Out of Control Policy Blog

The Mackinac Center Looks at Franchise Reform

The Mackinac Center for Public Policy in Michigan makes the case for cable franchise reform in a new paper by Diane S. Katz published Sept. 19.

Timed to coincide with hearings on Michigan House Bill 6456, which would create a statewide video franchising structure, "Assessing the Case for Franchise Reform" praises the creation of a uniform franchise requirement that would be administered by the Michigan PUC. This will speed entry of competition into local cable markets, as Katz shows through data from states like Texas and California that already have legislated statewide franchising. Still, Katz rightfully criticizes the bill for not permitting incumbent cable to convert to a statewide franchise agreement upon entry of a competitor.

While statewide franchising is a practical way of streamlining cable regulations–the regulations themselves will continue to adversely affect roll-out and may, in the end, wed franchise revenues to the cable model, which is being challenged by Internet video downloading services.

Katz writes:

"As a matter of policy, there is little rationale for main¨taining a franchise regime of any sort. The development of competitive video alternatives to cable undercuts the primary justification for municipal franchising. Moreover, state law would still empower communities to manage public rights-of-way in the absence of municipal franchising. Unfortunately, resistance to reform runs strong among those with a vested interest in the status quo – that is, municipalities and the cable industry. But enhancing consumer benefits and technological innova¨tion matters far more than preserving regulators' powers or special-interest advantages."


Download "Assessing the Case for Franchise Reform" here.


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