LE-15. Competitive Cable Franchising Authority (AH)
Issue: State legislation was introduced in 2010 that would have replaced local cable franchising authority with statewide video franchises. While 20 states have thus far created statewide franchises, effectively eliminating the role of cities in determining the terms of competition, other states have rejected such legislation in light of comprehensive studies by the University of Minnesota and others which found that despite promises by incumbent cable system operators of increased competition and/or increased services, competition actually declined, along with damaging decreases in support for local origination programming on local community, school and government access (PEG) channels and disruption or discontinuance of private sector maintenance of institutional networks (I-Nets).
Cities continue to maintain that transmission of video signals, regardless of how transported, remains subject to local franchising authority.
Unlike the exercise of local franchising authority, statewide video franchising models frequently make no provision for consumer complaints to be received and adjudicated at the local level. Such expedited complaint requirements at the local level solve such problems earlier, actually preserving customers for providers rather than increasing consumer anger toward the local video service provider.
Cities joined legislators during the 2010 legislative session in successfully pursuing legislation to encourage competitive entry while ensuring that community needs and interests are met.
Maintaining local franchising most effectively creates and preserves agreements that guarantee broad access to services throughout the community, ensuring there is no digital divide for access to available additional services such as access to IP voice and high-speed Internet via infrastructure that also delivers video programming services.
Response: State policy should maintain local cable franchise authority to ensure franchise agreements reflect new technology and are reasonably tailored to the technical and operational differences among providers and communities. Independent studies have clearly demonstrated that statewide franchising does not substantially increase direct competition to incumbent cable franchisees. The results of the 2009 University of Minnesota study point to significant problems for subscribers and the loss of community3 based programming and educational offerings as a result of implementing such laws in other states. The study also indicated that cable rate pricing in states that implemented state franchising did not decline despite assertions by incumbent cable franchises that price reductions would result. Likewise, cities would be likely to suffer the loss of revenues from providers for support of such services and for their use of public rights-of-way.
The Legislature, Federal Communications Commission (FCC), and Congress should also continue to recognize, support, and maintain flexible exercise of local franchising authority to encourage increased competition between incumbent cable system operators and new wireline competitive video service providers including.