEG programming and for the involvement of local entities in the CPUC’s complaint process. Reply comments are due on June 16.

AB 41 (Holden)
Meanwhile, in the California Legislature, House Democrats recently passed AB 41 on a party line vote, and the bill is currently being considered in the State Senate. California was one of the first states to adopt a state video franchising regime in 2006 on the promise that replacing the local franchising process would increase competition, lower prices, and expand consumer choices. As the bill finds and declares, however, the 2006 law has “fallen short of its intended outcomes” as evidenced by large numbers of unserved households in existing franchised service areas, exorbitant prices, the lack of competitive alternatives for residential broadband service, and evidence of discrimination against low-income communities, among other things.

AB 41 would advance a number of major reforms to the state video franchising law to address these concerns, including:

• Allow the CPUC to exercise the full authority, jurisdiction, and powers authorized to be exercised by a franchising authority pursuant to federal cable law.
• Replace the existing streamlined (and essentially automatic) state video franchise renewal process with a substantive process under an expanded timeline in which the CPUC must hold public hearings on each renewal application to identify unserved households in the service area, proposed upgrades to the cable system, and service quality and reliability information.
• Mandate that the CPUC require video service providers who are granted a renewal of their state video franchises to make video service available: to all residences in their service area where there is a minimum density of at least 25 residences per linear mile of cable within three years of renewal, and to all residences in their service area within five years of renewal. Exceptions are limited to factors beyond the franchise holder’s control and instances where the CPUC determines, in response to a franchise holder’s request, that the requirement would be unreasonable for a portion of its service area due to the limited number of residences that would be served.
• Modify the existing streamlined application process for a new state video franchise to allow for more review time; allow the CPUC to impose terms in the state franchise, including required system upgrades; and require a state franchise applicant to provide a description of the households that are unserved in its proposed service area.
• Establish a policy that subscribers and potential subscribers of a state franchise holder should benefit from “equal access” to services in the franchise service area; mandate that low-income households in the service territory have access to the holder’s services in set time periods; and expand the prohibition against discrimination to include discrimination or denial of equal access for any reason, rather than only because of the income of the residents in the local area where the group resides.
• Increase the maximum fine that could be assessed for an equal access requirement violation, as well as for a material breach of specified video service customer service and consumer protection standards. 

If your community is interested in supporting these reforms, consider participating in the CPUC proceeding and contacting your state senator. For additional assistance, please contact  the author or your BBK attorney.

Disclaimer: BBK legal alerts are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information in this communiqué.