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from: Macomb Daily

New cable law promises competition, but local officials leery

By Frank DeFrank
Macomb Daily Staff Writer
PUBLISHED: Sunday, April 8, 2007

A new state law promises to bring Michigan residents competition in the cable television industry, a development that proponents say will cut costs and increase TV-viewing options.

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But unanswered questions have left some local officials to wonder what will be the real price.

The Michigan Cable Act that took effect Jan. 1 removes a burdensome requirement for companies that provide in-home video entertainment. No longer do cable or telephone companies -- like Comcast and AT&T -- have to negotiate complicated franchise agreements with local government agencies. Rather, the companies simply apply for a one-size-fits-all agreement with the state and they're ready to roll.

"It's all about bringing competition to Michigan consumers," said Joe Steele, spokesman for AT&T, one of the firms that figures to benefit most from the law. "This legislation allows AT&T (and other companies) to invest in Michigan more quickly."

Steele said AT&T will invest $620 million in Michigan to deliver state-of-the-art video service to homeowners.

With other companies expected to follow suit, proponents say consumers will benefit because of the oldest economic law on the books: supply and demand. The more companies that provide video service, the more likely costs will remain stable, they argue.

Nationally, cable television rates have outpaced inflation for years. And in areas where only one cable television company has secured a franchise agreement, customers pay even more.

The law, at least in theory, is supposed to alter that equation.

State Sen. Mickey Switalski, a Roseville Democrat, voted for the bill. He believes the competition will work as designed and result in lower rates for customers.

"You could leave it the way it was and that's not going to change," he said.

But others aren't so sure. Among the agencies that unsuccessfully fought the law were the Michigan Municipal League, the Michigan Townships Association and the National Association of Telecommunications Officials and Advisors.

"We welcome more competition, but we thought it could have been done the former way," said Linda Badamo, director of cable operations for Clinton Township.

Shelby Township Supervisor Ralph Maccarone said the primary issue for municipalities is local control -- or a lack of it. Shelby Township and other communities no longer have a say in cable operations.

Municipalities now have no control over issues like insurance and indemnification in the event of damage or accidents, or the use of road rights of way.

Maccarone also said the new law, in some cases, doesn't require a cable company to provide service to a designated area. Under the old rules, he said, "we were able to enforce that.

"Local control is revoked," Maccarone said. "Anything as simple as (a complaint about) a wire coming up out of the ground has to go to the state. Anything cable-related, we no longer have a say."

But long-term, officials have another say. The new legislation still requires franchise fees be paid to local governments. Original versions of the bill that later became law would have stripped those.

"The locals were all concerned about the money they were getting," Switalski said. "For most people, it was an increase."

But if local governments no longer have a say in cable-related matters, how long before the companies complain about where the franchise fees are going?

"That's probably what they'll argue next," Maccarone said.