Earlier this year, the Florida House and Senate overwhelmingly passed Florida's statewide cable television franchising legislation, the Consumer Choice Act of 2007 ("the Act"). The Act became effective on May 18, 2007, when Florida's Governor, Charlie Crist, signed it into law. The Act sets July 1, 2007 — the first date a provider may apply for a state-issued franchise certificate — as a key date for planning purposes.

The Act creates an entirely new regulatory regime for incumbent providers and new entrants to Florida's cable television market by shifting franchising authority from municipalities to the state. Under the Act, municipalities no longer possess authority to grant new cable or video services franchises. Instead, providers must apply for a certificate of franchise authority issued by the state. The Act also permits incumbent cable operators to terminate existing, unexpired franchise agreements and replace them with a statewide certificate. The Act also adds provisions to Florida's Unfair and Deceptive Trade Practices Act to create and enforce new anti-discrimination requirements for cable operators. Although primarily concerned with cable and video services, the Act also modifies some obligations of telecommunications providers concerning intrastate access rates and Lifeline assistance programs for low income subscribers.

Because of the comprehensive changes to the regulatory regime, incumbent cable operators doing business in Florida should carefully review the Act to determine whether they would benefit from replacing their existing franchise agreements with the new state-issued certificates of franchise authority.

Highlights of Florida's New Cable Television Regulatory Regime

Overview: Statewide Franchising for Incumbent Providers and New Entrants

Under the new law, municipalities no longer possess authority to negotiate or grant cable television franchises or to charge franchise fees as a precondition to obtaining a cable television franchise. Instead, effective July 1, 2007, a prospective provider of cable or video services must apply to Florida's Department of State ("DOS") for a state-issued certificate of franchise authority in order to provide service in the state. Also, effective July 1, 2007, an incumbent cable operator may apply for a certificate of franchise authority from the state and terminate an existing, unexpired franchise agreement upon issuance of the state certificate. The statute defines "incumbent" as a cable or video service provider who is providing service on July 1, 2007. The new provisions are primarily contained in new section 610, Fla. Stat. (2007), which the Act creates.

Florida's Department of State becomes the new franchising authority. Instead of negotiations with municipalities, the Act provides for a streamlined application process for a state-issued certificate of franchise authority. The Act replaces the prior negotiation process with a relatively simple application process consisting of an application and an affidavit from a contact person, and establishes the DOS as the franchising authority that will receive and process applications.

Each certificate of franchise authority will represent a grant of authority to provide cable or video service as requested in the application and to construct, maintain, and operate facilities on any public right-of-way or waters, subject to the lawful operation of the cable or video service by the applicant.

Incumbent cable operators may terminate existing, unexpired franchise agreements with municipalities and replace them with state-issued franchise certificates. After July 1, 2007, an incumbent cable or video service provider is immediately eligible, at its option, to apply for a state-issued certificate of franchise authority. The incumbent operator must file a written notice with the municipality or county in which it provides cable service simultaneously with any filing with the DOS. The applicable municipal or county franchise is terminated on the date the department issues the state-issued certificate of franchise authority. § 610.105(1), Fla. Stat. (2007).

Municipal franchise obligations that exceed those imposed on a certificateholder become void as against public policy. If an incumbent provider has been granted a state-issued certificate of franchise authority that covers all or a portion of a municipality or county, the Act provides that any obligation under an existing municipal or county franchise that exceeds the obligations imposed on the certificateholder in the area covered by the certificate "shall be against public policy and void." § 610.105(2), Fla. Stat. (2007).

Franchise fees prohibited for certificateholders. The new law prohibits franchise fees imposed by local governments as a precondition for obtaining a state-issued certificate of franchise authority, except for those franchise fees already collected through the Communications Services Tax under section 202, Fla. Stat. (2007), and permitting fees collected for use of rights-of-way pursuant to section 337.401(6), Fla. Stat. (2007). In addition, the DOS may not impose any taxes, fees, charges, or other impositions on a cable or video service provider as a condition for the issuance of a state-issued certificate of franchise authority, other than those expressly provided for in the Act.

