Response to Possible Termination of Municipal Cable FranchiseTHE CITY OF Dubuque
~T "~R ~ All-America City
~J 1J 1 I
Masterpiece on the Mississippi
2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Response to Possible Termination of Municipal Cable Franchise
DATE: December 3, 2009
Mediacom has notified the City that they have converted their municipal cable franchise
agreement with the City of Dubuque to a State certificate of franchise authority. With
this action, the City is vulnerable to losing many of the requirements of the City
franchise that protect consumers and provide a certain level of service and benefit to
Dubuque residents.
Assistant City Attorney Tim O'Brien, Public Information Officer Randy Gehl and Cable
TV Coordinator Craig Nowack will make a presentation to the City Council on the
current situation and identified options for the Mayor and City Council to give direction
on a course of action.
Mic ael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Craig Nowack, Cable TV Coordinator
Randy Gehl, Public Information Officer
THE CITY OF
D B E MEMORANDUM
Masterpiece on the Mississippi
TO: Michael C. Van Milligen, City Manager
FROM: Craig Nowack, Cable TV Coordinator
DATE: Dec. 3, 2009
RE: Response to Possible Termination of Municipal Cable Franchise
INTRODUCTION
The purpose of this memorandum is offer options for the City to pursue in response to
Mediacom's asserted conversion of their municipal cable franchise agreement with the City to
a state certificate of franchise authority. This action, allowed by State legislation enacted in
2007, may have terminated Dubuque's 15-year franchise agreement with Mediacom, adopted
in 2005.
BACKGROUND
Iowa Senate File (SF) 554 was signed into law on May 29, 2007, despite opposition from the
Iowa League of Cities, the City of Dubuque, and other Iowa municipalities. It was adopted
into Iowa Code as "Chapter 477A Cable or Video Service Franchises." The stated purpose of
the legislation was to "encourage competition in the provision of cable service and video
service in this state, to encourage new providers of cable service and video service, and to
provide consumers additional choices in cable service and video service." Under the guise of
fostering competition in the video services industry, Iowa Code Chapter 477A employs a "one
size fits all" philosophy in allowing a video provider to obtain astate-issued franchise in lieu of
negotiating with individual municipalities.
While the City supports the intent of the legislation (to provide additional choices for cable
and video services in our community), the City of Dubuque opposed and lobbied against S.F.
554 and offered amendment language to clarify and strengthen the bill when it was in the
Iowa legislature. In a worst-case scenario, the legislation allows an incumbent provider to, in
effect, terminate an existing franchise agreement with a municipality when a competitor
merely applies for a state franchise. No commitment to a timeline for competitive service or
showing of technical /financial ability is required. That worst-case scenario may have now
occurred in Dubuque.
On Monday, November 23, 2009, the City of Dubuque received notice from Mediacom that
the cable company had converted its municipal cable franchise agreement with the City to a
state-issued certificate of franchise authority. Mediacom did this under Section 199 IAC 44.5,
which states that an incumbent video provider may apply for a state certificate of franchise
authority in a municipality when a competitive video provider applies for a certificate of
franchise authority in that municipality. In April 2009, Phalanx Technology Holdings, LLC
d/b/a as fyreSTORM Fiber & Cable was granted a state certificate of franchise authority. Its
application included a list of 298 Iowa communities, among them Dubuque, where it someday
hopes to offer video service. When the IUB approved fyreSTORM's application, with no
defined timeline or proposed level or area of service, it potentially enabled Mediacom to
convert its franchise agreement with Dubuque to a state franchise.
On Monday, November 30, 2009, Public Information Officer Randy Gehl, Assistant City
Attorney Tim O'Brien, and I met with two Mediacom representatives: Vice President of Public
Affairs, North Central Region, Mike Kohler and local Area Manager Kathy McMullen.
Mediacom requested this meeting to discuss a possible community partnership agreement in
light of their state franchise. During the course of the meeting we discussed what provisions
of our municipal franchise might stay in effect under the Mediacom offer now that the the
company claims the municipal franchise is no longer valid. For the immediate future, Mr.
Kohler verbally agreed that Mediacom would not change current practices/policies without
giving the City 30 days notice.
Dubuque's 15-year municipal franchise with Mediacom was approved in May 2005, following
two years of negotiations. Compared to a state franchise, it is remarkably detailed in
addressing the operation of Dubuque's cable system. The Dubuque franchise also contains
numerous provisions not found in the Iowa law, such as a 10 percent senior citizen discount,
one free cable drop to local schools and municipal buildings, the requirement that cable
service must be available to all city residents, reasonable provisions to extend service to
newly annexed areas, a broader definition of gross revenues, requirements for Mediacom to
operate two of the public access channels, annual requirements to upgrade the cable system,
and specific penalties and remedies for franchise violations.
Cable television franchise fees are compensation for use of public right-of-way and, due to
federal regulations, only apply to revenues from video service, not Internet or phone service.
From a budgetary perspective, the impact of the state franchise will most likely mean less
revenue from franchise fees. In Fiscal Year (FY) 2008, the City received $641,711 in
franchise fees from Mediacom. In FY 2009, the amount was $679,800.
DISCUSSION
Because of the state franchise legislation, Dubuque's municipal franchise agreement is
threatened, the level of supervision under the state franchise is minimal, and Dubuque
residents, as yet, have no competitive options for cable service.
When notified by Mediacom of the franchise conversion, Assistant City Attorney Tim O'Brien,
Public Information Officer Randy Gehl and I contacted the law firm of Miller & Van Eaton, the
City's telecommunications legal consultant. Based on our discussions, we firmly believe
Mediacom's action is contrary to the intent of the state franchise legislation. The legislation is
flawed and Dubuque's experience warrants amendments to the legislation. Furthermore,
because fyreSTORM has NOT notified the City of Dubuque of its intentions to offer service as
required by the state franchise law, we believe the Iowa Utility Board's granting of the state
franchise certificate to fyreSTORM was improper and therefore Mediacom's conversion of its
Dubuque municipal franchise may not be valid.
The City has several options in responding to the asserted termination of our franchise:
Negotiate an Enforceable Community Partnership Agreement with Mediacom
Mediacom has expressed willingness to craft a "community partnership agreement"
with the City of Dubuque that could preserve some of the provisions of our municipal
franchise not required by the state franchise. However, Assistant City Attorney Tim
O'Brien informs us that such an agreement may not be enforceable. He is researching
and talking with our Washington attorneys about ways to ensure that it could be made
enforceable. The City could continue to dialogue with Mediacom and explore such an
agreement.
