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Statewide video franchising agreements,enacted in many states, have undermined consumer protections previouslyprovided by local franchising agreements. Analysisof the effects of statewide video franchises found that consumers in statesthat have enacted statewide franchising laws have seen their cable servicebills go up 8 to 50 percent, depending on the level of service.  Further, consumer's complaints, instates with statewide video franchising, remain high with 74% of surveyrespondents reporting no reduction in the level of complaints.

Despite the evidence to the contrary, serviceproviders have argued for years that the streamlined process of statewide videofranchises, instead of local franchising agreements, could have benefits forthe public; such as slightly increasing competition or facilitating a morestrategic statewide universal deployment plan.  These providers  with interests in breaking into the TV industry, have putintense pressure on legislatures to adopt statewide video franchises.  The problem is that industry playersoppose the public interest requirements that always have gone hand-in-hand withfranchise deals.

In the 2008 session, lawmakers in both Tennessee and Louisiana, joined 18 other states, whoallow for statewide video franchises. The legislation in both states reflect the worst of the bad policiesfrom franchise legislation enacted in other states, including minimal, if any,build-out requirements, limits to municipal power and insufficient support toPEG stations. 

The negative results of statewide videofranchising emphasize how crucial it is that franchise agreements protectconsumers and ensure affordable access to high-speed Internet.  States must protect community services,build-out requirements and PEG stations.

  • Build-out Requirements: As legislatures consider franchising legislation, they must confront how companies will be required, over time, to offer service to all communities.  The best method to ensure that discriminatory redlining does not occur — and to bring video competition to every household — is to require franchise holders to build-out their services on a reasonable timetable.  It is important that states not only specify build-out requirements, but also establish oversight mechanisms to ensure negotiated build-out actually occurs.  Some of the best build-out requirement language was proposed in New York A03980, which would have required video service be provided to half of the state's consumers within three years and to 85% percent within five years. Companies selecting the state franchise were not allowed to reduce existing service and redlining could bring on fines.
  • Public, Educational and Governmental Channels: Public Educational and Government (PEG) channels are often the only remaining media outlets that broadcast local voices, cover local issues, and show exactly how local governments work.  They also allow for targeted programming to reach particular segments of the community that might not be served by major outlets. In order to protect PEG stations, states must first ensure that statewide video franchises do not reduce or eliminate PEG funding and support. It is also important that states include regulations in statewide video franchising to ensure providers carry PEG channels on the most basic tier of service so that the channels are accessible to any individual with a television, regardless of income level or cable package.  Michigan legislators[LM3] , in an attempt to keep PEG on the basic tier, drafted HB 5693, to require that cable providers keep their government channels available to subscribers without requiring the need for additional equipment (unfortunately only until 2009 when all channels go digital).  Michigan's amendment uses language similar to that in California's state video franchising legislation, AB 2987, which required that PEG channels be receivable by all subscribers.
  • Protecting Municipality Power, Community Benefits and Consumer Protections:  Statewide video franchising legislation should protect municipalities’ rights to provide high-speed Internet to their residents, allow local communities to collect or share in franchising fees, and provide consumer protection mechanisms that provide fair outlets for customer service complaints.

Some statelegislators have taken steps to rebut the negative trend of statewide videofranchising legislation.  InMinnesota SF3337 directs the Department of Commerce to request a study to analyze theimpact of enacted statewide video franchising legislation in at least threestates.  This thoughtful approachensures that before Minnesota takes any action, legislators have accurateinformation on the potential effects of statewide franchising and what consumerand municipal protections must be included.  In Maine, legislators developed ModelMunicipal Franchise language that has a large portion of the terms alreadyagreed upon by telecommunications companies and ensures that local communitiesnegotiate for important consumer protections.  The model bill is an attempt to streamline the franchisingprocess without circumventing municipal power.  

Resources:
New Rules Project - InformationSector Policies
Educause White Paper - ABlueprint for Big Broadband
National Association of TelecommunicationsOfficers and Advisors (NATOA) - Understandingthe Impact of State Video Services Legislation
Free Press - Video Franchising
Telecommunications AdvocacyCoalition - Why LocalControl?
Alliancefor Community Media

Consumers Union, Elementsof Consumer Friendly State Franchising Legislation