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April 8, 2014

When & Why to Hire an Attorney for your VA Disability Claim

Filed under: Veterans & Military — Tom Hagen @ 8:04 pm

The following information is adapted from the website of the National Organization of Veterans Advocates (NOVA).  Follow the links to learn more.

When to Hire an Attorney/Agent

A recent change in VA law now allows a veteran to hire an attorney or qualified agent once the VA’s appeals process has been initiated; that is, once a veteran has filed a Notice of Disagreement (NOD) at his or her Regional Office (RO).  Unfortunately, the change in law (see 38 U.S.C.S. § 5904) only applies to claimants who filed their NOD on or after June 20, 2007.  If the veteran filed the NOD prior to June 20, 2007, then he or she must wait until the BVA issues a final decision before hiring an attorney or agent for a fee.

Why Professional Advocacy is the Veteran’s Best Option

In short, the reason to hire an attorney or agent is because VA laws and regulations are complex and the Board of Veterans Appeals retains an attorney for every appeal.  It makes sense for a veteran to be on equal footing when their claim goes through its most precarious stage.  As of 2007, a veteran must wait some six months before receiving a decision from a VA Regional Office (VARO) regarding a claim for service-connected compensation. Then, if the veteran’s claim is denied, the appeals process at the local VARO level can take another six months to two years before it is finally forwarded to the next level of the appeals process, the Board of Veterans’ Appeals (BVA) in Washington, DC. Once there, a veteran must wait approximately two years for a decision from the BVA. Similarly, the delay at the U.S. Court of Appeals for Veterans Claims (CAVC) on average is also two years. All said, if a claim for VA benefits is denied, a veteran can spend 10 years or more waiting for VA to make the right decision.  Veterans who pursue their appeals for VA benefits without professional representation are at a severe disadvantage.

Success Rates Improve with Professional Advocacy

Veterans have many options and agencies to help assist and represent them in securing their claims. However, veterans represented by attorneys have the lowest denial rate in front of the BVA, at 17.7 percent, well below the average 24.2 percent denial rate, according to the Board of Veterans’ Appeals Annual Chairman’s Report (Fiscal Year 2011).

Veterans with attorney representation before the BVA also are among the most likely to have their appeals allowed according to the report, with a 30.1 percent success rate. Veterans who are represented by claims agents have a slightly higher success rate at 32.7 percent, but the agents were responsible for only 71 successful appeals, whereas attorneys handled 1,295 cases.

Why Hire a NOVA Attorney/Agent

At the link above, you will find a list of NOVA sustaining members by State. To be listed in our directory, these attorneys and agents must meet certain practice and training requirements.

These members:

  • MUST be actively engaged in representing claimants pursuing VA benefits, and be accredited by the Department of Veterans Affairs and/or admitted to practice at the Court of Appeals for Veterans Claims.
  • MUST agree to comply with minimum standards of practice in representation of a veteran, including a thorough review of the veteran’s claims folder and timely filing and responses to all VA and Court designated timeframes for filings, pleadings, and motions.
  • MUST attend one Continuing Legal Education (CLE) course every 24 months, which is specific to veterans’ law, and certify to NOVA the confirmation of such attendance.

Following the links in this article to learn more.

Tom Hagen is a member of NOVA and recently received a scholarship from the organization to attend their Spring 2014 Conference in Pittsburgh, Pennsylvania.

