Policy

Michigan Cities Cry Foul

3/31/2006 7:00 PM Eastern

Municipal officials from across Michigan are stepping up in a very public way to oppose state House and Senate versions of an AT&T Inc.-backed franchise-reform bill that city officials say will wrest power from the local communities.

At a recent press conference in Lansing, representatives from municipalities stressed that their towns are open for business to any competitive providers — and argued that their local rules are not a barrier to entry.

“Local communities believe that all residents matter, and local officials are not going to let some big phone companies say they don't,” said Farmington Hills Mayor Vicki Barnett at the March 22 event. “We're fighting for the right of all of our residents to receive more cable services.”

The local leaders are responding to proposed bills which state that current franchising rules and buildout requirements create a barrier to entry at a time when speed to market is critical. The bill declares there is “minimal competition in facilities-based video programming,” even though Michigan was one of the states that best fostered cable competition last decade, during the telephone industry's prior push into cable. Ameritech New Media earned several franchises in the Detroit suburbs before the regional Bell company gave up on the business and sold out to WideOpenWest LLC, which continues to operate in the state in head-to-head competition with cable operators, including Comcast Corp.

The AT&T-backed bill would allow for statewide certification of new providers, who would agree to pay a 5% fee to local governments, plus a 1% fee on gross revenues to support public-access activities. Both fees are passed through to consumers. Though new providers are required to pay these fees, they can also qualify for a credit equal to the amount they spend on rights-of-way maintenance in local communities.

Though incumbent operators could apply for state franchising at the end of current contracts, pending legislation would require them to continue current public-access support. New competitors would have to make “reasonable, technically feasible” efforts to interconnect with the incumbent to carry local programming.

Once an application is made, the state would have 30 days to grant certification. The new provider would have to identify its executives, agree to comply with federal requirements on video delivery, comply with local rights-of-way rules and describe its service footprint.

Local officials would be prevented from enacting local rules, such as basic rate regulation or buildout requirements.

According to the Michigan Municipal League, more than 120 communities, ranging from Detroit and surrounding Wayne County down through some of the state's smallest townships, have passed resolutions in opposition to state control of cable franchising,

“Without local control, cable providers will be unaccountable to the communities they are supposed to serve,” said David Bertram, spokesman for the Michigan Townships Association at the press event. “Franchise pacts level the playing field so that all companies play by the same rules. Michigan does not need a new layer of bureaucracy in Lansing to regulate a problem that does not exist.”

The proposal is before the energy and technology committees in both chambers of the Michigan Legislature.