from: Callahan’s Cleveland Diary [1]

MI video franchise “reform”: A license to redline?

HB 6456, Michigan’s new law stripping municipalities of cable TV franchise authority, appears to open the door for cable providers to deny service to “low value” neighborhoods in cities where they maintain franchises… in effect, creating a license to redline low-income communities.

The Michigan law is very likely to provide the template for similar legislation in the Ohio General Assembly early next year.

If my reading of the bill passed last week by the Michigan legislature is correct, it will permit Comcast (for example) to withhold new TV/Internet service and even abandon existing customers in neighborhoods of Detroit (for example) which have too few premium subscribers to meet the company’s market priorities, now or in the future. The provisions of existing cable franchises that commonly require companies to offer community-wide service are declared “unreasonable and unenforceable.”

Under Michigan’s new system, neither city nor state officials will have any negotiating or oversight power over a company’s decisions on where to offer service within a franchise area, unless they can show evidence of explicit racial or income discrimination. The law provides a presumptive “defense” against such a charge if the company can show that 30% of the households in areas it does serve make less than $35,000 a year. Time Warner could abandon half of Cleveland and still pass that test.

I called the Michigan Municipal League last Thursday to ask if they agreed with my reading of the new law. Joe Fivas, the MML’s assistant director of state affairs, confirmed my understanding of the language. (The MML strongly opposed HB 6456 and expects a legal challenge on the grounds that it violates the Michigan constitution’s protection of valid contracts.)

HB 6456’s provisions overturning existing local franchise protections were added to get Michigan’s cable industry to drop its opposition to statewide franchising, which it sees as a competitive maneuver by AT&T and Verizon. The telcos have exactly the same goals in Ohio, and the cable industry has the same objections, so there’s every reason to expect them to propose the same deal.

Here’s the final version of HB 6456 [2] approved by both houses of the legislature. Governor Granholm is expected to sign it this week.