Veterans Courts Offer Alternative

Filed under: Veterans & Military — Tom Hagen @ 7:42 pm

First posted March 16, 2014

When I returned to private practice with Bradley & Guzzetta last fall I was asked to join the team of the 5th Judicial District Veterans Court located in Mankato, Minnesota.  This week I will attend three days of training in conjunction with the Minnesota judicial system’s Veterans’ Treatment Court Planning Initiative.  The 5th District has also selected me to attend Veteran Court Conference 2 in Los Angeles in May.  My service with the court is entirely voluntary, and I am pleased and excited to have this additional opportunity to serve America’s veterans.
So what is a Veterans Court?  These courts first began in 2008 and there are now 130 of them in 40 states.  Also known as veterans treatment courts, they are an alternative to the regular criminal justice system.  They’re meant to address the unique needs and circumstances of veterans while recognizing their service and have been very successful in the short time they have been in existence.  Veterans courts are considered “problem solving” courts and use a multi-disciplinary team of professionals to address the needs of the vets in the program while promoting sobriety and stability.  One in six Iraq and Afghanistan vets suffer from substance abuse and 81% of vets arrested have a substance abuse problem.  Since 2004, the number of vets treated for mental illness and substance abuse has increased 38%.  Simply warehousing these people as may have happened after past wars is not the answer and fails to recognize the unique circumstances of their service on our behalf.
The court is designed for U.S. military veterans charged with misdemeanor, gross misdemeanor or felony offenses who are often struggling with addiction, mental illness and/or co-occurring disorders. The goal is to promote sobriety, recovery and stability through a coordinated response that involves cooperation and collaboration with the traditional partners found in problem solving courts, with the addition of the U.S. Department of Veterans Affairs Health Care networks, the Veterans Benefits Administration, volunteer veteran mentors and veterans support organizations.  For example, the following are some of the members represented on the team:  the vet court presiding judge, probation officers, prosecutors, defense attorneys, county veterans service officers, the jail administrator, volunteer mentors, and drug and alcohol counselors.  One of the key participants is the VA justice outreach coordinator who can keep the group informed of the veteran-defendant’s upcoming VA medical appointments, etc.  Other things the court may address are health care, emergency financial assistance, chemical dependency and mental health counseling, employment and skills training assistance, temporary housing and other referral services.
So how does it work?  After a veteran is charged with a crime, either prior to or after a plea or finding of guilty, the veteran-defendant with the consent of the prosecuting attorney may be offered the option to voluntarily participate in the program.  Participation is always voluntary.  The veteran-defendant then attends veterans court on a regular basis, as often as twice a month, for the duration of their probation.  The team meets before the court session for progress updates on each veteran and addresses any current needs the veteran may have with respect to getting back on their feet.
Veterans courts appear to be working. 67% of vets in the program successfully complete their treatment and those that receive VA services experience an 88% reduction in arrests from the year before.  As VA Secretary Eric Shinseki told Veteran Conference 1 in December, “Instead of either jailing veterans who have been brought up on charges or releasing them back to the streets, you have underwritten treatment as a powerful option for dealing with those who have broken our laws.”
Tom Hagen is a 25-year member of the Minnesota National Guard where he serves as a Lieutenant Colonel and judge advocate.  He deployed to Iraq twice with Minnesota’s 34th “Red Bull” Infantry Division.  Tom is a member of the National Organization of Veterans’ Advocates and has practiced law in Minnesota since 1997.  He concentrates on helping veterans and their family members receive the benefits they deserve.

Overview: The VA Claims Process

Filed under: Veterans & Military — Tom Hagen @ 7:40 pm

First posted November 5, 2013

“The willingness with which our young people are likely to serve in any war, no matter how justified, shall be directly proportional as to how they perceive the Veterans of earlier wars were treated and appreciated by their country.” George Washington, 1789

“…let us…care for him who shall have borne the battle, and for his widow, and his orphan…” Abraham Lincoln, Second Inaugural Address, 1865

As demonstrated in these quotes, the mandate to care for those who have “borne the battle” has been ingrained in our National ethos since our earliest days.  I am so inspired to be contributing to this heritage by focusing a legal practice on my fellow veterans.  And I am grateful and humbled by the willingness of Bradley & Guzzetta to add this service to their practice.  In this column I’ll provide a brief summary of the VA disability claims process.  A future column will describe the lawyer’s role in this process and how, when and why to hire one.

