Digital Policy Institute

Michigan consumers could save millions under franchise reform bill

EAST LANSING, Mich. – Telecommunication reform in Michigan could save consumers hundreds of millions of dollars annually on their cable bills, pour billions of dollars into the state and create as many as 34,000 new jobs over the next decade, according to a new study from researchers at Michigan State University and Ball State University.

"The Economic Impact of Video Franchising and Broadband Investment in Michigan: 2006" also found that proposed video franchise reform would add as much as $13.5 billion to the state's economy over 10 years.

Several states are well ahead of Michigan in adopting cable franchise reforms that would open the Michigan market to greater competition in video services and lure new investment in broadband networks across the state, said Barry Litman, an MSU professor of telecommunication, information studies and media and co-author of the study with Robert Yadon, a member of Ball State's Digital Policy Institute.

"In the information age, a robust broadband infrastructure is paramount for economic growth," said Litman. "Michigan now has an opportunity to not only encourage, but also participate in the development of broadband access statewide. To attract and retain business, to guarantee an environment where the sons and daughters of current Michigan residents can stay and work, state leaders must be proactive and prepare for the future."

The Michigan Legislature is considering House Bill 5895 that would create a one-stop statewide video franchising system to replace municipal franchise agreements and to speed the introduction of competing video and broadband services.

"As we move toward a fully digital environment, we find ourselves saddled with a legacy of regulatory environment that cannot easily rectify the imbalances that new technology creates on the national telecommunications playing field," Litman said.

Yadon said inaction by the Legislature would hurt consumers in the long run. "Doing nothing or delaying reform would be to ignore these substantial enhancements in consumer welfare and economic benefits to the state," he said.

Litman said the advent of new video technologies, including programming transmitted via broadband and telephone lines, promises to free consumers from local cable monopolies guarded by some 1,200 municipalities statewide.

"Michigan ranks only 30th nationwide in the number of broadband lines per thousand residents," Yadon said. "The state needs franchise reform to propel its economy forward. Through this bill, Michigan will create an environment with new infrastructure that will make the state more conducive to new investment and job creation."