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Michigan Broadcasters Back Statewide Franchise - Broadcasting & Cable

Michigan Broadcasters Back Statewide Franchise

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The Michigan Association of Broadcasters (MAB) has come out in support of bills in the Michigan House and Senate that would create a telco-friendly statewide video franchise.

Verizon, for one, has been actively pushing for statewide franchises to help it bypass time-consuming local franchise negotiations in its roll-out of video service in competition to cable. It has allies in the Bush administration, in Congress, and at the FCC, where speeding the rollout of broadband, as well as price and service competition, have put the issue of franchise reform on the front burner.

At least three states, Texas, Virginia, and Indiana, have passed some kind of state franchise reform, and national franchise reform is percolating on the Hill.

According to a copy of the House bill, Michigan would provide a statewide franchise, with a 30-day shot clock. If the application is complete, the state has 30 days to authorize the service or it will be considered de facto authorized. The bill requires the incumbent cable operators to open up their networks for interconnection with the overbuilder.

New entrants will be subject to a franchise fee where they compete with existing video service providers. It will be 5% of gross revenues, confined to cable and not to include telecommunications or information service revenues. Another 1% goes toward funding public, education and government programming (so-called PEG channels).

Incumbent cable operators will be able to secure a state franchise, too, but not until their current franchise expires, which in some cases could be many years.

A couple of broadcaster-friendly provisions in the bill include a requirement that a statewide franchise holder not "degrade" the broadcast signal it carries and one that says both TV and radio stations can request carriage (must carry), or try to negotiate retransmission-consent agreements that compensate them for carriage.

The bill contains anti red-lining language, saying a video service provider "may not deny access to service to any group of potential residential subscribers because of the income of the residents in the local area in which such group resides." But there is some wiggle room to build out the most lucrative areas first because it also says that the same provider "does not violate this section if it schedules the construction of its network and deployment of its services based on good faith projections of anticipated revenues and rates of subscription."

The bill also says that the government cannot mandate build-out or deployment timetables or requirements, which telcos argue are a barrier to entry and cable argues is insurance against cherry-picking.

Franchise holders cannot be held liable for content on public access channels, though the same does not apply to programming providers. That point was made clear recently by the Michigan courts, which upheld an indecent exposure conviction for the producer of a public access show featuring a talking penis.

The MAB, not to be confused with the NAB, is one of the largest state broadcast associations in the nation representing over 300 TV and radio stations.

"The National Association of Broadcasters supports the concept of the telephone companies getting into video," says NAB spokesman Dennis Wharton.

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