The United States Department of Veterans Affairs (VA) administers a variety of benefits and services that provide financial and other forms of assistance to servicemembers, veterans, their dependents and survivors. One of the most common benefits is Disability Compensation (DC). Disability Compensation is a tax free monetary benefit paid to veterans with disabilities that are the result of a disease or injury incurred or aggravated during active military service (“service connected”). Compensation may also be paid for post-service disabilities that are considered related or secondary to disabilities incurred in service and for disabilities presumed to be related to circumstances of military service, even though they may arise after service. Generally, the degrees of disability specified are also designed to compensate for considerable loss of working time from exacerbations or illnesses. (See www.va.gov) The bottom line is that veterans who can prove an illness or injury connected to or aggravated by their service may be eligible for benefits. This summary is not meant to be a detailed guide as to how to apply, or all of the details that accompany each step, detailed instructions for which can be found several places online.

VA Disability Compensation is, of course, for veterans. What is a “veteran” is not always as obvious as it may seem and is the first step in determining eligibility for DC benefits. For purposes of qualifying for benefits, the VA identifies veterans as “those individuals who served in the active military, naval, or air service, and [were] discharged or released therefrom under conditions other than dishonorable.” Again, veteran status is not always clear under this definition, but that is a topic for another post

As heard frequently in the media, the VA has a large backlog of claims and the process of applying for and receiving final determination may take several years. The steps to the claims process are as follows:

1. File a Claim. A claim can be filed at the local VA office or online. It is common for veterans to receive the assistance of their county veterans’ service office, or one of the service organizations (DAV, VFW, American Legion, etc.). A surviving dependent of a veteran may also file a claim for dependency and indemnity compensation, death pension, and accrued benefits.

2. Receive the decision.

3. If not satisfied with the decision, the applicant has one year from the date the decision is mailed to file a Notice of Disagreement (NOD). The NOD must be submitted in writing and express a desire that the matter be reviewed by the Board of Veterans Appeals (BVA). After sending a NOD, the veteran may request that an employee of the VA Regional Office, known as a Decision Review Officer (DRO), review the file. Once a NOD has been submitted, the veteran may hire an attorney to assist in the appeal.

4. After the NOD is reviewed, the VA will send the veteran a Statement of the Case (SOC), which will provide a detailed explanation of the laws, evidence, and regulations used in deciding the case. In addition, the veterans will receive a form for confirming that they still wish their appeal to go forward (VA Form 9).

5. Substantive Appeal. Using VA Form 9, the veteran provides specific reasons that he/she believes the VA decided the case incorrectly, within 60 days of the date the SOC was mailed or within one year of the date the VA mailed the original decision, whichever date is later.

6. Decision by the BVA. The BVA reviews cases in the order received. According to the National Organization of Veterans’ Advocates, as of 2011 it could take as long as 883 days for the BVA to review the appeal and make a decision. The BVA will grant the claim, deny the claim, or send it back for additional matters. The veteran’s options if the claim is denied are to try and reopen the claim at the Regional Office, ask the BVA to reconsider or review based on error, or appeal the decision to the U.S. Court of Appeals for Veterans Claims (CAVC).

7. Appeal to the CAVC. If the BVA denies a claim, an appeal can be filed with the CAVC, which has exclusive jurisdiction to review adverse decisions of the BVA. This special federal court of appeals reviews the record for error. It is not a trial court and there are no witnesses or new evidence allowed. At this point the VA is represented in the proceedings for the first time by government attorneys opposing the appeal.

Although this summary of the VA disability claim process was short, the issues can be legally complex. Questions of veterans status, connection of the veteran’s service to the injury or illness, and the disability rating derived therein represent just a few of the reasons a veteran should consider a trained advocate on their side. A future post will cover the role of an attorney in representing a veteran in the appeal process and provide a guide as to when and why to hire an attorney for the appeal.

