Out of Control Policy Blog

Franchise Reform News Nevada and Illinois

Nevada Gov. Jim. Gibbons signed AB 526 Monday, creating a statewide franchising process in the Silver State.

Compared to similar legislation in other states, where reform has taken a year or two to happen, Nevada moved rapidly. The bill was introduced on March 23.

The bill holds franchise fees to the federal cap of five percent of gross video revenues. Nevada in turn limits "gross video revenues" to income directly derived from the provision of cable service to consumers. The bill's definition does not include local ad revenues and sales commissions from shopping channels in the formula, however, neither are they explicitly excluded. Competitors much match the number PEG channels provided by the competitor. If none are offered, local communities of less than 50,000 may require up to two PEG channels. Communities of 50,000 or more may require up to three. Local communities, however, must provide up to 12 hours of programming a day, 80 percent of which is non-repeat. (In governmentspeak, the term "non-repeat" is applied liberally. For example, the tape of a city council meeting can be shown up to three times before being considered "repeat" programming.)

There are no build-out requirements, although there are anti-"redlining" provisions.

In Illinois, a state franchise bill passed the state House of Representatives last week 113-0. It now goes to the Senate. The bill, which was hotly opposed by municipal interests, contained some compromise measures hammered out among legislators, House Speaker Michael Madigan and State Attorney General Lisa Madigan.

Among the new provisions, according to the Chicago Tribune, is a requirement that all providers of video service give customers a four-hour service window when called. If a technician doesn't show up within that time, the customer would get an automatic $25 credit. Customers would be allowed a 60-day trial period for new services and the contract period for video services would be limited to one year.

Build-out requirements are somewhat convoluted. Essentially, within 5 years, at least 30 percent of households where service is available must qualify as low-income, 40 percent in Chicago.

It appears to be a win-win all around. Although I have my misgivings about government-mandated build-out schedules, I am more doubtful that, after investing billions of dollars in network upgrades, new entrants would deliberately choose not to sell service to large segments of the population. Market data shows low-income households purchase cable services at the same rate as wealthier ones. However, if these provisions change opposition of franchise reform to support, all the better. Even without them, these demographic segments would be very much in play.


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