2. Recommend Amendments to the State Code
The root source of the problem is a flawed state law that has produced the
consequences we currently face. It is not clear if amending the law would be
retroactive to our situation and our goal to restore our municipal franchise, but the City
could offer suggested amendments to our legislators to correct the legislation so it
achieves its intended purpose, increased competition for cable and video services in
Iowa communities. This was already attempted in 2007 when the bill was being
considered. Minimally, the law would be amended to keep the existing municipal
franchise in place until a competitor is able to provide service to a predetermined
percentage of the community, perhaps 25 percent.
3. Litigation
Assistant City Attorney Tim O'Brien advises that the City could pursue a lawsuit
against the Iowa Utility Board for improperly granting fyreSTORM a state franchise
certificate due to their failure to notify the City of Dubuque of their intentions to offer
services here. Additionally, fyreSTORM and Mediacom could b~ named in the suit.
The goal of such litigation would be to restore our municipal franchise and underscore
the need for amending the law. However, a victory on this issue would most likely be
short-lived because another applicant, or fyreSTORM, could apply and follow
procedures properly, resulting in the issuance of another certificate. The lawsuit could
also challenge the method that the IUB is using to implement the law and could
include a challenge to the law as being in conflict with Federal cable regulations.
Finally, litigation, or its threat, could result in Mediacom's immediate termination of the
lingering provisions/benefits of the municipal franchise and result strict adherence to
only the minimal requirements of the state franchise.
4. Combination of Options 1 & 3
Options 1 and 3 could be combined by giving staff the authority to negotiate an
acceptable and enforceable community partnership/settlement agreement with
Mediacom with litigation as an adjunct to negotiations.
An additional path to pursue, perhaps concurrent with the above options, is to commission
another feasibility study regarding the formation of a municipal telecommunications utility. In
November 2005, Dubuque voters authorized the City to establish such a utility by a 2-1
margin.
RECOMMENDED ACTION
This memorandum and related documentation is provided for your information. I respectfully
request direction on how to proceed.
Attachments:
Mediacom Notification Letter of Nov. 20, 2009 and Attachments
Iowa Code Chapter 477A: Cable or Video Service Franchises
cc: Randy Gehl, Public Information Officer
Barry Lindahl, City Attorney
Tim O'Brien, Assistant City Attorney
Mediacom
Thomas J. Larse~z
Vice President ofLegal & Public Affairs
November 20, 2009
Michael C. Van Milligen
City Manager
50 W. 13th St.
Second Floor
Dubuque, IA 52001
and
Craig Nowack
Cable TV Coordinator
City Hall Annex
1300 Main Street
Dubuque, IA 52001
Dear Sirs:.
The purpose of this letter is to inform you that, effective October 9, 2009, MCC Iowa LLC
("Mediacom") converted the municipal franchise issued by the City of Dubuque (the
"City" and/or "Dubuque") to a state issued certificate of franchise authority (the "State
Franchise"). -
As the attached information indicates, Mediacom filed a Notice of Service Area Revision
(the "Service Area Revision") with the Iowa Utilities Board ("lUB") pursuant to 199 IAC
44. The Service Area Revision added the City as now incorporated or as may be annexed
in the future to the service area of Certificate Number C-0002 currently on file with the
Iowa Utilities Board.
Specifically, the Service Area Revision was filed pursuant to 199 IAC 44.5 which permits
the conversion of a municipal franchise by an incumbent cable provider in the event a
competitive cable service provider applies for a certificate of franchise authority to operate
within a municipality served by an incumbent cable provider. By letter dated February 20,
2009 (see attached), Phalanx Technologies Holdings ("Phalanx") provided Mediacom with
30 days' notice of its intent to offer cable television and video services within a service
area that included the municipality of Dubuque. Since Mediacom filed the Service Area
Revision more than 30 days after the date that Phalanx provided Mediacom with the 30
days' notice of its intent to offer service, the IUB was required to grant the Service Area
Revision to be effective on the date the Service Area Revision was filed. By letter dated
-- ----- --- - November- lb,--2009-(see-attached)r_the-IUB_notified_Mediacom_that__the_Service Area_
Revision was accepted as filed on October 9, 2009.
Mediacom Communications Corporation
100 Crystal Run Road • Middletown, NY 10941 • 845-695-2754•Fax 845-695-2669
November 20, 2009
Page 2 of 2
Mediacom's new State Franchise is subject to the terms and conditions of Iowa Code
Chapter 477A ("Chapter 477A"). While Iowa Code §477A.2 specifically terminates
Mediacom's municipal franchise with the City, certain provisions of the terminated
municipal franchise are still relevant in determining Mediacom's responsibilities going
forward. Specifically, the prior franchise is relevant in determining 1) the percentage of
the franchise fee going forward; 2) the fees related to public, educational and governmental
("PEG") access channels required to be paid going forward; 3) the support required fo be
provided to the institutional network going forward; and 4) the number of PEG channels to
be provided and activated going forward.
In many respects, the obligations of Mediacom and the rights of City will be different
under the State Franchise when compared with the terminated municipal franchise. For
instance, Chapter 477A contains a more simplified definition of gross revenues, places
restrictions on the payment of fees other than those set forth in Chapter 477A and the
statute prohibits using PEG fees for anything other than support of PEG channels. Chapter
477A also. shifts the burden of operating PEG facilities and producing PEG content entirely
onto the City, and permits Mediacom to collect and identify franchise and PEG fees as a
separate line item on the regular bill of each subscriber.
We certainly recognize that the shift from a municipal franchise _to a state issued franchise
significantly changes the role the City will play in the administration of cable franchise
related issues. Nonetheless, Mediacom has long been a key pat~tner to Dubuque, and we
certainly want to continue in the role of good corporate citizen. To that end, Mediacom
would be amenable to working with the City to form a community partnership that would
provide the City and its citizens with benefits over and above what Mediacom is required
to provide under the State Franchise.
