Analysis & Opinions - The Boston Globe

Consumer Benefit in Cable Franchising

June 4, 2007

WHATEVER VOICE towns and cities have in their cable television service will be at stake in a bill before the state Legislature tomorrow.

The Joint Committee on Telecommunications, Utilities, and Energy will hold a hearing on a bill favored by Verizon Communications Inc. The so-called Act Promoting Consumer Choice and Competition of Cable Service would allow Verizon and other companies to preempt local control of the cable franchising process. Instead of local municipalities — with the participation of local citizens and their local community representatives — negotiating in good faith for better content, high-speed access to broadband, and quality digital services, Verizon proposes an expedited, but self-serving, single statewide franchise license that does nothing to improve choice or benefit consumers.

Currently, Verizon has licenses for and is providing multi channel video content services in nearly 50 communities. It plans to seek new licenses in only 67 of the 351 towns and cities, thus providing service in approximately 16 percent of the Commonwealth's municipalities. It appears that Verizon is not primarily interested in providing universal service across the state, but rather in serving only the most densely populated and potentially most profitable markets that surround Boston. It has not applied for a license to serve Boston itself, any of the other urban cities, or any of the towns in Central or Western Massachusetts or Cape Cod. Verizon is engaged in economic cream-skimming.

But what if Verizon prevails and gets its "Verizon choice" bill passed and statewide franchising replaces the existing local franchising process? Would consumers of multi channel video services actually benefit by any increase in competition in the cable industry? Not likely, since Verizon does not promise or offer any guarantee of statewide competition or lower prices or superior services over the long term. Nonetheless, Verizon wants to be instantly in play on a statewide basis without sufficient local municipal or consumer oversight or accountability.

Currently, the process of local franchising control, as established by state regulators, takes no longer than a year for completion. Often it is completed in far less time. Moreover, under existing procedures that value community participation in negotiations with cable companies, some communities have been successful in getting commitments for public, educational, and government access channels, and thousands of hours of locally produced programming content.

In addition, municipalities have successfully negotiated certain monetary benefits from cable companies for use of the public rights of way, thereby easing the local tax burden. Verizon's new proposal would reduce the number of dedicated access channels and it would cost municipalities more to produce locally responsive and relevant content and operate local access channels.

Under the existing local franchising rules, Verizon has played the game fairly. It is generally in compliance with local franchise terms and conditions in those cities and towns where it provides multi channel video services, as defined by the Federal Communications Commission. In addition, there appears to be ongoing competition among multi channel video service providers that include Comcast, RCN, and the satellite television service providers Dish Network and DirecTV.

Verizon is a late comer that wishes to tilt the competitive playing field with a bill that would place restrictive burdens on many of its multi channel video customers outside of Greater Boston, especially consumers in Western Massachusetts. They would have to travel to Boston to register consumer complaints to the state regulatory agency. Local accountability and responsiveness will be minimized if the Verizon-sponsored bill passes.

In such a case where a business makes no promises of public benefit, there are no particular performance goals expected, except, perhaps, to shareholders for greater profits. This bill is not in the public interest of the citizens and consumers of Massachusetts and should be defeated.

Nolan Bowie, a guest columnist, is adjunct lecturer in public policy and a senior fellow of the Joan Shorenstein Center on the Press, Politics and Public Policy.

For more information on this publication: Please contact the Belfer Communications Office
For Academic Citation: Bowie, Nolan.“Consumer Benefit in Cable Franchising.” The Boston Globe, June 4, 2007.