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Time Warner Wins Ohio-Wide Cable Franchise
An anonymous reader writes "Time Warner Cable has received a state-wide franchise agreement in Ohio. Time Warner's agreement covers 260 communities in 60 of Ohio's 88 counties, for 10 years. AT&T was the first to earn a state-wide franchise contract, after a law was passed in September that allowed operators to negotiate a single state-wide agreement. In the past operators negotiated franchise agreements at the local level."
I for one love less choice!
It's called "removing control at the local level, and moving it to people easier to reach to bribe". Traditionally, cable franchises (the right to do business in a market) are granted at a local municipality level. Cable operators are required to list on their bills the contact information for the market's franchising authority. This is so consumers can complain to them about service from the provider.
Because this office (which is usually connected to the local government) is the one who decides whether a cable company gets to stay in business in an area, as well as grant additional licenses to new providers, they are an important enemy to cable companies in individual areas. If a cableco was providing very poor services, the franchising office could grant a second company to provide services on their own overbuilt cable network to provide competition, or could simply pull/not renew the license of the original operator, forcing them to sell the market to another provider (this is more likely in small towns were more people may be on satellite or there are multiple cablecos located nearby).
With a statewide license, this sort of stuff isn't going to happen. Because obviously the state government is not going to kick a cableco out of all Ohio over problems in Tinytown, OH. Whereas before, the licensing board for Tinytown (the mayor, treasurer, and postmaster) might have done something about it.
The TFA (which is really just a state press release) says this is being done to promote penetration of broadband service in the state. Unless there are actual terms in the agreement that Time-Warner will service areas of __ population density or greater that's not going to happen. Time Warner will continue to push access in large cities, and let older rural cable networks degrade, confident they can still hold the market for 10 years at least.
This is not an exclusive arrangement.
Before this law, cablecos & telcos who wanted to provide service would have to negotiate (and pay kickbacks) to each and every locality. Now, they can do it all at once.
This way, there's only one big authorization (and one big kickback!) and a competitor can start rolling out service in the entire state. No seperate deals required for Cleveland and Canton and--whoops, Cincinnati has signed an exclusive agreement with another provider, so we can't roll it out there...
Now, this doesn't change the fact that there are all sorts of other barriers to entry...but it does help with some of the red tape.
The US free market: two halves of a government-granted duopoly are free to set the market price.
There does not seem to be any exclusivity here, the press release notes that AT&T got the same authorization in November and eight other companies have applied for authorization.
Furthermore, "The Director does not have any authority, however, to regulate the rates, terms or conditions of a provider's service - including the networks or television stations that the video-service company decides to carry", so it is not clear if this "authorization" has much meaningful effect.
The real "Libtards" are the Libertarians!
Since very few ./ readers actually work in the cable or satellite industries, I can understand the boo-hooing and the "welcome to the evil government-sponsored monopoly" comments that have been posted so far. Let me explain what has actually happened here, and how franchising agreements work.
Time Warner has merely been granted, or has renewed, permission to provide cable in these areas. In exchange, these localities will charge Time Warner a fee per subscriber for the privilege of serving these communities. Franchise agreements almost always contain language regarding quality of service, customer compensation in the event of a missed appointment, and other requirements.
A franchise agreement is not a monopoly in and of itself. A franchise agreement is neither inherently good nor evil; it is a business contract much like any other. Any other company is welcome to petition City Hall or the state government for a franchise for these same areas. It is up to the state and local governments to decide who can provide service, and who can not. You may have read about Verizon and AT&T getting their wrists slapped for installing their product in a few area where they did not have a franchise. The affected town governments were not upset at the increased competition; rather, they wanted Verizon and AT&T to pay their cut!
This law regarding statewide franchises will benefit local entities as well as TV providers. Negotiating franchise agreements with every little town in the county is often a long, drawn-out tedious affair. Some small town governments have refused to allow other companies to start providing a competing service. You can't blame the industry itself for monopolism in these cases. Now, a single agreement will provide access to these towns while TW, AT&T, the 2 major satellite companies, and any other companies with a franchise all compete. 4 major players, all providing ESPN, et al...I personally fail to see the monopoly.
khasim (12/9/06): In a blind taste test, more people preferred Coke over the Pepsi that I had previously pissed in.
I think you're onto something here. Rhode Island passed something similar in the past year allowing Verizon to sell FiOS statewide without having to negotiate with each little town. What was happening before was Verizon would have to go kiss every little town selectman's ass handing over fist-fulls of money at a time just to have permission to offer FiOS tv and internet in their town. Negotiations were taking over a year in some instances and ended with Verizon handing over millions of dollars just to be able to offer people faster internet access.
In that instance individual town licenses were a barrier to competition, not an encouragement for it. Somehow the state senators and reps in RI grew big enough balls to tell their local piddly town governments to screw off and they just gave Verizon a state-wide license. Result? Statewide fios deployment in RI.
Verizon's looking to do the same thing right now in Massachusetts. Each town wanted a bigger bribe than the last just to be able to offer fiber optic internet service to the residents. So this past summer, fed up with greedy local governments, Verizon pulled out of all local negotiations in progress and has announced they won't be applying for anymore. They want a state-wide license like time-warner just got here in Ohio and like Verizon already has in RI. Until they get it, no more fios expansion to any new towns in Mass.
There, so now that that's out there now try and tell me how a state-wide franchise is going to hold back progress any more than the old town-by-town franchise scheme. I know Telco companies aren't the epitome of business ethics and they could be upgrading their networks a lot faster but these local town governments aren't exactly making it easy.