After you have had an opportunity to xeview the information outlined in this letter, please
feel free to contact either Kathy McMullen or myself to discuss.
cerely,
homas J. Larsen
Enclosures
Cc: Kathy McMullen
Milce Kohler
CHESTER J. CULVER, GOVERNOR
PATTY JUDGE, I.T. GOVERNOR
ROBERT B. BERNTSEN, CHAIR
KRISTA K. TANNER, BOARD MEMBER
DARRELL HANSON, BOARD MEMBER
November 16, 2009
Mr. Thomas J. Larsen
VP, Legal & Public Affairs
Mediacom Communications Corporation
100 Crystal Run rd.
Middletown, NY 10941
RE: VCA-2008-0002
Dear Mr. Larsen:
MCC Iowa LLC d/b/a Mediacom's Notice of Service Area Revision, as filed on
October 9, 2009, has been accepted for filing.
If you have any questions, please contact our Telecommunications staff at
(515) 281-5477.
Sincerely,
Isl John Ridgway
John Ridgway
Manager
Telecommunications Section
dr
cc: Danielle M. Benoit
Womble Carlyle Sandridge & Rice
1401 Eye St. NW, 7t~' Floor
Washington, DC 20005
35O MAPLE STREET 1 DES MOINES, IowA 5031 9-0069 / 51 5.281.5979 /FAX 515,281.5329
HTTP: //ww W. STATE. IA. US/t UB
To see what state Government is accomplishing for Iowans, go to: www_resultsiowa.org
e~c
Tlrorr:as J: Careers
Yrce Pr•esrdent of Legal & Pzcblia Affairs
Octaber.8, 2009
Executive Secretary
Iowa Utilities Board
350 Maple Street
Des Moines, Iowa 50319-0069
Dear Ex~eutive Secretary:
FILED WITH
Executive Secretary
October 09, 2009
IOWA UTILITIES BOARD
VCA-2008-0002
On behalf of MCC Iowa LLC ("Mediacom"), I submit a Notice of Service Area Revision
(the "Notice") for fililig with the Iowa Utilities Board pursuant to 199 ]:AC 44. Tlxe Notice
is for MCC Iowa LLC as an incumbent cable provider and revises the service area of
Certificate Number C-0002 ciuxently on file with the Iowa Utilities Board.
The Kling of this Notice is made pursuant to 199 IAC 44.5 which permits the conversion of
a municipal franchise by an incumbent cable provider in the event a competitive cable
service provider applies for a certificate of franchise authority to operate within a
niuiiicipality served by an incumbent cable provider. By letter dated February 20, 2009
(see attached), Phalanx Technologies holdings ("Phalanx") provided Mediacom with 30
days' notice of its inteirt offer cable television and video services within a service area that
included the municipality of Dubuque, IA. Mediacom clu7ently holds a municipal
franchise to serve Dubuque and desires to convent this municipal franchise to Certificate
Number 00002. Since Mediacom is filing this application more than 30 days after the
data that Phalanx provided Mediacom with the 30 days' notice of its intent to offer service,
Mediacom has selected today's filing date, October 8, 2009, as the effective date of the
Notice.
A check in the amount of $50 was sent to the Iowa Utilities Board on October 2, 2009 and
represents the required filing fee pursuant to 199 IAC 44.4(6).
Should you have airy questions regarding this matter, please feel free to contact ine at
(84S)695~2754.
'oIY'
,,---,
Thffnlas J. Larsen
Enclosures
co: Office of Consumer Advocate {with 3 copies of the Notice)
Mcdiaoom Communieatians Coi•poratian
100 Crystal ]tun 12oad Middletown, NY 10941 • 845-695-2754•Fax 845-695-2GG9
Form must be filed electronically
IOWA UTILITIES BOARD
NOTICE OF SERVICE AREA REVISION, TRANSFER OR TERMINATION
OF CERTIFICATE OF FRANCHISE AUTHORITY PURSUANT TO 799 IAC 44
(Applicable Filing Fee must be sent to the Board's Executive Secretary at 350 Maple Street, Des Moines, IA 50319-0069)
Type of Modification (Check one}: Certificate Number: C-0002 FILED WITH
Executive Secretary
~ Service Area Revision ($50 Filing Fes)
p Transfer ($50 Filing Fee) October d9, 2009
~[~ Termination ($25 Filing Fee)
Name of Applicant: MGC Iowa dlblal: Medlacom IQWA UTILITIES BOARD
Address of Applicant's Principal Place of Business: 100 Crystal Run Road VCA-20~$-~0~~
City: Middletown State: NY Zip: 10941
Contact information for person responsible for this notice:
Name: Thomas J. Larsen
Address: 100 Crystal Run Road
Middletown, NY 10941
E-mall address: tlarsen@mediacomcc.com
Phone: 845-695-2754
For Service Area Revision: Effect)ve Date of Revision: October 8.2009
Describe the modified senrlce area and municipalities to be served by Applicant, including unincorporated areas, In a manner
complying with 199 IAC 44. Multiple service areas maybe described. Applicants certified by the Board as local exchange carriers
pursuant to Iowa Code Section 476.29 may choose to refer to descriptions (including maps) of service areas on file with the Board,
Description(s) may be submitted as an attachment if more space is needed.
City of Dubuque, Iowa as now incorporated or may be annexed In the future.
For Transfer:
Name of Successor:
Address of Successor's Principal Place of Business:
City:
d/b/a/:
State: Zip:
Names and titles of Successor's principal executive officers with direct authority over cable and/or video operations:
Sucoessor's Customer Service Contact Information:
Name:
Address:
Phone:
If service area and municipalities to be served by Successor, including unincorporated areas, differ from the current certificate
holder, describe here in a manner complying with 199 IAC 44. Multiple service areas may be described. Description(s) maybe
submitted as an attachment if more space is needed,
Effective date of transfer, if later than 14 business days after date notice is tiled:
For Termination:
Effective data of Termination:
RevlsedMarclr 2009
VCA-2U09-QQ04
FILED WITH
®OLAN LAW ®FFICES,
A Professional Corporation
136 36th St. Dr. SE Suite Al
Cedar Rapids, Iowa 52403
Phone (319) 363-'r'88B'
Fax (319) 3G3-7999
Febntary 20, 2009
Mediacom Commtw.ications Corporation
6300 Council St NE
Cedar Rapids, IA 52402
Ladies and Gentlemen:
Executive Secretary
~"C' March 16, 2009
IOWA UTILITIES BOARD
Chris#opher K. Dolan
Attorney at Law FILED WITH
Executive Secretary
October 09, 2009
IOWA UTILITIES BOARD
vcA-zoos-ooo2
This o££ice serves as legal counsel for Phalan7c Technology Holdings, L.C., an Iowa Limited
Liability Company.
