Telephone Hangups

Telecommunications Ordinance Passes, Fees and All

illustration by Doug Potter

Bored with your routine city government? You, too, can take part in an ongoing debate that's spawned personal recriminations, thwarted careers, and stoked political firestorms all over town for months! And it's as easy as picking up your phone.

In fact, it's all about picking up your phone, and how much you pay to the City of Austin for the privilege of doing so. In its ongoing attempt to figure out its role in the passion play of deregulated telecommunications, the city recently passed its Telecommunications Services Ordinance (formerly known as the Standard Telecommunications Ordinance; that is, the STO is now the TSO). This action simply -- well, fairly simply -- takes the current franchise fee paid by Southwestern Bell for using the city's rights-of-way to run its telephone lines, and levies it against all future Bell competitors in the open telecom market.

The net effect to you, as a phone customer, is basically zip -- you're already paying the franchise fee, passed along as a line item in your phone bill, and if you decide, when you actually have the choice, to switch your local service to AT&T or whomever, you'll be paying about the same amount through them. So what's the big deal?

Well, as we've all learned by now, nothing is simple, either in word or deed, in the world of telecom. As a point of policy, the city wants the widest range possible of telecom providers in Austin; to this end, they once planned to build a separate physical network through the Electric Utility conduit, open to all comers and free of the stranglehold of Southwestern Bell. This got short-circuited by HB 2128, Texas' state-level deregulation effort, which prevented cities from owning or operating telecom networks. The city then decided to franchise the electric conduit as they have franchised the rights-of-way occupied by Bell and Time Warner née Cablevision, and entered into a preliminary agreement with CSW, an arm of an investor-held electric utility serving other Texas communities including the Rio Grande Valley.

This plan is still floating in the realm of the possible, but in the meantime, federal telecom deregulation eliminated much of the immediate need for a separate network by ordering incumbent local carriers -- i.e., Bell -- to resell space on their networks at fire-sale prices to potential competitors. This displeased Bell for many reasons, among which was the fact that it is still paying rent on Austin rights-of-way for lines that will be used by competitors whose customers weren't being billed the franchise fee. Hence was born the TSO, which spent almost a year in a state of constant flux, as city staff worked out the practicalities of this assessment -- percentage or flat fee, a levy on receipts versus a per-line charge, etc. -- before, and even during, its approval by council.

Again, this basically ratifies the status quo, but the drafting of the TSO gave numerous constituencies in Austin an opportunity to rail against and/or try to transform that status quo. Their objections are manifold, sometimes conflicting. There are some protestors who dispute the need for a franchise or service fee at all, claiming that the city's rights-of-way have long been paid for, and that their ongoing maintenance costs far less than the $8 million or so a year which the TSO would raise. Others feel the fee should be, if not eliminated, at least reduced, so as to help small companies -- especially high-tech and multimedia developers who do most of their work online -- grow without adding a city fee to their cost of doing business. (A similar argument was used by the Federal Communications Commission, back at the time of the AT&T breakup, to absolve Internet service providers and other "new technology" businesses from paying access charges to Bell et al. for use of the local networks -- charges which ever since then have been paid by long-distance carriers.)

Still others are comfortable with the notion of the city's collecting a fair rent for use of its property, but they would like to see this $8 million devoted, through an enterprise fund, specifically to supporting the high-tech industry or to providing public-access telecom services, such as those sponsored by Austin Free-Net through the libraries. Right now, the revenue from the Bell and Time Warner franchises goes straight into the city's General Fund and subsidizes the broad range of city activity, as does the transfer from the Electric Utility. While many players within Austin's high-tech and telecom communities made lots of noise during the long gestation of the TSO, they didn't manage to coordinate their discomfort into a powerful advocacy effort, or to sufficiently question the basic premise of a franchise fee, and the City Council managed to pass the TSO without incurring a huge amount of heat from the city at large.

Plenty of heat, however, was generated within the narrow corridors of city government, and between those players in the community, and the flames and fallout are still ricocheting. One of the most vocal opponents of the TSO has been Ted Kircher, Ronnie Reynolds' appointee to the city's Telecommunications Commission. Kircher has been quite frank about his distaste for the franchise/service fee, calling it "a teat from which the city needs to be weaned." At last Thursday's council meeting, Kircher's dismissal from the Telecom Commission was on the agenda, for either being a squeaky wheel (according to Kircher), insulting members of the council (according to Gus Garcia, whom Kircher described on the Ausplan listserv as "a man who's probably never hit a keystroke"), and/or making racially offensive comments to city staff (according to longtime Telecom Commission member Stuart Heady, who called for Kircher's resignation or dismissal on those grounds.)

The first two of these possible reasons are beyond dispute -- Kircher is definitely a critic of the city's telecom policies, and he definitely has disparaged the qualifications of the council to deal with the issue. And Garcia, who chairs the council's telecom subcommittee and has often shown himself to be thin-skinned, did demand an apology from Kircher which was not forthcoming. The racial part is somewhat more nebulous -- Kircher claims that his conversation, back in October, with African-American city staffer Cheryl Williams dealt with legitimate, even academic, questions of technology's impact on disadvantaged communities, and that Williams was not offended by his comments either then or since. As Heady reported the incident -- which he apparently learned about from Williams' boss, Office of Cable and Regulatory Affairs manager Paul Smolen, who likewise expressed no reservations about it back in October -- Kircher's turn of phrase became "Your people would still be in the cotton patch without technology," which does indeed have a different demeanor and, Heady argued, was too inflammatory for a public servant to use, even if its meaning is defensible.

The outcome of this particular fracas is of less significance than its meaning for the telecom constituency as a whole. Whatever Kircher's alleged sins, it's clear that he and his former ally Heady are now sworn enemies, on matters of policy as well as political correctness. Which means that telecommunications, like the environment, or East Austin development, or a host of other city issues, has engendered its own bitter divisions not only between but within its camps. It may be a brave new world, but Austin's Information Age appears to be characterized by politics as usual.

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