Cable Franchise Vote This Week

November 3, 2006
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GRAND RAPIDS — The Michigan Townships Association and the Michigan Municipal League call it a “bad bill” because it would allow cable providers to terminate their franchise agreements with local governments at any time. They also say a new agreement would cost these units between $25 million and $35 million in franchise fees each year.

But AT&T counters the legislation would lead to a monthly cable bill being lowered by about 20 percent and would increase franchise-fee revenue to the state from $8.9 million to $14.8 million once competition enters the marketplace.

And lawmakers have indicated to Grand Valley Metro Council Executive Director Don Stypula the state House will pass the bill Thursday that would end local franchise contracts and create a statewide agreement that would be written by the Public Service Commission.

“The last word that we had received was everything is lined up right now for passage of the bill as it is on the House Floor,” said Stypula of HB 6548.

“In the Senate, we’re still not sure if Sen. Ken Sikkema (R-Wyoming) will move the bill (as passed by the House) through the process in the few remaining days of the legislative session in Lansing,” he added.

AT&T and Verizon have lobbied state lawmakers for the new regulation, which they claim would create more competition in the broadband and cable industries and reduce consumer prices for both. A study by the Professional Development Center at Lawrence Tech University in Southfield said more broadband competition would save state consumers up to $673 million a year.

At the same time, AT&T and Verizon argue the change would result in higher franchise fees for the state. Michigan municipalities reportedly receive about $100 million annually from cable agreements.

But local public officials aren’t convinced that they would get more money under a new agreement. Grand Rapids estimated it would lose at least 30 percent of the $1 million it receives annually from its contract with Comcast Cable if the new bill becomes law.

If so, then funding for public, educational and governmental media services, like Internet access and cable channels, could be lessened or even eliminated depending on the bill’s final version.

City officials also fear they would lose control over rights-of-way for a broadband build-out, and that new providers would engage in “redlining” or only offering service to affluent parts of the city.

The MTA and MML are trying to get amendments added to the bill that would prevent local franchise contracts from being eliminated, allow local units to issue and enforce the state agreements, and require that most of a franchise area receive service.

The bill requires the Public Service Commission to create a uniform agreement that local units would have to approve in 30 days. The contracts would be for 10 years and could be renewed for 10 more years. An existing agreement would be replaced or modified by the PSC version, but local governments and providers could enter into voluntary agreements that differ from the uniform one.

The bill requires providers to pay an annual and a quarterly fee to the local unit and both can’t exceed 6 percent of gross revenue. It also gives providers access to local rights-of-way and prohibits them from denying residential service on the basis of race or income.

The House Fiscal Agency reported the bill would increase expenditures for the PSC and “in the short run” increase revenue to local units, but didn’t say by how much for either.

State Rep. Mike Nofs, a Republican from Calhoun County, is the bill’s sponsor. HB 6456, also known as H2, was introduced in September and has replaced HB 5895.

Most municipalities oppose the bill. At least 103 local governments in Michigan have ratified resolutions that support local cable franchising. Those include Ada Township, Allegan, Coopersville, Grand Haven, Grand Rapids, Grandville, Holland, Hudsonville, Muskegon, Newaygo, Norton Shores, Plainfield Township, Walker and Wyoming.

The Metro Council Legislative Committee supports the amendments offered by the MTA and the MML.

“This stuff can come from out of nowhere. They could make a decision to move it or they could make a decision to hold it back in a heartbeat,” said Stypula of Thursday’s vote. “So we’ll just have to keep our eyes and ears open and see what happens.”    

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