Tom Hagen is a 24-year member of the Minnesota National Guard where he serves as a judge advocate.  He deployed to Iraq twice with Minnesota’s 34th “Red Bull” Infantry Division.  Tom is a member of the National Organization of Veterans’ Advocates and has practiced law in Minnesota since 1997.

Welcome to Tom Hagen

Filed under: Uncategorized — Tom Hagen @ 7:35 pm
First posted in October 2013
I want to take my first opportunity to contribute to the Bradley & Guzzetta website to introduce myself and thank Mike Bradley and Steve Guzzetta for inviting me to join their firm. I have been practicing law in Minnesota since 1997. I am focusing my current efforts on assisting veterans after over 15 years as a general practitioner, military lawyer and government employee. I also have a strong interest in public service as I strongly believe it to be critical to the health and vitality of our American experiment in self-government. My nearly 25 years in the National Guard with three overseas deployments since 2003 have also given me a strong appreciation for and desire to serve my fellow veterans. It is for them that I have returned to the private practice of law. Although I am focusing on veterans, I bring a wealth of experience in law, government, public policy and military affairs to the firm and am available for a wide range of matters.
I’ve known Mike since we served together in the National Guard as judge advocates (military lawyers) in the late 1990s. I am a born and raised Minnesotan and my family has deep roots in Minnesota and the Upper Midwest. I was born at the old St. Mary’s Hospital (now University of Minnesota Riverside) and graduated from Chaska High School in 1986. While studying political science at the University of Minnesota-Duluth I developed my interest in government, politics and public policy. This led to my interning in then-U.S. Senator Dave Durenberger’s Washington, D.C. office and eventually a full-time gig on his staff after I graduated.
I returned to Minnesota to attend law school at William Mitchell at night while I worked for the State of Minnesota during the day. After graduating my wife and I decided that we wanted to start a family in a small town and I accepted my first attorney position with a small firm in Waseca, Minnesota. I commenced to start a family and a general practice focusing on family, criminal and municipal law. It was a great place to learn the ropes of the law. My interest in community service also led to my seeking public office and election as Mayor of Waseca in 2000.
In the post-9/11 era, my service with the Minnesota National Guard led to three overseas deployments starting in 2003. As a young captain and judge advocate with the 34th Infantry Division, we deployed to Bosnia-Herzogovina in support of the Dayton Peace Accords that ended the war following the break up of Yugoslavia. This was the largest deployment of the Minnesota National Guard and the first for the 34th Infantry Division headquarters since the end of World War II. Little did we know that this was just the first of many deployments for the Minnesota National Guard and its Red Bulls. I then served as the Brigade Judge Advocate (senior lawyer) for the 34th’s First Brigade Combat Team in southern Iraq in 2005-06. Caught in the 2007 surge, the First Brigade’s 22-month deployment turned out to be the longest for any U.S. Army unit in Operation Iraqi Freedom. I then deployed for my third time as the Deputy Staff Judge Advocate for the 34th Infantry Division headquarters as it deployed for the second time since World War II in 2009. The 34th provided command and control for 16,000 troops in the 9 provinces of southern Iraq. I currently hold the rank of Lieutenant Colonel. Between deployments I returned to state service as an Assistant to the Commissioner at the Minnesota Department of Commerce. I recently completed a three year set of active duty orders with the National Guard in a mission supporting civil authorities in domestic emergencies and natural disasters.
My wife and I continue to live in Waseca, Minnesota with our three children. I am a member of the American Legion and VFW and coach youth baseball. My wife has been a financial advisor with Edward Jones since 1999. Our two boys are involved in baseball and football and our special needs daughter brings much joy and challenge to our lives. We like hunting, fishing, boat and camping. I guess you could say we are natural Minnesotans. My full professional bio can be found on the firm website at http://bradleyguzzetta.com/TomHagenBio.html, and I can be reached at thagen@bradleyguzzetta.com.

