Strengthening Communities

MI: Opposition to Video Franchise Bill that Fails Michigan's Communities

Like many other states, Michigan is struggling with how to build a technology infrastructure that can grow the state's economy and educate its children. Unfortunately, meeting in a lame-duck session, the Michigan's State Senate is considering an industry-backed bill, HB 6456, to create statewide franchises for video services by cable and telephone companies that will just increase company profits at the expense of consumers, low-income families, and technological innovation. Opponents of the bill range from the Michigan Municipal League protesting the destruction of community control to groups, led by Free Press, demanding Net Neutrality in access to Internet services.

The Progressive States Network outlined its full concerns about the bill in a letter sent to Michigan legislators, but the summary of problems with the bill -- like so many of these statewide "video franchising bills," includes:

• No real commitment to universal build-out of services: In exchange for abolishing existing local franchise agreements for video services, the bill requires that no more than 50% of households get service from these new statewide franchises. This will just institutionalize the digital divide where companies cherry-pick the most profitable areas within the state without having to serve all consumers, a recipe for continuing monopolies in many regions.
• Ignoring how broadband Internet is reshaping the video environment and key issues like Net Neutrality: Given the emergence of YouTube and other Internet-based video services, the bill is oddly fixated on past regulatory issues involving telephone versus cable companies, but does not specify build-out requirements for high-speed broadband Internet access to deliver these emerging video options. And while the bill creates "must-carry" provisions for broadcast television, there is no parallel discussion about assuring Net Neutrality and non-discrimination in access to Internet-based video sources for those using high-speed Internet services.
• Undermining municipal innovation in providing Internet services: The Michigan Municipal League has estimated that local governments may lose between $25 million and $35 million in in-kind services as part of franchise agreements (plus additional cash franchise fees), a loss that could undermine a range of local experiments underway in Michigan to promote universal broadband Internet access.
• Lacking an adequate regulatory structure: The bill eliminates the ability of local communities to negotiate fair treatment of consumers through local franchise agreements, yet fails to give the Michigan Public Service Commission adequate powers or funding to protect consumers and the public interest. And by exempting cost studies, customer usage data and other vital data from state Freedom of Information Act disclosure requirements, the public will be denied crucial information for public oversight of the industry.

Hopefully, the State Senate will vote down the current bill and take the time to craft a new bill in the 2007 legislative session that builds towards universal access to the telecommunications infrastructure needed for a 21st century economy in Michigan.

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