"Real liberty is neither found in despotism or the extremes of democracy, but in moderate governments.
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Saturday, March 7, 2015

Time Warner Cable Franchise Fee Worksheet

For those that may be interested, the following is the data sheet our friends at TWC use to calculate the franchise fee. Be aware that whatever the franchise fee % is( currently 2%) , it is paid for 100% by subscribers. TWC just passes it along.
Prior to 2007 , the fee was deposited in the general fund. A warrant article created the Communications Technology Capital Reserve Fund in 2007 and since then, the annual fee has been deposited in there. As of December 31st 2014, the fund balance was $187,338.61. This year we will add $33,007.42.
As you may know,we are in the process of negotiating a new contract with TWC. My personal feeling ( and this is just me, a taxpayer talking) is that even though it only amounts to about a $1 per month per subscriber, it is still a tax on those that have access to TWC and choose to subscribe. I feel that ( again this is me, a taxpayer talking) that if we want to continue to support this fund, it should be an equal tax on every taxpayer, an appropriation of about $12 per year.
 So, the question will be as we go forward is do we want to continue collecting a franchise fee ( could go as high as 5%) or discontinue it and look for TWC to build out the infrastructure? How and where to expend the current balance ( will be about $220,000) is also on the table.


Joe Cormier/jcormier2@myfairpoint.net said...

"So, the question will be as we go forward is do we want to continue collecting a franchise fee ( could go as high as 5%) or discontinue it and look for TWC to build out the infrastructure? How and where to expend the current balance (will be about $220,000) is also on the table."

That is a valid and appropriate question to ask.

A personal opinion is the cable subscriber "fee", which "taxes" subscribers, only, is part of the negotiations with TWC for the new contract; old contract ends March 19, 2017.


There is no mandate to subscribe to cable, and many do not, and some of us are preparing to quit ... at least how much we're paying.

It takes a long time to negotiate the franchise agreement because of federal law ... no I won't burden you with detail ...it's lengthy.


2% of cable fee goes into the MoBo Tech Fund (now about $30K-$35K/year). 5% is the federal cap that can be assessed, and passed onto subscribers. You go out to eat ... you pay a meal tax ... don't have to go out to eat. If you can afford to, and want to ... so be it.

I would be opposed to using the Tech Fund to run more cable lines, only. I would support using the Tech Fund money for all facets of Broadband ... Super WiFi, fixed wireless, White Space, beta-site with UNH, hybrid networks of cable fiber/wireless/satellite that would benefit the WHOLE town, not the supposed 1% not covered by Time Warner cable (presently, not future).

I support the town attorney negotiating a 5% fee, if the money is to be spent by MoBo to provide funds for town broadband infrastructure, if the town decides it wants to get involved with becoming an ISP (I don't).

However, would rather have that fee pay for broadband, than another petition for money for a few Townies.

Put the money in the General Fund and get rid of the Tech Fund(didn't hear ABC discuss it, ... anybody on that committee have any interest ... or conflict of interest). That'll be over $200,000 that the budget folks won't have to find.

That's without saying that "Cable" as we know it, is becoming obsolete. Technology change is pressuring, and if Congress can require a-la-cart, not all-the-channels, packages, the consumer will win.

It will be interesting to see how the FCC is going to TRY (pre-lawsuit) to regulate "cable broadband" from "cable TV". The TV piece is also covered under RSA 53-C, in addition to the federal rules. Broadband will now be considered a "public utility", as of the Feb. 26, 2015 FCC vote ... barring the federal courts overruling.

HBO anyone ... (on Roku)?



Broadband Bill said...

The cable franchise fee is based on television services, not the Internet or telephone services that Time Warner Cable (TWC) provides. Many are watching streaming content, but since TWC TV subscriber count went up 37% in 2014, it is a bit early to declare cable TV dead.

Moultonboro is respected among NH town and state planners for its foresight to create a technology fund from the franchise fee, but few are aware that the town has not yet figured out a way to spend it. The funds are available, if required, to ensure 100% of our town has access to residential class internet, but that is a short term problem. The long term question is; what else should the tech fund used for?

The tech fund was created by voters to expand communication offerings in town, but after everyone is hooked up, what’s next? Faster speeds is one answer.

Most TWC customers have access to more speed than they need, up to 50 megabits/second (Mbps), but many locations in town can’t get cable and are limited to Fairpoint DSL for broadband service. Fairpoint offers up to 15 Mbps in some neighborhoods, but speed diminishes quickly with distance from the DSL hubs. Many properties in town are limited to 3 Mbps and some, under 1 Mbps.

An analogy to the speed issue is the electric service in your neighborhood. If you need 200 amp service but only 100 amp service is available, you cannot take advantage of modern living to its fullest. For a rough estimate of household broadband speed requirements, figure 2-4 Mbps per active device. If your service is limited to a capacity of 3 Mbps, your household internet use will be limited. Today, many households are OK with this, but bandwidth demands are increasing quickly, especially as streaming content becomes popular and with younger generations.

So, should the town spend the tech fund to expand TWC, put in more Fairpoint DSL hubs or entice new vendors to set up shop? In my opinion, the town government should work with TWC to expand its plant as much as possible and where they can’t or won’t, work with Fairpoint to install more tactically placed hubs.

I believe the town should not be in the ISP business, other than offering free WIFI at town hall. Enticing new broadband providers to our town with subsidies doesn't make sense to me, because there are so few unserved customers to create a demand. Winning market share from TWC will not be easy, so it will be difficult for new providers to build a viable business plan.

Now, as for the franchise fee. My opinion is that until the town spends down the technology fund, the franchise fee should go to zero. If the tech fund finds its purpose and has a predictable yearly run-rate, then shifting its funding to a technology tax for all, rather than a franchise fee makes sense to me. Just because the town can collect a franchise fee from its taxpayers is not a good reason to do it. The franchise fee was supposed to be a tax on the provider, as payback for granting them a monopoly in town. The plan backfired when the providers just passed it along to its customers.

Don’t get rid of the tech fund, but please broaden its purpose to technology adoption, not just infrastructure expansion.

Joe Cormier/jcormier2@myfairpoint.net said...

After a couple of emails ...

Just heading back out, but thought I'd drop on note on the TWC "sheet", so we're all singing from the same hymnal (in my view).

The $33,007 at bottom right is the annual money sum MoBo got last year, 2014, from TWC, as per the 2% of revenue stipulation in the 2001 contract (franchise agreement).

It represents 2% of revenue.
Add the monthly, "Revenue Fee" and you'll get $33,007.

Add the monthly "Total Revenue" fees and you'll get $1,650,371 (rounded to nearest dollar).

2% of $1,650,371 is $33,007 the money MoBo got from TWC for 2014.

The money that is/has been going into the MoBo Tech Fund.

Don't know if there's a monthly check, or an annual check, to the Town.

The number of subscribers is a non sequitur.

Revenue, from TV or internet is a non sequitur.

The cost or loss-to-revenue of Programming is eye opening though, especially as a % of revenue.

Looks like there is a good business reason for getting into "streaming" (broadband sense).

Joe Cormier/jcormier2@myfairpoint.net said...

"Cable TV" is changing faster than some may think. Broadband ain't just for "geeks" (saying that affectionately).

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Joe Cormier/jcormier2@myfairpoint.net said...

Didn't want to post anything about tomorrow's annual town meeting ... suspense ... and sitting around getting a sore ... *ss!

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Got to go. The wife and I are heading for the Bobhouse! Keep the local establishments busy! Glad it's not called the outhouse ... or ... town hall ... (just jesting)!