April 7, 2014

Competitive Cable Franchising in Minnesota

Filed under: Cable Television — Mike Bradley @ 6:52 pm

Originally published on September 17, 2009

Companies that want to provide cable service are required by the Federal Cable Act to acquire a cable franchise from a unit of local government before providing service. In Minnesota, cities are the local unit of government that is authorized to grant cable franchises. Federal law also requires these franchises to be non-exclusive. In other words, no city may grant an exclusive franchise to any one particular company. For many years, most cities did not see more than one provider seeking a cable franchise. There are many reasons for this, but probably the biggest reason was that it was prohibitively expensive for a competing cable operator to construct cable wire and other facilities throughout a city. It was simply cost-prohibitive in most situations. However, with recent changes in technology and the ability of telephone companies to provide video service through IP technologies, the competitive landscape is changing. More telephone companies, particularly rural telephone companies are seeking to add video to their lineup of service offerings to their customers.

State Law Considerations

When there is an existing cable franchise in place in a city, the second competitive franchise must not be “more favorable or less burdensome than those in the existing franchise pertaining to: (1) the area served; (2) public, educational, or governmental access requirements; or (3) franchise fees.” When the new cable entrant is proposing different franchising requirements in these three areas, it is up to the franchising authority and the other interested parties to reach agreement on what “more favorable or less burdensome” means in this context. As of this posting, this issue has not yet been fleshed out by any court in Minnesota.

Another consideration is whether the competing company is a “cable communications company” as that term is defined by the Minnesota Cable Act. If it is not, the level playing field provisions of the Minnesota Cable would not apply.

Local Considerations

When looking at granting a competitive cable franchise, it is also important to understand any “competitive equity” or “level playing field” provisions in the existing cable franchise. It is not unusual for the existing franchise to have language that contains limitations beyond the level playing field conditions set forth in state law. The language may also apply to more companies than merely cable communications companies.

Federal Considerations

In 2007, the FCC released two orders relating to competitive franchising. The first order addressed competitive applicants for cable franchise and the second order addressed whether the rules in the first order applied to the existing franchise holder. Under the first order, the FCC adopted new rules concerning the application for an additional cable franchise starting with the time in which a request for a franchise must be acted upon.

Competitive Franchise Deadlines

If a company already has authority to access the public rights-of-way, the franchising authority my act on an application within 90-days.
All other applications must be acted on within six (6) months.
A franchise applicant has the burden of proving that it filed the requisite information with the franchising authority.
Unless otherwise agreed by the applicant and the franchising authority, if deadline is not met then an applicant is automatically granted interim authority to utilize public rights-of-way to provide cable service.
The terms of an “interim franchise” are those proposed in an applicant’s application and remains in effect until a local franchising authority takes final action on a franchise application.
Network Build-Out Requirements

Like state law, the FCC in its first order addressed the area a franchising authority may require in a cable franchise. The FCC declared it is unlawful for franchising authorities to refuse to grant a competitive franchise on the basis of “unreasonable build-out mandates.” In Minnesota, it will be up to the parties to apply this language consistent with the state level playing field language relating to area served.

While the FCC did not definitively define what constitutes an “unreasonable build-out” mandate, it did list examples of both reasonable and unreasonable build-out requirements.

Examples of Unreasonable Build-Out Requirements

The FCC’s examples of unreasonable build-out mandates include:

requiring a new entrant to serve everyone in a franchise area before it has begun to serve anyone;
requiring facilities-based entrants, such as incumbent LECs, to build out beyond the footprint of their existing facilities before they have even begun to provide cable service;
requiring more of a new entrant than an incumbent cable operator by, for instance, requiring the new entrant to build out its facilities in a shorter period of time than that afforded to the incumbent;
requiring the new entrant to build out and provide service to areas of lower density than those that the incumbent cable operator is required to build out to and serve;
requiring a new entrant to build out to and service buildings or developments to which the entrant cannot obtain access on reasonable terms or which cannot be reached using standard technologies; and
requiring a new entrant to build out to and provide service to areas where it cannot obtain reasonable access to and use of public rights-of-way.
Examples of Reasonable Build-Out Requirements

The FCC notes that it would seem reasonable for a local franchising authority to consider benchmarks requiring the new entrant to increase its build-out after a reasonable time, taking into account the new entrant’s market success. The FCC also opined that it would seem reasonable to establish build-out requirements based on a new entrant’s market penetration.

