Policy Documents

Better Prices and Better Services for More People: Assessing the Outcomes of Video Franchise Reform

Steven Titch –
January 1, 2007

Franchise reform, the movement to replace local regulatory regimes that govern legacy cable
monopolies with statewide franchise agreements that encourage competition and improved
service, has taken on new urgency. Encouraged by telephone companies eager to provide an array
of new broadband video services to anxious customers, eleven states, including Texas, Indiana, North Carolina, South Carolina, New Jersey, California and Michigan, have enacted bipartisan statewide franchise reform since 2005.

Franchise reform lowers the legal burdens traditionally imposed by local franchise agencies. These agencies have long regulated local cable monopolies by creating a single statewide franchise application process through which companies can gain access to the entire state’s market. In addition, franchise reforms restrict or eliminate the sometimes arbitrary concessions imposed by local franchise agencies. Franchise reform, however, does not eliminate the fees which are paid by cable or video broadband providers to local franchise agencies.

Where enacted thus far, franchise reforms benefits have been undeniable. Consumers have enjoyed greater choice and a range of new services, including on-demand video and “a la carte” content selection, at lower cost. Legacy cable providers have responded to new competition by lowering costs and improving service.