Monday, March 09, 2009

The Ramifications of Various Legal Tendons

There are 438 people who live in the town of Mecosta Michigan and boy, are they getting shtupped. The University of Minnesota report “Statewide Video Franchising Legislation: A Comparative Study of Outcomes in Texas, California and Michigan” (March 2009) says so. The rate for Basic + Expanded Basic cable went from $41.33 in 2006 to $69.71 in 2009. Now you could say that people in Ingham County got it even worse, their rates went from $38.75 to $74.20 in the same time period. However, the difference is the folks in Mecosta didn’t even get a “thank you ma’am.”

It’s important to look at the per channel rate in the report. Ingham County residents saw their per channel rate increase from 51 cents to 98 cents. The town of Mecosta’s residents saw their channel rate increase from $1.15 to $2.79. Meaning, Mecosta cable subscribers are paying a way lot more for a way lot less.

In 2008, Minnesota was just on the brink of passing statewide cable franchising when the legislator sponsoring the bill was convinced to commend the matter to a study. Gee, sounds like what just happened in Maryland. The Department of Commerce was instructed to commission the study and so they did with the University of Minnesota.

And guess what the researchers found out? Come on…20 points for the right answer!

Yep, competition doesn’t lower prices and video service providers cherry-pick service areas.

“Statewide video franchising—or in some states the practice of state‐issued franchises—has led to an increase in new providers, but the numbers are underwhelming….Texas reports occurrences when cable companies requested amendments to remove cities and towns from their service area. In 2005 and 2006, no removals were recorded for municipalities in Texas. However, 2007‐2009 saw an uptick in removals, totaling several dozen. Scores more were collectively added to the service areas of cable companies, as their rivals jockeyed for competitive positions in the state. All in all, the largest cable companies in Texas expanded their number of municipalities served. However, it is unclear from the data whether cable companies dropped low‐income regions.”

The study cites the industry arguments for statewide franchising.

“Among their many arguments, proponents of statewide video franchising assert that statewide video franchising will:
1. result in a modernization of the video infrastructure of many communities during a time of rapid technological change;
2. result in the employment of thousands of people during tough economic times and high unemployment;
3. reduce regulations and create a market environment of greater competition as it lowers barriers of entry for video service providers; and
4. provide additional competition which will result in lower rates and better service for all customers.”

Very, very convincing stuff. The creation of jobs argument is the best, especially in these tough economic times. Glad that’s working out.

The study also provides a snapshot of what has happened to PEG access television in the three states. I won’t enumerate it here because I’ve been howling about it for four years now, see the archives. It’s what we all know.

Which now makes it even more curious that Idaho, of all places, has just passed a bill through their Senate for statewide video franchising. Hey Idaho, statewide franchising is soooo last year, didn’t you get that memo? Maybe you should get this report. Or maybe somebody on the House side in Idaho should call for a study, it really is the latest thing, kinda like Baby Boomers on Facebook.

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Anonymous said...

We're fighting the Idaho statewide franchising tooth and nail. It got through the senate because we were (incorrectly) told that the Association of Idaho Cities opposed it, so we took no action against it there. Now that it's in the house, we have citizens statewide emailing and calling their legislators to knock the bill down.

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