Redlining

With regard to redlining, the FCC continued to rely on 47 U.S.C. § 541(a)(3) to protect consumers against economic redlining, also known as cherry picking.

Conclusion

Franchising competitive operators in Minnesota involves the consideration of federal, state and local laws and contracts. For more information do not hesitate to contact the attorneys at Bradley & Guzzetta, LLC.

Filed under: St. Paul,Woodbury — Mike Bradley @ 6:48 pm

Originally published October 3, 2013.

An old saying for folks living on the East Side of St. Paul is “once an East Sider always an East Sider.” It’s still true today. Although I haven’t lived on St. Paul’s east side for over 20 years, I still identify with it. I guess I’ll always be an East Sider.

The East Side has always been a tough side of town. The people are a no nonsense type of people. You don’t get away with having fancy airs about you. But it has also been a place to raise families and a place that cares about its community. A place that takes care of its own. I don’t think that has changed.

But on the night of August 10, 2013 something terrible happened on the East Side. That night, Ray Widstrand, went out to walk his dog. He never got home.

As Ray walked toward a group of people, he was struck in the head so hard that he became unconscious. That was the first blow. After that the group took turns kicking and hitting Ray – mostly in the head. He was then stripped out of his clothes – still unconscious. Robbed. Left for dead.

Incredibly, Ray survived. But he suffered brutal brain injuries. He now has a long road of recovery ahead. He did nothing wrong. All he was doing was walking his dog. There was no reason for theattack.

Ray and his family need help. Ray’s friends have put together a fundraiser. It is being held this Saturday, October 5, 2013 at the Goodrich Golf Dome. This is the dome over by Aldrich Arena. The event is called Putts Fore Ray. It is meant to be a fun event. Miniature Golf, music, food, silent auction.

Please consider helping in any way that you can. There has also been a fund set up called Ray’s Fund. You can drop donations off at any Wells Fargo. East Siders, Ray needs our help. We are participating. I hope you will too.

But I Didn’t Order That!

Filed under: Cable Television — Mike Bradley @ 6:45 pm

Originally Published October 8, 2013

A Couple of years ago, Comcast told its subscribers that it was converting most of its channels from analog to digital. The transition, according to Comcast, would result in all sorts of great benefits to subscribers. But, there was a catch. You now had to have a converter box on all of your TVs.

No problem said Comcast, “we we will provide our residential customers at the Standard level of service and higher with one digital set-top converter and up to two digital adapters – all with remotes – at no change in the current monthly service cost.” All subscribers had to do was call and request the boxes. Subscribers did just that.

For about 2 years, everything went as promised. Then Comcast changed course. It started to charge subscribers $1.99 per subscriber per box for these converter boxes. Subscribers cried out, “wait a second, you said I wouldn’t be charged!” It was pointed out by some rate authorities that the $1.99 charge was $1.49 higher than the maximum permitted rate on Comcast’s Rate form.

Comcast changed course again, indicating that the $1.99 fee was a service fee rather than an equipment fee. Then Comcast said that of the $1.99 fee, $.50 was for equipment and $1.49 was for service. Not only were subscribers now being charged for equipment that they were previously told would be provided at no cost due to Comcast’s decision to convert its cable signals, but they were now being charged for a service that they never ordered at all. When subscribers realize they are now being charged for this new never-been-described service, the collective subscriber response has been, “but I didn’t order that!”

