N.C., N.J. Approve Cable Franchise Reform

Published September 1, 2006

North Carolina and New Jersey in July and August became the seventh and eighth states to pass laws authorizing statewide video franchising, while Louisiana Gov. Kathleen Blanco (D) vetoed a similar measure that had passed the legislature by a nearly three-to-one margin.

New Jersey Gov. Jon S. Corzine (D) signed legislation August 4 that will allow new entrants to seek immediate approval to offer cable TV and multichannel services anywhere in the state. Without the law, new entrants, predominantly telephone companies seeking to provide video over their own networks, would have had to negotiate individually with some 566 municipalities.

Corzine was an early supporter of the bill, which he said would increase cable TV competition and lower cable rates by making it easier for other companies to enter the market.

In response to concerns that the phone companies would choose to service only densely populated areas, the law authorizes the state Public Advocate to monitor build-out. The Board of Public Utilities will issue regulations to enhance the state’s ability to review the expansion of new franchises.

In North Carolina, Gov. Mike Easley (D) in late July signed a similar bill to create statewide video franchising after the North Carolina Senate passed the bill unanimously. Previously, the state House of Representatives had passed the bill 111-5, according to The Associated Press.

In a unique approach, the North Carolina bill does away with franchise fees as a separate “tax” and instead subjects video services to the same 7 percent sales tax applicable to other goods and services. The bill stipulates that a portion of the revenues collected from the tax on video services go toward broadband development.

In Louisiana, Blanco’s veto, in the face of 27-10 and 73-26 votes, respectively, in both houses of the state legislature, was the first for a statewide franchise bill that had made it out of the legislature.

The veto came after the legislature had adjourned for the year. Legislative leaders said it was doubtful a special session would be called to attempt an override, but they expressed disappointment nonetheless.

“The fact that Cox Cable just raised its rates $3.43 a month in Baton Rouge without any regulation shows they need some competition,” state Rep. Billy Montgomery (D) told the Lafayette Daily Advertiser. “The consumer was left out of the process. Helping the consumer was the main part of the bill.”

Blanco’s main concern was the potential loss of revenues to local authorities. “If the bill became effective and the result was significant revenue loss to local government, as many have reported, traditional vital services for our citizens would have to be cut or those citizens may be asked to pay increased taxes,” she said in a statement.

Steven Titch ([email protected]) is a senior fellow with The Heartland Institute and managing editor of IT&T News.