Tag: "franchise"

Posted August 27, 2009 by Christopher Mitchell

Folks who are mostly interested in broadband are probably unfamiliar with video franchising laws. Many people still apparently believe that cable companies are able to get exclusive franchises from the city (granting them a monopoly on providing cable television). However, that is not true and has not been true for many years.

Most cable companies still have a de facto monopoly because it is extremely difficult to overbuild an existing cable company - the incumbent has most of the advantages and building a citywide network is extremely expensive. This is not a naturally competitive market; it is actually a natural monopoly.

However, most people want a choice in providers (something that goes beyond a single cable company and a satellite option or two depending on whether you rent/own and your geographic location. In talking with many local officials and the National Association of Telecommunications Officers and Advisers (NATOA), it seems that almost every local government wants more competition in its community too.

This is where telephone and cable company lobbyists have stepped in - more successfully at the state level than at the federal level. They have convinced legislators that the barrier to more competition is local authority over the franchise (the rules a company agrees to in return for the right to use the community's Right-of-Way in deploying their network). These rules include red-line prohibition (you cannot refuse to serve poor neighborhoods), an affordable "basic" tier of service, local public access channels, broadband connections at public buildings, etc.

Some states have listened to the lobbyists and enacted statewide franchising - where local communities are stripped of the authority to manage their Right-of-Way and companies can offer video services anywhere in the state by getting a state franchise from the state government. Every year, we gather more data that this practice has hurt communities, raised prices, and barely spurred any competition. Most of the competition it is credited with spurring came from Verizon's FiOS deployments, which would have occurred regardless of state-wide franchise enactment.

This touches directly on broadband because the statewide franchises often give greater power to companies like Verizon to cherry-pick who gets next generation broadband. Wealthier neighborhoods will increasingly get access to faster...

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Posted July 24, 2009 by Christopher Mitchell

A recent editorial in the Boston Globe caught my attention - Fiber-optic nerve. It seems that Boston is tired of waiting for private companies to build modern broadband networks in the city.

The editorial suggests that as Verizon has started building its FTTH FiOS in New York City, D.C., and some of the Boston suburbs, it may be a withholding the network from Boston due to the Mayor's efforts to change a state law that has exempted telecom companies from paying a number of taxes. Verizon denies any connection. From the editorial:

Menino is right to insist that telecommunication companies pay their fair share of taxes. In Boston, the exemption shifts more than $5 million a year onto the property tax bills of homeowners, say city officials. But tensions between Verizon and the mayor can be costly in many ways. City cable providers Comcast and RCN, for example, don’t offer the speedier fiber-optic connections into customers’ homes available from Verizon in 98 Massachusetts cities and towns. The new and faster broadband speeds - both downstream and upstream - offered by Verizon to Internet customers therefore remain beyond the reach of Bostonians, as do FiOS-related incentives on products such as mini netbooks and camcorders. Cable and Internet competition is alive and well in the suburbs, but flat in Boston.

Verizon has previously threatened to withhold its investments in states that do not sufficiently deregulate -- after turning its back on the New England region by offloading its customers on the totally unprepared Fairpoint company, Verizon pushed franchise "reform" in Massachusetts. Franchise "reform" is when states agree to preempt local communities that selfishly want to regulate the quality of service offered by providers - things like requiring some local channels and thresholds for customer service. As Karl Bode noted in the link above:

While these bills are promoted as a magic elixir that will bring competition and lower TV prices to a region, when people go back to investigate whether these bills actually helped anybody (which is amusingly rare), data indicates that TV prices increased anyway and consumers got the short end of the stick. State lawmakers are usually no match...

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