Years ago, Congress passed a law that was designed to protect cable subscribers from being duped into buying new equipment and services without actually asking for it. A practice called negative option billing. The FCC has a similar rule.

Were subscribers duped by Comcast? We think so. This story from King 5 News in Seattle shows that subscribers think so too.

Commercial Satellite Subscribers Beware!

Filed under: Business,Satellite — Mike Bradley @ 6:40 pm

Originally published October 25, 2013.

Many businesses buy Satellite television service. When they buy it, they want it working and they want it cheap. Satellite operators are happy to oblige and sign ‘em up. They might get residential service or a form of commercial service. Who cares, it’s working right? Buyer beware!

It does matter. What many businesses don’t realize is that they need specific authorization to publicly show the programming. When the service is ordered and installed, this may not be made clear to the business. Without the right authorization, the business could unwittingly be violating federal law. And the law is punitive.

Eventually, satellite operators like DirecTV investigate their commercial subscribers. Here’s how they do it. The operator, through a law firm, sends a private investigator to the place of business. The PI takes video inside the establishment and may even ask the establishment to change the channels to see different programming. The video will show the number of patrons and the programming. The PI sends the video and pictures to the attorney.

Armed with this information, the operator’s attorney will send a demand letter to the business claiming the business violated federal law, 47 U.S.C. §605(e), for the unlawful public showing of satellite programming. The attorney will demand money. A lot of money. If the business doesn’t pay, the operator may sue and seek the following:

· Actual or Statutory damages which allows for a recovery between $1,000 and $10,000, in the courts discretion. See [§ 605(e)(3)(C)(i)(I)-(II)]; and
· Enhanced damages for a willful violation in an amount up to $100,000. See [§ 605(e)(3)(C)(ii)]; and
· Attorneys fees and costs. See [§ 605(e)(3)(B)(iii)].

The suit is usually brought in federal court, where the operator knows it will be more expensive to litigate. In 2012, the U.S. District in Wisconsin ruled against a bar/restaurant for showing a sporting event without authorization to 43 patrons. The court calculated statutory damages at $55 per patron, but added another $19,978 for enhanced damages and attorney’s fees and costs. An award of $24,000. For a small business that is a big hit. In that case bar/restaurant didn’t appear and that was held against them in terms of enhanced damages.

Add in attorney’s fees to defend the business, and it’s easy to see how significant the impact could be on a small business.

The lesson for business owners is to review the satellite service agreement. Now! Don’t wait for the demand letter to show up at your door.

Cable Franchise Fees

Filed under: Cable Television — Mike Bradley @ 6:36 pm

Originally published September 27, 2010.

The FCC clarified several issues surrounding the calculation of cable franchise fees in its report and order in 2007, including:

(i) the franchise fee revenue base;

(ii) limitations on charges incidental to the awarding or enforcing of a franchise;

(iii) the proper classification of in-kind payments unrelated to the provision of cable service; and

(iv) the proper classification of contributions in support of PEG services and equipment.

Later in a Second Report and Order, the FCC applied the majority of these findings and rules to existing as well as competitive entrants.

Franchise Fee Revenue Base

In its order, the FCC clarified “that a cable operator is not required to pay franchise fees on revenues from non-cable services.” According to the FCC, this prohibition would specifically apply to cable modem service revenues, broadband data service revenues, Internet access revenues and other non-cable service revenues.

The FCC did not specifically address whether advertising revenues, home shopping channel commissions, launch support, late fees, installation fees and even equipment revenues, because they could be considered “non-cable” services. The FCC does note that advertising revenues and home shopping commissions have historically been included in gross revenues for franchise fee calculation purposes, but it does not say such revenues and commissions can be included in the calculation of gross revenues going forward.