This letter will serve as notice as required by Section 199-44(1), Iowa Adrninistrative Code, that
Phalanx Technology Holdings, L.C. will provide competitive cable television services and video
services within a service area. which includes your incumbent service areas as outlined in
Exhibit A, beginning on a date not less than thirty {30) days from the date of this Letter. Said
services will be provided pursuant to a Certificate of Franchise Authority to be issued by the
Iowa Utilities Board.
Please talce notice accordingly.
Respectfully submitted,
Ss/Christopher K- Dolan
Christopher I~. Dolan
cc. Iowa Utilities Soard
VCA-2009-0004
EXIBIT A FILED WITH
Executive Secretary
List of Municipalities and ILEG Exchanges far Cable and Video March 16, 2009
Franchise in Iowa by fyxeSTORM Cable and Fiber IOWA UTILITIES BOARD
FILED WITH
Cities Listed by Municipality: Executive Secretary
Octaber 09, 2009
Cedar Rapids IOWA UTILITIES BOARD
Hiawatha
Marion VCA-2008-0002
Robins
Fairfax
Watford
Palo
Ely '
Mt. Vernon
Lisbon
Marengo
Anamosa
Vinton
Iowa City ~'
Coralville '
Universtiy Heights
Davenport
Bettendorf
Eldridge
Clinton
DewitC
Maquoketa
Dubuque
Charles City
Mason City
Waterloo
Ceder Fa11s . .
Evansdale
Ames
Des Moines
West Des Moines
Clive
Windsor Heights
Urbandale
C'rrimes
Johnston
Altoona
Ankeny
Exibit A -Page 1
Berwick
Pleasant HiII
Ottumwa
Oskaloosa
Community's listed by IowaTelecom Exchange
Adair
Afton
Agency
Ainsworth
Albert City
Albia
Alden
Alpha
Alta Vista
Aplington
Argyle
Arispe
Arlington
Atalissa
Attica
Auburn
Audubon
Avoca
Bagley
Bayard
Bellevue
Benton
Bladensburg
Bladenburg
Glencoe
Bouton
Braddyville
Brandon
Bridgewater
Brighton
Buckeye
Bussey
Centerville
Ce~atral City
Chariton
Charlotte
Chelsea
Chillicothe
Cincinnati
Exibit A -Page 2
Clarinda
Clearfield
Colesburg
College Spxings
Collins
Columbus Jmic#ion
Conesville
Conroy
Crawfordsville
Cresco
Creston
Cylinder
De Soto
Dedham
Delhi
Delta
Denmark
DeW~tt
Dexter
Diagonal
Dolliver
Donnellson
Douds
Dows
Dunlap
Durant
Dyersville
Earlville
Eddyville
Edgewood
Eldon
Elkhart
Elma
Emmetsburg
Epworth
Exira
Fairbank
Faixlield
Farley
Farmington
Farson
Fayette
Fonda
Fontanelle
Fredericksburg
Fremont
Garvin
Exibit A -Page 3
Gladbrook
Glidden
Grand Junction
Grandview
Gravity
Greeley
Greenfield
Grinnell
Halbux
Haxper
Harris
Hazleton
Hedrick
Hillsboro
Holy
Cross
Hoplcizaton
Houghton
Humeston
Jamaica
Janesville
Keilerton
Kent
Keota
Knoxville
Lacona
Lake City
Lake Vew
Lamont
Lanesboro
Lawler
Le Claire
Le Grand
Ledyard
Leighton
Letts
Libeziy Center
Libertyville
Lime Springs
Linden
Linn Grove
Lisbon
Little Sioux
Lockridge
Logan
Lohrville
Lone Tree
ExibitA-Page 4
Lovilia
Low Moor
Lucas
Luxembtu'g
Lytton
Macksburg
Madrid
Magnolia
Malcom
Mallard
Manchestex
Manson
Marathon
Martensdale
Martinsburg
Maxwell
May City
Maynard
McCallsburg
Melcher
Melrose
Melvin
Milo
Milton
Mia~den
Mingo
Modale
Mondamin
Monroe
Montour
Montrose
Moravia
Moscow
Mt. Ayr
Mt. Pleasant
Mt. Ui~i.on
Mystic
Nevada
New I-laxnpton
New London
New Sharon
New Vienna
New Virginia
Newell
Newton
Nichols
Qalrville
Exibit A ~ Page S
Ocheyedan
Olds
Ollie
Orient
Osceola
Otley
Packwood
Panama
Pella
Peoria
Percival
Persia
Peru
Peterson
Pisgah
Plano
Pleasantville
Pomeroy
Portsmouth
Prescott
Primrose
Promise City
Protivin
Ralston
Randalia
Randall
Randolph
Redding
Redfield
Rembrandt
Richland
Ricketts
Rippey
Riverside
Riverton
Rochester
Rockwell City
Roland
Rolfe
Rowley
Russell
Ryan
Sabula
Salem
Schleswig
Seymolur
Shannon City
Exibit A -Page 6
Shelby
Sidney
Sigonrney
St. L~icas
Story City
Strawberry Point
Sluianer
Svvea City
Tabor
Thurman
Tingley
Tipton
Toledo
Tracy
Trasr
Troy Mills
Ute
Vail
Volga
Wadena
Wallcer
Wapello
Washington
Wancoma
Wellsburg
West Chester
West Point
What Cheer
Williamsbuxg
Williamson
Wir~f'ield
Woodbine
Worthington
Lxibit A -Page 7
Iowa Code 477A Page 1 of 11
CHAPTER 477A CABLE OR VIDEO SERVICE FRANCHISES
Purpose of chapter; 2007 Acts, ch 201, § 1
477A.1 DEFINITIONS.
477A.2 CERTIFICATE OF FRANCHISE AUTHORITY REQUIREMENT.
477A 3 APPLICATION REQUIREMENTS -- CERTIFICATE OF FRANCHISE AUTHORITY.
477A.4 APPLICABILITY TO FEDERAL LAW.
