Why Municipal Franchising Is Obsolete

The Telecommunications Act of 1996 was intended to reduce regulatory inconsistencies resulting from dramatic changes in telecommunications technologies. A key element of the act was the phase-out of price controls on cable TV, which had inhibited competition and network investment. The statute also allowed cable firms to provide telephone service and for the telephone companies, in turn, to enter the video market.

Whereas past regulation was structured to control cable monopolies, the development of competing video technologies — fiber optics and Internet transmissions, in particular — rendered such regulation obsolete. A variety of new services and service providers made competing network infrastructure far more affordable, particularly when bundling voice, video and data services as a single package. Thus, the municipal franchise system imposed decades ago has been overtaken by the abundant, affordable video options available today. Differences among the various alternatives are outlined below.

  • With traditional cable TV service, all available programming is transmitted to a pipeline into the premises. A set-top box, TV tuner or VCR unscrambles the signals based on a customer’s service tier. Many cable systems have upgraded their networks in recent years with fiber-optic lines, which increase transmission capacity, speed and signal clarity.[23]

  • The Internet-based networks developed by telecommunications firms only transmit to the premises the content a customer selects. The signals are transmitted via a Digital Subscriber Line (DSL).[24] This frees up bandwidth to be used for customized applications.

  • Under current federal law, Internet-based video services are exempt from local franchise requirements. This was reinforced recently by opinions from the Oklahoma attorney general as well as Connecticut’s Department of Public Utility Control.

  • Satellites operate as celestial antennas, relaying signals to and from computers and to a subscriber’s satellite dish. The transmissions are weather sensitive and more prone to landscape interference than other technologies. Satellite service cannot offer the "triple play bundles" of voice, video and data service.

  • Several cellular telephone companies offer wireless video services through handheld devices. In general, users may select segments of news, sports, weather and music videos, although full-length video is available on a limited basis.