New state telecom and cable regulations are not the stuff of compelling headlines. But here in New Jersey, the optimistically named “Market Competition and Consumer Choice Act” , which was recently approved in the Assembly, has actually attracted the attention of our local news outlets.
Also known as A-3766 ( S-2664 for Senate folks), this legislation has managed the neat trick of drawing complaints from both consumer groups and local municipalities.
This latest effort to modify cable franchising rules can be seen as the end-game to a 2006 law that introduced state-wide franchising (aka “The Verizon Act”).
In 2006, NJ along with several other states that year (California, Virginia, North and South Carolina,Indiana, and Kansas) updated their cable laws to allow new players (phone companies) to enter the cable television market in a more significant way.
Rather than having to negotiate with different municipalities (over coverage, franchise fees, public access channels, free Internet access for libraries, etc), cable operators of any stripe in these states could obtain state-wide franchises to lock in a single franchise rate. Usually these state agreements had less demanding coverage requirements.
In NJ’s version, the law was written so that if a company already “has plant or equipment in use for the provision of any consumer video, cable or telecommunications service” (read Verizon), it could apply directly to NJ’s public utility board for a franchise.
In exchange for this fast track rule, a NJ “system-wide” franchise holders would pay going forward a higher franchise rate, 3.5% of gross revenues, to municipalities rather than a 2% rate for agreements worked out through direct municipal consent. The law let existing rate arrangements by incumbents (Comcast, Comvision) with towns and cities remain as is even if the rates were above 2%.
The policy idea behind system-wide franchising was to encourage more competition. So far, so good.
NJ municipalities liked the new rules: less headaches, more revenue, and their rights-of-way prerogatives were intact (as long as they were reasonable and non-discriminatory).
Your state’s politics may be different, but those of us living in NJ could easily conceive why Verizon or AT&T would rather not negotiate with every duchy and semi-autonomous republic in the Garden State.
State cable rules are a balancing act between encouraging investments from carriers while extending broadband coverage, protecting consumers, and satisfying municipal leaders.
On the last point, A-3766’s targeted modifications to the current cable franchise equilibrium have met with disapproval from the NJ League of Municipalities, the very same group that had originally supported the 2006 law.
One of their objections (a good one in my opinion) is that it removes a provision—subsection h of Section 28 of the cable statute, ahem—which would have required system-wide franchise holders to “to match or surpass any line extension policy operative at the time the system-wide franchise is granted.”
In other words, the new players would need to do as well as the incumbents rather than, say cherry-pick their coverage.
And the new law is on auto-pilot when it comes to renewal of state-wide franchises, which have a period 0f seven years. As long as the franchise-holder (Verizon) is in a competitive franchise area (two or more operators), the renewal is guaranteed for another seven, and the NJ utility board has no say in the matter.
Hmmmm.
Let’s see what the NJ Senate does with this rather bold gambit.
Related articles
- N.J. Assembly passes bill to end most regulations of basic cable, land line telephone services (nj.com)
- Despite Amendments, New Jersey Cities’ Group Still Opposing Telecom Deregulation Bill (jerseycityindependent.com)
- Taking Stock of the Changing Cable Television Landscape (njslom.com)
- Market Competition and Choice Act (njleg.state.nj.us)
- “Verizon Act” (njstatelib.org)
