Like almost every public official in the Washington area, Fairfax Supervisor Joe Alexander is looking for a pot of gold to pay the mounting bills of local government. He thinks he's found it with something that the area's politicians are about to give away: lucrative cable television franchises.
"There are millions of dollars to be made on cable TV," says Alexander. "Municipalities could bring in tons of revenues [for themselves] on a service like this."
So Alexander, a ranking Democrat on the Fairfax board, has persuaded the county to study something that cable industry executives call heresy: public ownership of cable television systems.
Proponents of public ownership point to almost three dozen communities that have built cable systems with public money and are collecting a portion of the billion-dollar profits the industry enjoys. In a county the size of Fairfax, they say, where cable television revenues could top $20 million annually after the first five years of operation, the potential profits to the county could be enormous.
But Alexander's idea is certain to face tremendous obstacles in a state that is as probusiness as Virginia and in a county that has seen as many cable lobbyists as Fairfax. The Virginia legislature is dotted with lawmakers who are stockholders in local cable companies, a fact that some say will make the lawmakers in Richmond less than eager to approve legislation allowing Fairfax to own its own system.
"I really think something like that would have almost no chance of getting through the General Assembly, which as you know is a free enterprise body," says State Sen. Adelard Brault (D-Fairfax), who himself has a financial interest in a cable company that is considering bidding on the Fairfax franchise.
Other legislators with a financial interest in private cable firms include Del. Vincent Callahan, Northern Virginia's ranking House Republican, and State Sen. William T. Parker, a Chesapeake Democrat. Callahan holds equity in United Cable Television Corp., a firm that has expressed an interest in the Fairfax franchise. Parker has a 14 percent share of a Cox Cable Communications subsidiary in Tidewater.
Under legislative rules, Brault and the others are supposed to abstain from voting on any measure that could affect their own finances. Their votes could be irrelevant, however, given the legislature's general bias against local governments operating any ventures that private businesses are willing to undertake.
Without specific state legislation, Alexander's idea could fall victim to a common law doctrine known as the Dillon rule. That doctrine, in force in Virginia and a number of other states for more than a century, holds that cities and counties may take only those actions specifically approved by the legislature.
According to a spokesman for Virginia Attorney General J. Marshall Coleman, there is nothing in existing state law that either permits or prohibits municipally owned cable systems.
Even if Fairfax County manages to work its way through the legal labyrinths, would it be worth the county's time, effort and money -- an estimated $60 million -- to build the system?
Proponents of public ownership maintain that raising the money would not pose a problem, and that expected profits would more than justify the expense. Municipalities could easily sell tax-exempt revenue bonds, they say, thus raising the required capital at a cost well below what private companies would face. The revenue would be underwritten by cable television subscriber fees, not county tax revenues.
"It doesn't make sense for municipalities to just give away their cable rights to out-of-state companies who have no real commitment to community residents," says Ronald E. Wills, a Minneapolis businessman who calls himself one of the nation's top lobbyists for public ownership of cable. Wills' position is not purely philosophical. He hopes to secure a commission by arranging bond sales for municipal cable systems.
Private cable companies "want to make as much money as they can," Wills claims. "Those interests are in direct conflict with the interests of local citizens and taxpayers. And yet we're giving them exclusive control. It doesn't make any sense."
If a municipality owned its own system, it would no longer be bound by federal rules that restrict local governments to levying a "franchise fee" of only 3 to 5 percent of a privately owned cable system's revenues. Over the long run that would mean the municipality could pocket the system's profits -- some cable experts estimate that can run as high as 30 percent of revenues -- to pay bills for such things as highways, energy and rising personnel costs.
It is also likely, the proponents say, that a municipal system could cut the price charged to customers. Nationally, subscriber rates for publicly owned cable systems run $2 to $3 less per month than those charged by private companies, according to John Mansell, who edits a respected cable TV newsletter.
Despite the lure of generous cable profits, political squabbles, philosophical questions about the proper role of government, and intensive lobbying by the cable industry have limited the nation's municipally run cable systems to only a handful of the estimated 4,100 systems currently in operation.
The city of Alexandria and Prince George's, Montgomery, and Arlington counties all considered and rejected the idea of public ownership within recent years. The reason: local officials believed private enterprise could perform the service better.
"Back in 1973 [when Arlington awarded its franchise], public ownership wasn't really an option," said Arlington cable administrator Scott Spaine. "Not many people were doing it then."
According to Montgomery County cable administrator John Hansman, officials there reasoned it would be unwise for the county to deplete its bonding capacity or invest public money in a potentially risky enterprise like cable TV when dozens of experienced private cable companies were eager to perform the service.
"The question became: what is the special value of devoting our time, attention and resources from things only the government can do to something that private industry is willing to do for us," said Hansman. "We found it less inviting than franchising."
Cable industry executives opposed public ownership as threatening unwarranted and unfair competition and say it would enable the government to dominate the media at a time when technological advances make it theoretically possible for a cable system to control as many as 100 channels of TV programming.
"I don't think any arm of the government has a legitimate role in determining what people might see or read," says Tom Wheeler, president of the National Cable Television Association, an influential trade group. "That's the function of an editor, and it's something that is sacrosanct."
Other discouraging words come from industry analysts, who say locally run cable systems are vulnerable to the political pressures of the politicians who run them. They caution that low municipal salaries would not attract the management talent that major cable corporations like TelePrompter, Cox Cable and Warner Amex might bring.
Some argue that risks to cable systems are legion, and governmental bodies have no right taking such risks with public funds.
"If you were running a cable system, you'd hope that 35 or 40 or 45 percent of the households would subscribe," says Gary Urvitz, a consultant with the Washington firm of Malarkey, Taylor and Associates. "If only 30 percent take cable, your company goes down the tubes. If it isn't professionally marketed and professionally run, it could be a multi-million-dollar loser."
Such arguments don't discourage San Bruno, Calif., city manager Gerald Minford, who says his 35,000-population city is making a profit of $200,000 a year on its 8-year-old system serving approximately 6,000 of the city's 14,500 homes. He says he expects the system will add almost $90,000 to its annual profits starting next year when the original $540,000 investment has been paid off. San Bruno's is the largest municipally-run cable tv system in the country.
"We've never had problems with First Amendment questions," says Minford. "We're competing with 20 other channels and four newspapers. Even if we wanted to carry biased news coverage [on a city-operated channel], all the other news media would love it. They'd all write about how biased our reporting was."
San Bruno's cable system boasts quick responses to customer complaints -- a feature that one local official said leaves neighboring Bay area governments "kicking themselves" for awarding franchises to private firms that sometimes take days to correct technical problems.
"I really wish we had a system like theirs," says the official, Diane Ceravolo, who monitors the performance of the privately-run cable system in neighboring Pacifica: "San Bruno was just way ahead of its time. Somebody had a lot of foresight over there when people here didn't know what was going on."