FCC to Vote on Franchise Reform, Expert Says Consumers Could Benefit

Michael Van Winkle

(Chicago, Illinois - December 19, 2006) The Federal Communications Commission is expected to vote December 20 on whether to relax rules regulating cable television providers.

Currently, local municipal governments have enormous power, through franchise agreements, to impede the entry of new service providers into a given area. There are more than 33,000 video franchises in place around the country, imposing approximately $2.4 billion in fees on consumers and providers.

The existing local franchise regime critically reduces competition in what is one of the most important global industries, leaving only 4 percent of United States consumers with a real choice of cable providers.

According to Steven Titch, senior fellow for IT and telecom policy at The Heartland Institute, new regulations are needed so "rather than negotiating piecemeal with each and every municipality, new entrants can move quickly into local markets throughout the states, bringing lower rates, more choices, and new technologies consumers want, such as fiber-to-the-home and Internet Protocol TV."

Titch notes several states--including California, Michigan, and Texas--have passed franchise reform. "Residents in states with reformed cable franchising," Titch points out, "are already seeing lower prices and better services, including innovations such as fiber-to-the-home. New FCC rules would accelerate the pace of competition that much more, which is good news for consumers."

Titch sees this vote as an opportunity to allow telecommunications service providers to compete aggressively without arbitrary constraints. "In its best form," Titch says, "franchise reform would level the playing field by regulating cable and phone companies lightly and the same way."


Steven Titch is senior fellow for IT and telecom policy for The Heartland Institute. He can be reached for further comment on video franchise reform at 281/571-4322 or via email at titch@heartland.org. For more information about The Heartland Institute contact Michael Van Winkle at 312/377-4000 or via email at vanwinkle@heartland.org.