Video competition, pt. 2: A Little Something for the Cities

by on February 16, 2006 · 4 comments

Much of the debate so far over cable tv franchising has been in generalities. For instance, the set of principles outlined by Sens. Burns and Inouye refers elegantly to “deliberately structured dualism”, recognizing that each local cable regulatory is “uniquely positioned to ensure that video providers meet each community’s needs and interests in a fair and equitable manner.”

That’s all very nice. But what is it that local officials are really asking for? In a recent filing with the FCC, AT&T provided some specific examples of what some creative local officials are requesting as part of their efforts to ensure that video providers meet their community’s needs and interests in a fair and equitable manner:

– One city asked the potential cable competitor to pay for a new recreation center and pool.
– Another city compiled a $13 million dollar wish list, including digital editing equipment, and video cameras to film a math tutoring program.
– A New York town asked for seed money (literally) for wildflowers, and a video hookup for its Christmas celebrations.
– A Massachusetts cable authority asked for free television for every house of worship and a 10% video discount for all senior citizens.
– Another asked for high-speed Internet for sewage facilities and junk yards.
– A no doubt aesthetically minded regulator asked for “flower baskets for light poles.”


– Perhaps the best negotiator was the regulator who simply asked for everything that was given to other cities.

Of course, not all localities have made such demands (although some of those may now be kicking themselves for not thinking of it.) And much of the debate over video franchising has centered on more substantive issues such as build-out requirements. But “wishlist” requests are not uncommon. Certainly, they are tempting for local officials who have pet projects they want funded without the normal financing and oversight constraints. But it is no free lunch–the cost is paid for in the form of foregone competition and higher cable TV costs. “Deliberately structured dualism” or not, that’s no good thing.

  • http://precision-blogging.blogspot.com Precision Blogger

    You’re not making fun of towns for asking for weird stuff, are you? I sure hope not. When I was on a cable committee, we asked for equipment to help us run our own TV channel. Frankly we knew the cable company owed us a lot for ignoring terms of the previous contract – and they eventually agreed – but state law prevented us from asking them to change their rates or modify their programming. So what’s left?

    During the renewal process, I began one of the state-mandated “complaint” hearings by explaining that although people could discuss anything they wanted, we, the cable committee, lacked any authority to affect choice of programming or rates. A citizen stood up and asked, “Then why are are here?” (The audience applauded.)

    That’s why towns are going to ask for weird stuff.

    - The Precision Blogger
    http://precision-blogging.blogspot.com

  • http://precision-blogging.blogspot.com Precision Blogger

    You’re not making fun of towns for asking for weird stuff, are you? I sure hope not. When I was on a cable committee, we asked for equipment to help us run our own TV channel. Frankly we knew the cable company owed us a lot for ignoring terms of the previous contract – and they eventually agreed – but state law prevented us from asking them to change their rates or modify their programming. So what’s left?

    During the renewal process, I began one of the state-mandated “complaint” hearings by explaining that although people could discuss anything they wanted, we, the cable committee, lacked any authority to affect choice of programming or rates. A citizen stood up and asked, “Then why are are here?” (The audience applauded.)

    That’s why towns are going to ask for weird stuff.

    - The Precision Blogger
    http://precision-blogging.blogspot.com

  • James Gattuso

    I don’t know the specifics of your situation, but the examples I cited did not involve any violation of a franchise agreement — they involved firms making an initial application for a franchise. And each I believe was from a potential second competitor. If the goal is to lower rates and improve service, the thing to do is to approve entry as soon as possible, rather than submit wishlists, weird or not.

    I do think that the question “why are we here?” is a good one. I know it sounds harsn, but in a competitive market, its hard to come up with an answer besides “we shouldn’t be.”

  • James Gattuso

    I don’t know the specifics of your situation, but the examples I cited did not involve any violation of a franchise agreement — they involved firms making an initial application for a franchise. And each I believe was from a potential second competitor. If the goal is to lower rates and improve service, the thing to do is to approve entry as soon as possible, rather than submit wishlists, weird or not.

    I do think that the question “why are we here?” is a good one. I know it sounds harsn, but in a competitive market, its hard to come up with an answer besides “we shouldn’t be.”

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