Statewide Video Franchising Legislation: Bad Bills in Tennessee & Louisiana, and an Innovative Approach in Minnesota

Legislators in both Tennessee and Louisiana have heavily promoted statewide video franchising legislation this session.  Just this past week the Tennessee House approved HB 1421, the "Competitive Cable and Video Services Act," while Louisiana legislators have introduced multiple statewide franchising bills, with SB 807 having the most momentum.  The common thread between each Louisiana bill is that they are all bad for consumers.  

In theory, statewide video franchises, which create a single statewide, simplified process of offering cable services, could have benefits for the public, such as increasing competition.  Unfortunately, however, the legislation enacted so far does not include strong enough consumer protections or broadband deployment requirements and once implemented generally does not supply the promised benefits. Despite, all the evidence from the National Association of Telecommunications Officers & Advisors (NATOA),Texas, and North Carolina that statewide video franchising without strong build-out requirements, consumer protections, and mandatory Public, Educational, and Governmental (PEG) access channel support does not produce positive results for residents, states continue to push through bad legislation.For example, according to a study conducted by NATOA, consumers in states that have enacted state-level franchising laws have seen their cable service bills go up 8% to 50%, depending on the level of service .

Problems with Tennessee and Louisiana Franchise Bills:  Proposed legislation in both states reflect the worst of the bad policy from franchise legislation enacted in other states, including:

  • Build-out Requirements are Minimal:  The bills will allow providers to offer services to wealthy, more profitable neighborhoods and ignore more unprofitable areas, like isolated and low-income regions.  The Tennessee bill allows providers to define and cherry-pick attractive areas of services, allows too long of time period before service must be made available to a minimum percentage of households, and has odd formulas that could be manipulated to let franchise holders potentially count certain households multiple times.  Louisiana's SB 807 is even worse with a complete prohibition on having any build-out requirements.
  • Municipal Power is Too Limited:  Tennessee's bill not only takes away municipal power by regulating local franchises, the legislation also limits municipalities' ability to provide broadband services themselves.  Louisiana's SB 807 severely limits fees paid to local communities or that can be imposed in exchange for giving providers access to public rights-of-ways.
  • Public Access Television (PEG) Support is Insubstantial Tennessee's bill greatly limits residents access to PEG stations and reduces both the quality of transmission and funding for PEG stations.  Under both the Tennessee and Louisiana legislation, there is no obligation to provide PEG access programming in a basic or analog service package.  The movement of PEG stations out of the basic package will have the largest impact on low income and elderly households who often cannot afford more expensive television packages.
Minnesota Takes A Smart and Novel Approach to Statewide Video Franchising:  In Minnesota, Representative Sheldon Johnson has introduced House File 2351 to study the impact of state video franchising.  HF 2351 directs the Department of Commerce to request a proposal for a study of the "impact of statewide video franchising legislation enacted in at least three states."  The study would include information on how statewide franchising would effect:

  • competition;
  • video service prices;
  • franchise fee revenues received by municipalities from video service providers;
  • the number of PEG channels available to communities, the amount of revenues received by municipalities to support PEG programming in communities and the effect on the amount of PEG programming available in communities;
  • the progress of new cable providers in meeting any build-out requirements in the law; and
  • municipal services provided to communities by cable service providers.

Conducting a study to analyze the positives and negatives of statewide video franchising in other states is a good way to ensure that before Minnesota takes any action, legislators have accurate information on the potential effects of statewide franchising.  This impact study will allow Minnesota -- and other states -- to determine if statewide video franchising is the correct action to take and what consumer and municipal protections must be included.





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