Florida Passes Franchise Reform

Published July 1, 2007

Florida became the latest state to embrace statewide video franchise reform in May, a move supporters say will accelerate competition, stabilize prices, and add value to cable TV and broadband offerings in the Sunshine State.

Gov. Charlie Crist (R) signed the bill, the Consumer Choice Act of 2007 (HB 529), on May 21 after it passed by margins of 117-1 and 30-3 in the Florida House of Representatives and Senate, respectively. The bill becomes law effective July 1.

Any local franchise agreement that does not correspond to the terms created for statewide franchises will be considered void under the new law. Any incumbent or new entrant into the market will be allowed to apply for a statewide franchise as of July 1, regardless of the terms or status of its local agreements. The new law contains no build-out requirements.

Municipalities will still be able to collect local taxes on cable services. Under current Florida law, municipalities do not collect franchise fees as they do in other states. Instead, they collect a Communications Services Tax levied at a uniform rate on all telecom providers.

Limiting Fees

The new law allows local communities to require permits and limited fees for use of rights-of-way, and it allows them to charge “reasonable” rents for use of public lands and buildings based on “fair market value.” However, cities cannot charge different carriers different rates for the same access.

The law also calls for new entrants to provide the same number of public, educational, and government (PEG) channels to a community as the incumbent, and a minimum of two if there are no PEG channels at present. The municipality itself is required to fill each PEG channel with an average of 10 hours of programming per day.

Ending Barriers to Entry

Florida is the third state this year to set up a process that allows new cable TV competitors to apply for a “franchise”–ostensibly government authorization–to launch service anywhere in the state. Until now, new entrants in Florida had to negotiate franchises with individual cities, towns, and municipalities, a time-consuming and expensive process critics say presented a barrier to entry.

Lawmakers in Georgia approved a franchise reform bill in April by votes of 166-2 and 52-2, respectively, in the state House and Senate. Missouri passed similar legislation in March. (See “Franchise Reform Bills Snowball in the States,” IT&T News, May 2007.)

In Tennessee, lawmakers in May withdrew a franchise reform bill because it lacked votes to pass, ending any franchise reform action in the Volunteer State this year.

As in Missouri, the Florida effort took two years. A 2006 franchise reform bill died in committee.

“Starting from zero, they couldn’t get it done,” said Rob Johnson, vice president of federal and state campaigns at FreedomWorks, a free-market organization that supported franchise reform efforts in both states. “But when they came back this year, they had a head start. They had familiarity with the issue.”

Competition Nets Benefits

The measure’s success may also have been due in part to the fact that some Florida consumers were already seeing the effect of cable competition firsthand, even without franchise reform. The growing demand for cable alternatives sparked Verizon’s entry in 2006 in Manatee, Sarasota, and Tampa, where the company rolled out its fiber-optic-based FiOS service last year.

Bright House Networks, the Tampa cable incumbent, responded by discounting prices. Comcast, the incumbent in Manatee and Sarasota, refrained from raising prices in 2006, holding the line on an annual increase for the first time in a decade.

At press time, video franchising bills were under consideration in the state legislatures of Illinois, Iowa, Massachusetts, New York, Utah, Washington, and Wisconsin.

Steven Titch ([email protected]) is senior fellow for IT and telecom policy at The Heartland Institute and managing editor of IT&T News.

For more information …

Florida’s Consumer Choice Act of 2007 (HB 529), http://www.myfloridahouse.gov/Sections/Documents/loaddoc.aspx?FileName=_h0529er.doc&DocumentType=Bill&BillNumber=0529&Session=2007

John Skorburg, James Speta, and Steven Titch, “The Consumer Benefits of Video Franchise Reform in Illinois,” Heartland Policy Study No. 112, April 2007, http://www.heartland.org/Article.cfm?artId=20871