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Viewpoint: Additional CommentarySunday, April 29, 2007 1:49 AM CDT
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Local cable franchising inhibits competition
By Steven Titch
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Whatever its original intention, Illinois' current local cable TV franchising process is more a barrier to competition than a facilitator. That's why there is a bill currently before the General Assembly, HB 1500, that would create statewide franchising rules. It is sorely needed.

While municipalities talk about their desire to offer consumers more competition for cable TV services, they generally fail to deliver on this promise.

In less than two years, statewide franchising in states that allow it has done much more to encourage competition than thousands of towns and cities have managed in the 15 years since the FCC ordered them to open the process to competitors.

Statewide franchise reform means more competition for cable TV. More competition is likely to mean lower prices and greater value for Illinois consumers.

According to an original analysis published this month by The Heartland Institute, the typical Illinois household with a cable subscription would save $103 a year due to lower prices, plus gain $12 a year in services valued over and above the amount paid for them. The total consumer benefit would be $115 a year.

If every community in Illinois were competitive, the benefit to consumers would total $316 million a year due to lower prices and $36.5 million due to increased consumption of desired services.

The statewide annual consumer benefits would be $352.5 million.

While cable companies already face competition from satellite providers such as DirecTV and Dish Network, market studies show satellite market share has flattened at about 29 percent with no sign of future growth.

And satellite service is hampered by its lack of telephone and high-speed Internet service bundling.

Meanwhile, telephone companies have the capability to upgrade their existing networks with fiber optics in order to package multichannel video services around their own voice and data services.

But in their efforts to offer video to consumers, they are running head-on into franchise regulations at the local level that do nothing but impede rollout.

Residents of DuPage County proved to be an unfortunate example of this last year when local mayors and city managers launched a coordinated push to prevent AT&T from upgrading its fiber optics network. In at least one community the delay lasted 180 days.

Cable franchise agreements were originally set up as purely bilateral revenue-sharing arrangements. The community guaranteed a monopoly and the cable company was willing to bear the various extra costs the franchising process imposed.

The costs included franchise fees; rights-of-way fees; public, educational and government (PEG) channel overcapacity; and the costs of such "non-cash concessions" as the construction of parking lots and public swimming pools. Cable companies simply passed those costs along to consumers.

Local franchise rules represented an insurmountable barrier to entry for would-be competitors.

On top of all these demands, competitors often would be given just three to five years to build a network that extended to the same number of households that took an incumbent 10 to 20 years to reach.

Statewide franchising would end this nonsense.

Cities and towns would continue to receive franchise revenues, right-of-way compensation, and PEG channels, but franchises would be granted quickly and terms would be consistent across the state.

Cable and badly needed broadband services would no longer be an easy cash machine for local govern-ment.

In August 2005, Texas was the first state to adopt statewide video franchising. Almost immediately, Verizon began extending its FiOS network in Keller, Texas, which had until that point been operating as a pilot project.

By the end of the year, Charter Communications, the incumbent cable company in Keller, had responded to the competition by cutting some cable rates by 27.5 percent.

Seven more states, including Indiana, passed franchise reform in 2006.

In March, Missouri became the first of 12 states that have introduced statewide franchise reform in 2007 to pass it. It's time for Illinois to join them.

Statewide franchise reform invites the real competition that lights a fire under all the cable, satellite and telephone companies.

It means lower rates and better services for more people, especially as broadband services continue to expand. It's what Illinois consumers and their representatives want.

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Reader comments on this story - 5 total

Note: All views and opinions expressed in reader comments are solely those of the individual submitting the comment, and not those of the Pantagraph or its staff.

Free at Last wrote on May 2, 2007 2:32 PM:

" I finally got satellite and now that cable monkey's off my back for good! How you like me now, Mediacom? "

to Well wrote on May 1, 2007 9:22 PM:

" There's no voting with your wallet if AT&T wants to put a massive box in your backyard. Its going in there whether you want it or not! "

Well ... wrote on May 1, 2007 8:09 AM:

" ...if you don't like the choices, don't subscribe to the service. Use the power in your wallet. "

Whatever happened to public access channels? wrote on Apr 29, 2007 10:40 PM:

" I thought part of getting a franchise by cable companies was to provide local access channels so we could be better informed on what's happening in our communities. Apparently, if the channels ARE available, there's not enough interest or sponsoship available. I thought Cable TV was supposed to provide each community its own channel. Of course, there's opportunity for officials to blow their own horns and try to control the content. Could someone enlighten me on this fule? Is it still in effect and if so, why can't I find community cnannels? While we're at it, whatever happened to the money toschools that was supposed to come from Gambling Casinos and the Lottery? I don't remember seeing or reading any reports on anything other than the winning lottery numbers. I'd appreciate an update on that, too. "

Dupage wrote on Apr 29, 2007 9:16 AM:

" The problem was that AT&T wanted to put these massive 6 foot tall, 6 foot wide cabinets all over the place; in people's front yards, in their backyards, and all sorts of unsightly places. If AT&T had come up with more unobtrusive options for deploying their service, then there wouldn't be complaints. Their boxes are not like the little noticed Verizon building on G.E. Road near Towanda Barnes, they're big, obnoxious and there's a lot more of them. "
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