477A.5 MUNICIPALITY RESTRICTIONS.
477A.6 PUBLIC EDUCATIONAL AND GOVERNMENTAL ACCESS CHANNELS.
477A.7 FEES -- FINANCIAL SUPPORT.
477A.8 CUSTOMER SERVICE STANDARDS.
477A.9 NONDISCRIMINATION BY MUNICIPALITY.
477A.10 PROVIDER DISCRIMINATION PROHIBITED.
477A.11 APPLICABILITY OF OTHER LAW.
477A.12 RULES.
477A.1 DEFINITIONS.
As used in this chapter, unless the context otherwise requires:
1. "Board" means the utilities board within the utilities
division of the department of commerce.
2. "Cable operator" means the same as defined in 47 U.S.C. ~
522.
3. "Cable service" means the same as defined in 47 U.S.C. ~
522.
4. "Cable system" means the same as defined in 47 U.S.C. ~
522.
5. "Competitive cable service provider" means a person who
provides cable service over a cable system in an area other than the
incumbent cable provider providing service in the same area.
6. "Competitive video service provider" means a person who
provides video service other than a cable operator.
7. "Franchise" means an initial authorization, or renewal of
an authorization, issued by the board or a municipality, regardless
of whether the authorization is designated as a franchise, permit,
license, resolution, contract, certificate, agreement, or otherwise,
that authorizes the construction and operation of a cable system or
video service provider's network in a public right-of-way.
8. "Franchise fee" means the fee imposed under section
477A.7.
9. a. "Gross revenues" means all consideration of any kind or
nature, including but not limited to cash, credits, property, and
in-kind contributions received from subscribers for the provision of
cable service over a cable system by a competitive cable service
provider or for the provision of video service by a competitive video
service provider within a municipality's jurisdiction. Gross
revenues are limited to the following:
(1) Recurring charges for cable service or video service.
(2) Event-based charges for cable service or video service,
including but not limited to pay-per-view and video-on-demand
charges.
(3) Rental of set-top boxes and other cable service or video
service equipment.
(4) Service charges related to the provision of cable service or
http://coolice.legis.state.ia.us/Cool-ICE/default.asp?category=billinfo&service=IowaCode... 12/3/2009
Iowa Code 477A
Page 2 of 11
video service, including but not limited to activation, installation,
and repair charges.
(5) Administrative charges related to the provision of cable
service or video service, including but not limited to service order
and service termination charges.
(6) A pro rata portion of all revenue derived, less refunds,
rebates, or discounts, by a cable service provider or a video service
provider for advertising over the cable service or video service
network to subscribers within the franchise area where the numerator
is the number of subscribers within the franchise area, and the
denominator is the total number of subscribers reached by such
advertising. This subparagraph applies only to municipalities that
include this provision in their franchise agreements as of January 1,
2007.
b. "Gross revenues" does not include any of the
following:
(1) Revenues not actually received, even if billed, including bad
debt.
(2) Revenues received by any affiliate or any other person in
exchange for supplying goods or services used by the person providing
cable service or video service.
(3) Refunds, rebates, or discounts made to third parties,
including subscribers, leased access providers, advertisers, or any
municipality or other unit of local government.
(4) Regardless of whether the services are bundled, packaged, or
functionally integrated with cable service or video service, any
revenues derived by the holder of a certificate of franchise
,authority from services not classified as cable service or video
service, including, without limitation, revenue received from
telecommunications services, revenue received from information
services, revenue received in connection with home-shopping services,
or any other revenues attributed by the competitive cable service
provider or competitive video service provider to noncable service or
nonvideo service in accordance with the holder's books and records
kept in the regular course of business and any applicable rules,
regulations, standards, or orders.
(5) Revenues paid by subscribers to home-shopping programmers
directly from the sale of merchandise through any home-shopping
channel offered as part of the cable services or video services.
(6) Revenues from the sale of cable services or video services
for resale in which the purchaser is required to collect the
franchise fee from the purchaser's customer.
(7) Revenues from any tax of general applicability imposed upon
the competitive cable service provider or competitive video service
provider or upon subscribers by a city, state, federal, or any other
governmental entity and required to be collected by the competitive
cable service provider or competitive video service provider and
remitted to the taxing entity, including but not limited to sales or
use tax, gross receipts tax, excise tax, utility users tax, public
service tax, and communication taxes, and including the franchise fee
imposed under section 477A.7.
(8) Revenues forgone from the provision of cable services or
video services to public institutions, public schools, or
governmental entities at no charge.
(9) Revenues forgone from the competitive cable service
provider's or competitive video service provider's provision of free
or reduced-cost video service to any person, including, without
limitation, any municipality and other public institutions or other
institutions.
(10) Revenues from sales of capital assets or sales of surplus
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equipment.
(11) Revenues from reimbursements by programmers of marketing
costs incurred by the competitive cable service provider or
competitive video service provider for the introduction or promotion
of new programming.
(12) Directory or Internet advertising revenues including but not
limited to yellow page, white page, banner advertisement, and
electronic publishing.
(13) Copyright fees paid to the United States copyright office.
(14) Late payment charges.
(15) Maintenance charges.
10. "Incumbent cable provider" means the cable operator
serving. the largest number of cable subscribers in a particular
franchise service area on January 1, 2007.
11. "Institutional network" means the system of dedicated
fibers, coaxial cables, or wires constructed and maintained by an
incumbent cable provider which is reserved and dedicated by the
municipality for noncommercial purposes.
12. "Municipality" means a city.
13. "Percentage of gross revenues" means the percentage set
by the municipality and identified in a written request made under
section 477A.7, subsection 1, which shall be not greater than five
percent. However, if the incumbent cable provider is a municipal
utility providing telecommunications services under section 388.10,
"percentage of gross revenues" means the percentage set by the
municipality and identified in a written request made under section
477A.7, subsection 1, which shall not be greater than an equitable
apportionment of the services and fees that the municipal utility
pays to the municipality, or five percent, whichever is less.
14. "Public right-of-way" means the area on, below, or above
a public roadway, highway, street, bridge, cartway, bicycle lane, or
public sidewalk in which the municipality has an interest, including
other dedicated rights-of-way for travel purposes and utility
easements. "Public right-of-way" does not include the airwaves
above a public right-of-way with regard to cellular or other nonwire
telecommunications or broadcast services or utility poles owned by a
municipality or a municipal utility.