Contents of applications for state-issued certificates of franchise authority. The application must include the official name, street address of the principal place of business, federal employer ID or DOS document number, and the name and address of a member, officer, partner, owner or manager as a contact person for the video services provider to whom questions or concerns may be addressed. § 610.104, Fla. Stat. (2007).

  • Affidavit of Contact Person. The affidavit from the contact person must attest that the applicant is fully qualified to provide the service under the Act; has filed or will file all forms required by the Federal Communications Commission in advance of offering cable or video service in Florida; and agrees to comply with all applicable federal and state laws and regulations, including municipal and county ordinances and regulations regarding the placement and maintenance of communications facilities in public rights-of-way in accordance with section 337.401, Fla. Stat. (2007).
  • Area to be served. With some exceptions, the Act provides that incumbent cable or video service providers with an existing franchise agreement must use the same service area described in its existing local franchise. Entities using telecommunications facilities to provide video service must describe their service area in terms of entire wire centers. All other providers must describe the initial service area on a municipal or county basis. Certificateholders may serve additional service areas by filing an amendment to the certificate with the DOS, describing the new service area or areas to be served, within five (5) business days of providing service in the new area.

Expedited review of applications. The law requires DOS to state whether an application is complete within ten (10) days of receiving it. If DOS rejects the application, it must notify the applicant of the reasons with particularity. Once the applicant submits an amended application, DOS must act on it within ten (10) days of receipt of the amended application. Once the DOS accepts an application, it must issue the certificate within fifteen (15) days.

The Act also requires DOS to act in a ministerial capacity when reviewing applications, that is, it shall accept information contained in the affidavit and application "at face value." An applicant may challenge a rejection of an application by filing a petition for mandamus in a court of competent jurisdiction.

$10,000 initial application fee. The Act provides for a one-time $10,000 application fee. A parent company may file a single application covering itself and all of its subsidiaries and affiliates intending to provide cable or video service. A certificateholder must file an update with DOS every five (5) years along with a processing fee of $1,000. In addition to these fees, each initial application and any amendments or information updates must be accompanied by a fee equal to that for filing articles of incorporation with DOS.

New provisions for customer service standards and complaints. The Act phases out the municipal role in hearing complaints from customers. If a municipality or county has an office dedicated to responding to cable or video customer service complaints, it may continue to respond to such complaints until July 1, 2009. On July 1, 2009, all cable or video customer service complaints will be handled by Florida's Department of Agriculture and Consumer Services ("DACS"). The Act grants DACS authority to adopt rules concerning its handling of customer service complaints; however, DACS is not permitted to establish customer service requirements inconsistent with the Federal Communication Commission ("FCC") rules. All cable or video service providers must abide by customer service standards in the FCC rules. The FCC regulations concerning customer service for cable operators are set forth in 47 C.F.R. § 76.309, et seq.

Provisions concerning Public, Educational, and Governmental (PEG) access channels. Certificateholders must designate a sufficient amount of capacity to allow for the same number of PEG channels that a municipality or county has activated under the incumbent provider's franchise as of July 1, 2007. A PEG channel is considered activated when it shows programming at least ten (10) hours per day on average, with at least five (5) hours of non-repeat programming.

A municipality or county may request additional PEG channels, provided that the usage of any new public access channel must be determined by a majority of the provider's subscribers in the jurisdiction.

  • PEG channels may revert to the operator if not sufficiently used. The Act permits a cable operator to reprogram PEG channels for another use at the operator's discretion if the user of the PEG channel fails to provide sufficient amount of programming to keep the PEG channel activated.
  • Free cable or video services available under certain conditions for school libraries and local governments. The new law provides for free cable or video services for K-12 public schools, public libraries, or local government administration buildings if certain conditions are met.
  • New interconnection standards for PEG channels. The Act also sets forth standards and procedures for certificateholders to interconnect their systems with those of incumbent cable operators for the transmission of PEG programming.

Other specific provisions affecting municipalities: municipalities may not discriminate between certificateholders as to use of property, buildings, and rights-of-way. The Act also prohibits municipalities and counties from discriminating among certificateholders concerning access to rights-of-way, buildings, or other property, and terms and conditions for utility pole attachments. In addition, municipalities and counties may not impose additional requirements on certificateholders, including financial, operational or administrative requirements.