Charges Incidental to the Awarding or Enforcing of a Franchise

Section 622(g)(2)(D) of the Cable Act excludes from the federal five percent franchise fee cap “requirements or charges incidental to the awarding or enforcing of the franchise, including payments for bonds, security funds, letters of credit, insurance, indemnification, penalties, or liquidated damages . . .” According to the FCC, the term “incidental” includes only those items listed in Section 622(g)(2)(D), “as well as other minor expenses” described in the order. Examples of charges that are not “necessarily” to be regarded as incidental include processing fees, acceptance fees, consultant fees, and attorney fees. Reasonable franchise application fees and processing fees are, however, to be regarded as proper incidental fees that do not count towards the federal franchise fee cap.

The FCC also concluded that “free or discounted services provided to an LFA” and certain “in-kind payments” are non-incidental costs that must be considered franchise fees. The order was silent on the specific treatment of institutional networks and whether the costs associated with providing fiber for institutional networks and furnishing free drops, outlets and cable service to governmental institutions could be deducted from a cable operator’s franchise fee payments.

In-Kind Payments Unrelated to the Provision of Cable Service

The Report and Order finds that “any requests made by LFAs that are unrelated to the provision of cable service by a new competitive entrant are subject to the statutory 5 percent franchise fee cap.” The FCC provides no concrete guidance as to what types of financial and in-kind requests would not be counted against the franchise fee cap, but does list certain examples of requirements that apparently would be deemed franchise fees, if included in franchise documents, such as scholarship grants, video hookups, money for wildflower seeds and fiber for traffic signal monitoring.

Contributions in Support of PEG Services and Equipment

Section 622(g)(2)(C) of the Cable Act specifies that “capital costs which are required by the franchise to be incurred by the cable operator for public, educational, or governmental access facilities” are not franchise fees. The FCC interprets this language to encompass “those costs incurred in or associated with the construction of PEG access facilities.” The order goes on to state that “payments in support of the use of PEG access facilities” are franchise fees. These payments in support of PEG include, but are not limited to, “salaries and training.”

PEG and I-Net Requirements Under FCC Local Franchising Order

Filed under: Cable Television — Mike Bradley @ 6:34 pm

Originally published on September 27, 2010.

The recently affirmed FCC order on local franchising concludes that “LFAs may not make unreasonable demands of competitive applicants for PEG and I-Net” and that doing so constitutes an unreasonable refusal to award a franchise.

Reasonable and Adequate Support

With regard to PEG channel capacity, the FCC determined that it would be unreasonable “to impose on a new entrant more burdensome PEG carriage obligations that it has imposed on the incumbent cable operator.” The FCC found that PEG support must be both “adequate and reasonable.” Adequacy is defined by the FCC as “satisfactory or sufficient.” The order does provide some examples of unreasonable PEG support obligations, including:

· completely duplicative PEG and I-Net requirements;
· payment of the face value of an I-Net that will not be constructed; and
· requirements that are in excess of the incumbent cable operator’s obligations.

Pro Rata Cost Sharing is Per Se Reasonable

According to the FCC, pro rata cost sharing of current (as opposed to future) PEG access obligations is per se reasonable. Unfortunately, the FCC did not provide additional guidance on how to properly and accurately calculate what the appropriate per subscriber payment should be made. Questions remain about situations where lump sum PEG grants and in-kind contributions are included in an existing franchise agreement.

In the event that pro rata cost sharing is utilized, PEG programming providers must permit a new entrant to interconnect with existing PEG video fees. The new entrant must bear the cost of interconnection. The order is silent on where interconnection must take place, or what type of transmission medium (e.g., fiber or coaxial cable) must be used.

Regulation of Mixed-Use Networks

The order states that “LFAs’ jurisdiction applies only to the provision of cable services over cable systems. To the extent a cable operator provides non-cable services and/or operates facilities that do not qualify as a cable system, it is unreasonable for an LFA to refuse to award a franchise based on issues related to such services or facilities.” In other words, cable franchising decisions can only be made based on issues related to cable service.

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