15. "Video programming" means the same as defined in 47
U.S.C. § 522.
16. "Video service" means video programming services provided
through wireline facilities located at least in part in the public
right-of-way without regard to delivery technology, including
Internet protocol technology. "Video service" does not include
any video programming provided by a provider of commercial mobile
service as defined in 47 U.S.C. § 332, or cable service provided by
an incumbent cable provider or a competitive cable service provider
or any video programming provided solely as part of, and via, a
service that enables users to access content, information, electronic
mail, or other services offered over the public Internet.,
Section History: Recent Form
2007 Acts, ch 201, §2, 15; 2008 Acts, ch 1062, ~1
477A.2 CERTIFICATE OF FRANCHISE AUTHORITY
REQUIREMENT.
1. After July 1, 2007, a person providing cable service or video
service in this state shall not provide such service without a
franchise. The franchise may be issued by either the board pursuant
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to section 477A.3 or by a municipality pursuant to section 364.2.
2. a. A person providing cable service or video service under
a franchise agreement with a municipality prior to July 1, 2007, is
not subject to this section with respect to such municipality until
the franchise agreement expires or is converted pursuant to
subsection 6.
b. Upon expiration of a franchise, a person may choose to
renegotiate a franchise agreement with a municipality or may choose
to obtain a certificate of franchise authority under this chapter.
An application for a certificate of franchise authority pursuant to
this subsection may be filed within sixty days prior to the
expiration of a municipal franchise agreement. A certificate of
franchise authority obtained pursuant to an application filed prior
to the expiration of a municipal franchise agreement shall take
effect upon the expiration date of the municipal franchise agreement.
c. A municipal utility that provides cable service or video
service in this state is not subject to this section and shall not be
required to obtain a certificate of franchise authority pursuant to
this chapter in the municipality in which the provision of cable
service or video service by that municipality was originally
approved.
3. For purposes of this section, a person providing cable service
or video service is deemed to have executed a franchise agreement to
provide cable service or video service with a specific municipality
if an affiliate or predecessor of the person providing cable service
or video service has or had executed an unexpired franchise agreement
with that municipality as of May 29, 2007.
4. A competitive cable service provider or competitive video
service provider shall provide at least thirty days' notice to each
municipality with authority to grant a franchise in the service area,
and to the incumbent cable provider, in which the competitive cable
service provider or competitive video service provider is granted
authority to provide service under a certificate of franchise
authority that the competitive cable service provider or competitive
video service provider will offer cable services or video services
within the jurisdiction of the municipality, and shall not provide
service without having provided such thirty days' notice.
5. As used in this section, "affiliate" includes but is not
limited to a person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with a person receiving, obtaining, or operating under a
franchise agreement with a municipality to provide cable service or
video service through merger, sale, assignment, restructuring, or any
other type of transaction.
6. If a competitive cable service provider or a competitive video
service provider applies for a certificate of franchise authority to
operate within a municipality, the incumbent cable provider may,,at
its discretion, apply for a certificate of franchise authority for
that same municipality. Such application shall be automatically
granted on the same day as a competitive cable service provider or
competitive video service provider files a thirty days' notice of
offering service as required pursuant to subsection 4. The franchise
agreement with the municipality is terminated on the date the board
issues the certificate of franchise authority to an incumbent cable
provider. The terms and conditions of the certificate of franchise
authority shall be the same as the terms and conditions of a
competitive cable service provider or a competitive video .service
provider pursuant to this chapter and shall replace the terms and
conditions of the franchise agreement previously granted by the
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municipality.
Section History: Recent Form
2007 Acts, ch 201, ~3, 15; 2008 Acts, ch 1062, ~2
Referred to in ~ 477A.7
477A.3 APPLICATION REQUIREMENTS -- CERTIFICATE OF
FRANCHISE AUTHORITY.
1. The board shall issue a certificate of franchise authority
under this chapter within fifteen business days after receipt of a
completed application and affidavit submitted by the applicant and
signed by an officer or general partner of the applicant. The
application and affidavit shall provide all of the following
information:
a. That the applicant has filed or will timely file with the
federal communications commission all forms required by the
commission in advance of offering cable service or video service in
this state.
b. That the applicant agrees to comply with all applicable
federal and state statutes, regulations, and rules.
c. That the applicant agrees to comply with all applicable
state laws and nondiscriminatory municipal ordinances and regulations
regarding the use and occupation of a public right-of-way in the
delivery of the cable service or video service, to the extent
consistent with this chapter, including the police powers of the
municipalities in which the service is delivered.
d. A description of the service area to be served and the
municipalities to be served by the applicant which may include
certain designations of unincorporated areas. This description shall
be updated by the applicant prior to the expansion of cable service
or video service to a previously undesignated service area and, upon
such expansion, notice shall be given to the board of the service
area to be served by the applicant.
e. The address of the applicant's principal place of business
and the names of the applicant's principal executive officers.
2. The failure of the board to notify the applicant of the
completeness of the applicant's affidavit or issue a certificate of
franchise authority before the fifteenth business day after receipt
of a completed affidavit shall constitute issuance of the certificate
of franchise authority applied for by the applicant without further
action by the applicant.
3. The certificate of franchise authority issued by the board
shall contain all of the following:
a. A grant of authority to provide cable service or video
service in the service area designated in the application.
b. A grant of authority to use and occupy the public
right-of-way in the delivery of cable service or video service,
subject to the laws of this state, including the police powers of the
municipalities in which the service is delivered.
c. A statement that the grant of authority provided by the
certificate is subject to the lawful operation of the cable service
or video service by the applicant or the applicant's successor.
d. A statement that the franchise is for a term of ten years,
is renewable under the terms of this section, and is nonexclusive.
4. A certificate of franchise authority issued by the board is
fully transferable to any successor of the applicant to which the
certificate was initially issued. A notice of transfer shall be
filed by the holder of the certificate of franchise authority with
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the board and the affected municipality and shall be effective
fourteen business days after submission. The notice of transfer
shall include the address of the successor's principal place of
business and the names of the successor's principal executive
officers. The successor shall assume all regulatory rights and
responsibilities of the holder of the certificate. Neither the board
nor an affected municipality shall have authority to review or
require approval of such transfer.
