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Wakefield selectmen review cable contract with counsel

Board to explore cost involved in setting up cable station as nonprofit

September 01, 2011
WAKEFIELD — Wakefield selectmen met with Kate Miller of Donahue, Tucker and Ciandella (DTC) on Aug. 24 to review the proposed town cable contract with Time Warner cable and discuss the next steps in the process.

They also ended up discussing with Miller how she and DTC might be able to help set up the Wakefield public access station as a separate nonprofit legal entity, a stated goal of Board Vice Chair Mark Duffy.

Duffy, who ran the meeting as Acting Chair in the absence of Ken Paul, said he had reviewed the contract draft Miller had prepared and the only problem he had was the lack of a senior citizens discount.

Miller said pricing is one of the areas not regulated by the Board of Selectmen and thus is not part of the franchise agreement. However, it can be covered by a side agreement specifying low-income residents, not specifically seniors.

She also recommended that the town ask for no longer than a five-year agreement. Such an agreement can be extended, but it also gives the town an option if a competitor like FairPoint or its successor emerges within five years. Stated simply Miller said it makes no sense to give a longer contract if the town is not given extra services or higher franchise fees. She added that Time Warner will likely push back in negotiations on that point and ask for a longer term.

Duffy said he hadn't seen a map of the cable build-out in town and wanted to see what was involved in providing service to more residents. Miller produced a build-out map copied by DTC from the Time Warner original.

Miller said selectmen could mark up the map to indicate areas where service is wanted. Older contracts did require full build-outs, but now there is usually a formula, such as a minimum number of houses per mile, below which service would be cost-prohibitive and residents wanting service would be asked to pay additional fees. She asked whether there were any commercial areas that were not covered by Time Warner. The board said no.

To proceed with negotiations Miller said it would be necessary to gather information on uncovered areas, including the number of houses in them. "Reasonable cost" is a factor that can affect whether a cable provider is willing to provide service, and density of housing affects that, even if it is a cluster of houses separated some distance from an existing cable.

Miller advised not holding a public hearing before meeting with Time Warner so that issues can be defined. The proposed contract itself does need a thorough review before that meeting, however.

She returned to the term of the contract, which will definitely be a negotiation point. The minimum is three years but five years is reasonable. She said the fact is that a cable company only pays attention at renewal time. If they agreed to a full build-out, then a longer term would be worth it.

Duffy said he read that cable subscriptions are down. Miller responded that sports is the main reason people stay with cable. Her view is that in the long term internet will prevail over cable services. One reason is that ala carte selection of programs is not allowed on cable or satellite services: you can't pick and choose which programs you want to receive. There just is no good program competition at present.

Miller moved on to the franchise fee. The current proposal is two percent, which would be for town use. The fee is billed to customers as a separate line item and paid to the town quarterly. It is only based on the cable TV portion of the bill, not on the whole bundle, which could include internet access and phone service.

Duffy said the fee would be dedicated to supporting the public access station.

The draft contract also says it is "covering all residences now in existence." It also includes free internet to schools and libraries.

Miller noted that the internet portion of cable is not regulated but is often covered by a side agreement.

Duffy proposed that he, Kasprzyk and Paul review the 3/31/11 contract draft and get specific comments to Williams. In the meantime the draft contract will be put up on the town Web site.

Making station a nonprofit

Resident Steve Miller asked if DTC could help with setting up the public access station as a 501(c)3 nonprofit organization.

Kate Miller, who had risen to leave the meeting, replied that DTC can help and that she specializes in nonprofit organizations. She said 501(c)3 "is the way to go in public access for all sorts of reasons, including finances and politics." As a nonprofit it can also have underwriters to support it.

Kasprzyk asked about cost of setup. Miller said the firm has a higher rate for nonprofits of $200 an hour, but there is a half rate available for startups. She estimated the total costs, including $1,000 in filing fees, would run $2,000 to $2,500.

Steve Miller asked how long it would take.

Kate Miller responded that the paperwork is easy but going over what's involved can take time. "You need to know how to operate a nonprofit," she said. She said she could sent a packet of information on setting up a 501(c)3 to Town Administrator Williams for the town to review. She also offered to answer questions by phone.

Resident Dave Mankus asked if a 501(c)3 can keep money from year-to-year if not all is spent in the year. Miller replied that a nonprofit can't sit on the money but can accumulate it for a specific purpose. "You don't have to spend everything every year," she said, "but once you start having real money a 501(c)3 is a good idea."

Kasprzyk asked who appoints directors. Miller said incorporators select directors but added that "you don't want to have town officials on the board." Selectmen have control of the franchise and can "pull the plug" on the channel, but "they can't meddle with how things are done. The town can put aside money to set up the organization. It needs to find 5-7 people who want to get involved.

Mankus remarked that the current contract includes a senior discount but Time Warner "doesn't seem to know it." Miller replied that if people are not being served as specified under the current contract or not getting a senior discount, "we need to know it before the current contract is superseded" by the new one.

Resident Relf Fogg asked if a list of town facilities is included in the current contract draft. Williams said the contract would be put up on the town Web site.

Resident Jim Miller asked if startup funds could be requested for the station. Though it has been around for a while, it is still in "startup mode." Kate Miller agreed it could be made part of the negotiation. Cable companies used to offer startup funding but now resist.

Jim Miller stated he was happy with the cable discussion he heard that evening. He reminded selectmen that five years is not a long time and "we live in a rural town where high speed internet is really needed." Requiring a certain number of homes per mile will not get the wires out there where they are needed. "We can count on Time Warner to look out for Time Warner. We need to look out for ourselves."

Kasprzyk ended the discussion by pointing out that wireless internet nodes may make the homes per mile limitation irrelevant.

Wakefield selectmen meet next on Sept. 14 at 7 p.m. at the Town Hall meeting room.

Martin Lord Osman
Salmon Press
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