As of mid-February, 21 states have active franchise laws in which telecommunications firms such as AT&T, Qwest, or Verizon no longer have to approach each city separately to bring in service. Instead, telecommunications companies have a statewide “contract” that allows them to offer services—such as cable, Web access, and other broadband options—to consumers on a statewide basis, rather than knocking on each city's door.
While five states adopted state franchise laws immediately after the Cable Communications Act of 1984 passed, the other 16 states have been added since 2005, and more bills are sitting on the desk of governors or legislators. Some cities find this statewide franchise problematic; others don't see it having any effect on right of way or public works.
Three possible public works problems stand out in these franchise laws: loss of gross revenue and a decrease in the quality and quantity of PEG (public, educational, and government) access channels. Finally, managers argue that loss of right of way control is an issue, but the repercussions of this loss have not yet been felt.
Currently, each city without a statewide franchise gets 3% of the gross revenue from telecoms with a city franchise. Though the definition of gross revenue varies dramatically from telecom to telecom, the loss of this funding may hurt cities (the jury is still out).
Secondly, PEG programming often carries city council meetings and public service announcements, key to public works departments' communication with constituents. Some are concerned that the level of support and number of channels may dwindle under the new state franchise. Others claim that the connection costs will fall back on the cities' shoulders, whereas before it was covered by the telecommunications firm—another blow to the pocketbook.
While some states, like Tennessee, have worked furiously to defeat statewide franchises, the agreement has worked well in other states. Most laws have passed too recently for anyone to determine if it's good or bad yet—last year's fiscal budgets are just wrapping up, for instance, and most don't know whether they've lost or gained on this one.
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