5. The certificate of franchise authority issued by the board may
be terminated by a person providing cable service or video service by
submitting written notice to the board and any affected municipality.
Neither the board nor an affected municipality shall have authority
to review or require approval of such termination.
6. The board shall only have the authorization to issue a
certificate of franchise authority as provided in this section, and
shall not impose any additional requirements or regulations upon an
applicant.
Section History: Recent Form
2007 Acts, ch 201, §4, 15
Referred to in § 477A.2
477A.4 APPLICABILITY TO FEDERAL LAW.
To the extent required by applicable law, a certificate of
franchise authority issued under this chapter shall constitute a
"franchise" for the purposes of 47 U.S.C. § 541(b)(1). To the extent
required for the purposes of 47 U.S.C. § 521--561, only the state of
Iowa shall constitute the exclusive franchising authority for
competitive cable service providers and competitive video service
providers in this state.
Section History: Recent Form
2007 Acts, ch 201, §5, 15
477A.5 MUNICIPALITY RESTRICTIONS.
1. A municipality shall not require a holder of a certificate of
franchise authority to do any of the following:
a. Comply with a mandatory build-out provision.
b. Obtain a separate franchise.
c. Pay any additional fees, except as provided in this
chapter.
d. Be subject to any additional franchise requirement by the
municipality, except as provided in this chapter.
2. For purposes of this section, a "franchise requirement"
includes any provision regulating rates or requiring build-out
requirements to deploy any facilities or equipment.
3. Section 364.2 shall not apply to a holder of a certificate of
franchise authority issued pursuant to this chapter.
Section History: Recent Form
2007 Acts, ch 201, §6, 15
477A.6 PUBLIC, EDUCATIONAL, AND GOVERNMENTAL ACCESS
CHANNELS.
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1. Not later than one hundred eighty days after a request by a
municipality in which a competitive cable service provider or a
competitive video service provider is providing cable service or
video service, the holder of the certificate of authority for that
municipality shall designate a sufficient amount of capacity on the
certificate holder's communications network to allow the provision of
a comparable number of public, educational, and governmental channels
that the incumbent cable provider in the municipality has activated
and provided in the municipality under the terms of a franchise
agreement with a municipality prior to July 1, 2007. If no such
channels are active, the municipality may request a maximum of three
public, educational, and governmental channels for a municipality
with a population of at least fifty thousand, and a maximum of two
public, educational, and governmental channels for a municipality
with a population of less than fifty thousand.
a. The public, educational, and governmental content to be
provided pursuant to this section and the operation of the public,
educational, and governmental channels shall be the responsibility of
the municipality receiving the benefit of such capacity. The holder
of a certificate of franchise authority shall be responsible only for
the transmission of such content, subject to technological
restraints.
b. The municipality receiving capacity under this section
shall ensure that all transmissions, content, or programming to be
transmitted by the holder of the certificate of franchise authority
are provided or submitted to the competitive cable service provider
or competitive video service provider in a manner or form that is
capable of being accepted and transmitted by the competitive cable
service provider or competitive video service provider, without
requirement for additional alteration or change in the content, over
the particular network of the competitive cable service provider or
competitive video service provider, which is compatible with the
technology or protocol utilized by the competitive cable service
provider or competitive video service provider to deliver services.
At its election the municipality may reasonably request any cable
service provider or video service provider to make any necessary
change to the form of any programming, furnished for transmission,
which shall be charged to the municipality, not to exceed the
provider's incremental costs. The municipality shall have up to
twelve months to reimburse the cable service provider or video
service provider. The provision of such transmissions, content, or
programming to the competitive cable service provider or competitive
video service provider shall constitute authorization for such holder
to carry such transmissions, content, or programming, at the holder's
option, beyond the jurisdictional boundaries stipulated in any
franchise agreement.
2. Where technically feasible, a competitive cable service
provider or competitive video service provider that is a holder of a
certificate of franchise authority and an incumbent cable provider
shall use reasonable efforts to interconnect the cable or video
communications network systems of the certificate holder and
incumbent cable provider for the purpose of providing public,
educational, and governmental programming. Interconnection may be
accomplished by direct cable, microwave link, satellite, or other
reasonable method of connection. A holder of a certificate of
franchise authority and an incumbent cable provider shall negotiate
in good faith and an incumbent cable provider shall not withhold
interconnection of public, educational, or governmental channels.
3. A court of competent jurisdiction shall have exclusive
jurisdiction to enforce any requirement under this section.
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Section History: Recent Form
2007 Acts, ch 201, ~7, 15
477A.7 FEES -- FINANCIAL SUPPORT.
1. a. In any service area in which a competitive cable
service provider or a competitive video service provider holding a
certificate of franchise authority offers or provides cable service
or video service, the competitive cable service provider or
competitive video service provider shall calculate and pay a
franchise fee to the municipality with authority to grant a
certificate of franchise authority in that service area upon the
municipality's written request. If the municipality makes such a
request, the franchise fee shall be due and paid to the municipality
on a quarterly basis, not later than forty-five days after the close
of the quarter, and shall be calculated as a percentage of gross
revenues. The municipality shall not demand any additional franchise
fees from the competitive cable service provider or competitive video
service provider, and shall not demand the use of any other
calculation method for the franchise fee.
b. All cable service providers and video service providers
shall pay a franchise fee at the same percent of gross revenues as
had been assessed on the incumbent cable provider by the municipality
as of January 1, 2007, and such percentage shall continue to apply
for the period of the remaining term of the existing franchise
agreement with the municipality. Upon expiration of the period of
the remaining term of the agreement with the incumbent cable service
provider, a municipality may request an increase in the franchise fee
up to five percent of gross revenues.
c. A provider who is both a competitive cable service
provider and a competitive video service provider shall be subject to
and only be required to pay one franchise fee to a municipality under
this subsection regardless of whether the provider provides both
cable service and video service.
d. At the request of a municipality and not more than once
per year, an independent auditor may perform reasonable audits of the
competitive cable service provider's or competitive video service
provider's calculation of the franchise fee under this subsection.
The municipality shall bear the costs of any audit requested pursuant
to this subsection, unless the audit discloses that the competitive
cable service provider or competitive video service provider has
underpaid franchise fees by more than five percent, in which case the
competitive cable service provider or competitive video service
provider shall pay all of the reasonable and actual costs of the
audit.
e. A competitive cable service provider or competitive video
service provider may identify and collect the amount of the franchise
fee as a separate line item on the regular bill of each subscriber.
