COSTLY ANALYSIS
Don't enjoy community cable channels? You're still paying for them

Got your Cox Communications cable bill handy? Good, now take a closer look at it. See where it says "franchise fee?" Ever wonder where that money goes? Or what franchise you're being charged a fee for exactly? The franchise in question is Cox Communications, a company that by law is required to collect 5 percent of subscriptions generated by its cable customers to put toward the general funds of various local governments. One such general fund goes on to finance - among other things - KCLV Channel 2, the official cable station of the City of Las Vegas. In starker terms, Cox cable customers pay a franchise fee, conveniently tacked on to their cable bills, that finances the paychecks of the dozen-or-so City of Las Vegas (union) employees who operate KCLV. 

What, you say? You'd rather watch paint dry than endure a minute's worth of another boring City Council meeting, or another political ad masquerading as a council member's neighborhood clean-up effort? Too bad: You're stuck paying the franchise fee. Only Cox customers who pay for high-speed Internet service - without cable service - are able to eschew the added cost. 

That's because Cox and the City of Las Vegas have a franchise agreement, whereby Cox gets to be the sole cable provider in Las Vegas under the condition that Cox finances government programming (or community access) for the valley.

Community access is, of course, different from public access. Public access means anyone with enough funds can pay to broadcast his or her own original and unique programming. Government officials have been quoted as saying that allowing public-access programming means inviting suspect types (pornographers, skinheads, Libertarians) to share their views on air, thereby violating "community standards of decency." 

What the government is really scared of is giving you the freedom to watch what you want to watch. Things are set up now so that the government determines what you watch. 

"Last year, we put $14.4 million into local communities," says Steve Schorr, Vice President of Public and Government Affairs, putting things in perspective. "And it's up to local governments to determine where that money goes. It's not up to Cox, and it's not our responsibility. We have no control over these matters because everything is mandated by government." 

Schorr doesn't seem to enjoy this fact, but as he points out: "In some Nevada communities, the franchise fees paid by all franchise providers can amount to 20 to 30 percent of the general fund budget. At least the money that we charge goes into a general fund, which benefits the overall community." 

The fact remains that Cox charges a "franchise fee" to its customers, which the city and county then collect to pay for employees and broadcasting equipment. The fee - again, 5 percent of all Cox cable subscription payments - is an added 5 percent of cost. More accurately, it's a 5-percent tax that the government passes on to Cox customers. 

When Liberty Watch called Cox customer service to ask what a franchise fee is, it was even described as "a tax" that allows customers to "enjoy community programs." 

Defenders of the current franchise agreement maintain that Cox subscribers already pay for a lot of mediocre cable content - like, say, with a monthly rate of around $10 for "basic cable." But the cost of that mediocre content is bundled together with many other stations. Therefore, content costs less. Cox subscribers aren't being charged an added fee to watch, say, QVC. 

One would assume that local governments would argue for doing away with the franchise fee, and instead ask for bids from Cox and other companies to actually produce - not just throw money at - community programming. After all, that's a free-market scenario. 

Instead, Cox is stuck as the government taxman, simply handing over money to government for it to waste on union employees and government channels in Las Vegas. 

Even worse, just last year, Cox was forced into a position to ask for state legislators to tax satellite TV companies to the tune of 5 percent, so as to create a more level playing field. 

"Any multi-channel provider of services should be treated the same way," says Schorr, defending Cox's position on the issue. 

"Why should one customer be treated differently from another?" 

One of the major criticisms of free-market capitalism has always been that it's a system that fosters monopolies due to lack of regulations. But in the case of the Las Vegas cable market, the opposite is true. 

Government interference in the free market has created a cable monopoly in southern Nevada (Cox), a monopoly that seeks to increase taxes for southern Nevadans. Hell, Cox even wrote the legislation in last year's Assembly Bill 151, which exempted cable companies from a 5-percent tax. The bill was shot down. 

Make no mistake: Cox is a government-created monopoly. No one else has a pipe directly to your house. And only one monopoly has immediate access to all new developments in southern Nevada in the form of easements. 

Furthermore, watching Channel 2 is watching government waste in action. If there's an item on the City Council agenda that affects you, you will likely attend the meeting, right? You don't need it piped into your house while you sleep. Anyhow, chances are you'll read about the item's outcome in the morning's Review-Journal, like everyone else. 

Sure, in case of emergency, the city and county channels are supposed to somehow provide emergency communications in the wake of something like a natural disaster or nuclear war. What, like talking heads at FOX won't be covering a major trauma? 

"The reason you don't have true public access is because of the control," says Schorr. "Cox has already set aside, if the government wants us to put together a program, a studio in which we can produce material. But it's their determination to spend the money any way they want." 

Seriously though, ask yourself this question the next time you pay your cable bill: If given a chance to save a little money, would you check a box that says you don't want to receive Channels 2 and 4? Liberty Watch bets you would check that box in a heartbeat. 

But with the money in the general fund going toward other necessities like hospitals, ambulances and law enforcement, it would be difficult to disentangle the money wasted on government programming from the larger fund without jeopardizing the current arrangement. 

"I am proud of what this company does for the local community," emphasizes Schorr. "We give back to the community like no other service provider. I've got nearly 1,100 employees who contribute to the local economy, and we pump millions as a local company into the larger economy of southern Nevada. The way we see it, the issue of franchise fees is a government issue, not a Cox issue." LW