Municipalities no longer may require approval for transfers of control, although they may require notice. Under the Act, a municipality or county may not require its approval of a transfer of ownership or control of a cable or video system. However, a municipality or county may require the certificateholder to provide notice of such a transfer. Furthermore, a municipality or county may require the issuance of a permit for the placement and maintenance of facilities in the public right-of-way on terms consistent with permits issued to other telecommunications providers. Municipalities and counties are prohibited from imposing any fees on certificateholders in connection with use of the public right-of-way, except for those franchise fees collected through the Communications Services Tax and permitting fees collected under section 337.401(6), Fla. Stat. (2007).

Repeal of prior state cable franchising provisions. The Act also repeals Florida's prior cable franchising law set forth at section 166.046, Fla. Stat. (2007), and amends statutes related to the Communications Services Tax, the use of rights-of-way, and communications services offered by governmental entities to conform to the new cable franchising law.

The Act's Buildout and Anti-discrimination Provisions

No buildout requirements. Franchising authorities, state agencies, and political subdivisions are prohibited from imposing any buildout, system construction, or service deployment requirements on certificateholders.

The Act prohibits discrimination based on race or income. The Act prohibits cable or video service providers from denying access to service to any individual or group of potential residential customers based on race or income, and adds new section 501.2079, Fla. Stat. (2007), to Florida's Deceptive and Unfair Trade Practices Act ("FDUTPA") setting forth procedures for enforcing the anti-discrimination provisions. The Act permits enforcement of the anti-discrimination provisions by Florida's attorney general pursuant to sections 501.206 and 207, Fla. Stat. (2007), and pursuant to section 501.211, Fla. Stat. (2007), which permits anyone aggrieved by a violation to seek a declaratory ruling as to whether conduct violates FDUTPA, and also authorizes an action for actual damages by anyone who "suffers a loss" as a result of a violation.

Penalties for discrimination based on race or income. If a court finds that a provider has engaged in unlawful discrimination and the provider fails to cure its noncompliance within a reasonable time as specified by the court, the provider may be liable for a civil penalty of up to $15,000 for each violation. Discrimination against each individual member of a group is considered a separate violation subject to a separate penalty.

The Act's New Provisions Concerning Telecommunications

New provisions concerning telecommunications services — automatic enrollment in Lifeline. The Act also makes some changes to laws concerning telecommunications services. In particular, the Act amends section 364.10, Fla. Stat. (2007), to establish a process for automatic enrollment of eligible low-income customers to receive discounted basic local telephone service through a Lifeline Assistance Plan. If a state agency determines that a person is eligible for Lifeline service, the agency must immediately forward the information to the state Public Service Commission ("PSC") to ensure that the person is enrolled in Lifeline. The agency must include an option for eligible customers to choose not to subscribe to Lifeline. The Act requires the PSC and the Florida Department of Children and Families ("DCF"), by December 31, 2007, to adopt rules establishing procedures for automatic enrollment. In addition, by December 31, 2007, the PSC, DCF, and the Office of Public Counsel are required to enter into a memorandum of understanding, establishing their respective duties related to automatic enrollment.

Repeal of certain rate provisions involving incumbent local exchange telephone companies. The Act also repeals section 364.164, Fla. Stat. (2007), which had permitted a local exchange telecommunications company ("LEC") to petition the PSC for approval to raise its basic local service rates, provided that the resulting increase in revenues be offset by a reduction in the company's intrastate access rates. The Act amends section 364.385, Fla. Stat. (2007), to provide that the rates and charges for basic local service approved by order of the PSC pursuant to section 364.164, Fla. Stat. (2007), and in effect immediately prior to July 1, 2007, shall remain in effect.

The Act also amends section 364.163, Fla. Stat. (2007), to cap certain intrastate access rates in effect immediately prior to July 1, 2007, at those levels until July 1, 2010. The Act also repeals provisions in section 364.051, Fla. Stat. (2007), which had enabled incumbent LECs to petition the PSC to be regulated in the same manner as competitive providers once a LEC's intrastate access rates reach parity with interstate access rates.