2. If an incumbent cable provider pays any fee to a municipality
for public, educational, and governmental access channels, any
subsequent holder of a certificate of franchise authority that
includes that municipality shall pay this fee at the same rate during
the remaining term of the existing franchise agreement with the
municipality, even if the incumbent cable provider elects to convert
to a certificate of franchise authority pursuant to section 477A.2.
All fees collected pursuant to this subsection shall be used only for
the support of the public, educational, and governmental access
channels.
3. a. If an incumbent cable provider is required by a
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franchise agreement as of January 1, 2007, to provide institutional
network capacity to a municipality for use by the municipality for
noncommercial purposes, the incumbent cable provider and any
subsequent holder of a certificate of franchise authority shall
provide support only for the existing institutional network on a pro
rata basis per customer. Any financial support provided for an
institutional network shall be limited to ongoing maintenance and
support of the existing institutional network. This subsection shall
be applicable only to a cable service provider's or video service
provider's first certificate of franchise authority issued under this
chapter, and shall not apply to any subsequent renewals. For the
purposes of this subsection, maintenance and support shall only
include the reasonable incremental cost of moves, changes, and
restoring connectivity of the fiber or coaxial cable lines up to a
demarcation point at the building.
b. For purposes of this subsection, the number of customers
of a cable service provider or video service provider shall be
determined based on the relative number of subscribers in that
municipality at the end of the prior calendar year as reported to the
municipality by all incumbent cable providers and holders of a
certificate of franchise authority. Any records showing the number
of subscribers shall be considered confidential records pursuant to
section 22.7. The incumbent cable provider shall provide to the
municipality, on an annual basis, the maintenance and support costs
of the institutional network, subject to an independent audit. A
municipality acting under this subsection shall notify and present a
bill to competitive cable service providers or competitive video
service providers for the amount of such support on an annual basis,
beginning one year after issuance of the certificate of franchise
authority. The annual institutional network support shall be due and
paid by the providers to the municipality in four quarterly payments,
not later than forty-five days after the close of each quarter. The
municipality shall reimburse the incumbent cable provider for the
amounts received from competitive cable service providers or
competitive video service providers.
c. This subsection shall not apply if the incumbent cable
service provider is a municipal utility providing telecommunications
services under section 388.10.
4. A franchise fee may be assessed or imposed by a municipality
without regard to the municipality's cost of inspecting, supervising,
or otherwise regulating the franchise, and the fees collected may be
credited to the municipality's general fund and used for municipal
general fund purposes.
5. To the extent that any amount of franchise fees assessed by
and paid to a municipality prior to May 29, 2007, pursuant to a
franchise agreement between a municipality and any person to erect,
maintain, and operate plants and systems for cable television,
exceeds the municipality's reasonable costs of inspecting,
supervising, or otherwise regulating the franchise, such amount is
deemed and declared to be authorized and legally assessed by and paid
to the municipality.
Section History: Recent Form
2007 Acts, ch 201, ~8, 15
Referred to in ~ 477A.1
477A.8 CUSTOMER SERVICE STANDARDS.
1. The holder of a certificate of franchise authority shall
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comply with customer service requirements consistent with those
contained in 47 C.F.R. § 76.309, and shall maintain a local or
toll-free telephone number for customer service contact.
2. The holder of a certificate of franchise authority shall
implement an informal process, for handling inquiries from
municipalities and customers concerning billing events, service
issues, and other complaints. If an issue is not resolved through
this informal process, a municipality may request a confidential
nonbinding mediation with the holder of a certificate of franchise
authority, with the costs of such mediation to be shared equally
between the municipality and the holder of a certificate of franchise
authority.
Section History: Recent Form
2007 Acts, ch 201, §9, 15
477A.9 NONDISCRIMINATION BY MUNICIPALITY.
1. A municipality shall allow the holder of a certificate of
franchise authority to install, construct, and maintain a
communications network within a public right-of-way and shall provide
the holder of a certificate of franchise authority with open,
comparable, nondiscriminatory, and competitively neutral access to
the public right-of-way.
2. A municipality shall not discriminate against the holder of a
certificate of franchise authority in providing access to a~municipal
building or through a municipal utility pole attachment term.
Section History: Recent Form
2007 Acts, ch 201, §10, 15
477A.10 PROVIDER DISCRIMINATION PROHIBITED.
1. The purpose of this section is to prevent discrimination among
potential residential subscribers.
2. A competitive cable service provider or competitive video
service provider holding a certificate of franchise authority shall
not deny access to any group of potential residential subscribers
because of the income of residents in the local area in which such
group resides.
3. a. A video service provider operating under a certificate
of franchise authority that is using telecommunication facilities to
provide video services and has more than five hundred thousand
telecommunication access lines in this state shall extend its system
to a potential subscriber, at no cost to the potential subscriber, if
all of the following criteria are met:
(1) The potential subscriber is located within its authorized
service area.
(2) At least two hundred fifty dwelling units are located within
two thousand five hundred feet of a remote terminal.
(3) These dwelling units do not have cable or video service
available from another cable service provider or video service
provider.
b. This subsection shall be applicable only after the first
date on which the video service provider operating under a
certificate of franchise authority is providing cable service or
video service to more than fifty percent of all cable and video
subscribers receiving cable or video service from the holders of
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certificates of franchise authority and any other providers of cable
or video services operating under franchise agreements with a
municipality.
Section History: Recent Form
2007 Acts, ch 201, X11, 15
477A.11 APPLICABILITY OF OTHER LAW.
1. This chapter is intended to be consistent with the federal
Cable Act, 47 U.S.C. ~ 521 et seq.
2. Except as otherwise stated in this chapter, this chapter shall
not be interpreted to prevent a competitive cable service provider,
competitive video service provider, municipality, or other provider
of cable service or video service from seeking clarification of any
rights and obligations under federal law or to exercise any right or
authority under federal or state law.
Section History: Recent Form
2007 Acts, ch 201, §12, 15
477A.12 RULES.
The board shall adopt rules necessary to administer this chapter.
Section History: Recent Form
2007 Acts, ch 201, X13, 15
Previous Chapter 477 Next Chapter 477B
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