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May 09, 2006
Anaheim vs. The Sacred Cow of Franchise Fees, Part II
Fresh thinking about video franchise fees continues to flow from Anaheim. Sunday’s edition of the Orange County Register endorsed Mayor Curt Pringle’s call for an end to video franchise fees—the percentage of revenues service providers pay local cities and towns for the “right” to supply residents with TV programming. Pringle has called this an unnecessary tax and the Register agrees.
Anaheim Mayor Curt Pringle, in another of his moves to deregulate his city, told us he is working to take the government out of deciding who’s a winner in telecommunications, allowing the marketplace to determine usage and rates among providers of cable, satellite, Wi-Fi and phone company services – and any new technology that comes down the digital pike.
Mr. Pringle said Anaheim approved an agreement with AT&T in March that charges no “fees.” And it is negotiating a new cable contract with Time Warner Cable that also will charge no “fees.” He said the city will lose more than $1 million in such “fees” a year by canceling its 5 percent cable “franchise fee.” But the gain is that his city is not stuck with a late-20th century regulatory model, but will enjoy a deregulated 21st century, streamlined model. He pointed out that these “fees” actually are not paid by the companies, but by customers.
“There shouldn’t be a policy of encouraging which technologies have an advantage,” he said. Exactly. We suspect that, by making his city a model of telecommunications innovation, property values and business revenue increases well could generate enough new taxes to make up for the “lost” fees.
Pringle’s suggestion that cities begin to wean themselves from franchise revenues is sound advice. Cities would do well to remember that local franchise fees are not tied to all video revenues, just the revenues that are collected via cable TV model. Franchise revenues are safe as long as the service provider uses a local satellite head-end to receive hundreds of programming channels and pipe them down the cable to area homes. Should programming delivery shift to a Web-based client-server model , where the cable box works more like a web browser than a TV channel tuner, subscription-based Internet video could replace today’s downlink-and-transmit model.
Under the way franchise rules work, cities can no more collect a franchise fee on these revenues any more than they can on any other on-line transaction.
It is not hard to imagine a point where cable and telephone companies shift programming delivery to regional or national server farms owned and operated by a separate subsidiary, say “AT&T Content Aggregation Services,” or “Comcast Programming Inc.” These subsidiaries would compete with other third party aggregators, like iTunes, CBS Innertube or Netflix. The problem for cities is ,under this arrangement, video revenues—the source of franchise fees--have been divorced from the local service provider. From a corporate point of view, AT&T and Comcast may still be programming distributors, but they won't be managing delivery in a way that makes franchise fees possible.
Don’t scoff. In addition to Innertube, which gives insight on how networks might use the Web for video services in the future, the Connecticut Department of Utilitiy Control this week tentatively ruled that AT&T’s video services – because they are IP-based and operate closer to client-server, are exempt from franchise fees.
Posted by steve.titch at May 9, 2006 09:23 AM
I just don't have much to say recently. Such is life. I've basically been doing nothing. Basically nothing seems worth bothering with. Oh well.
Comment by: Sten96678 at January 24, 2007 04:23 PM
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I just don't have much to say recently. Such is life. I've basically been doing nothing. Basically nothing seems worth bothering with. Oh well.
Comment by: Sten80707 at January 26, 2007 03:46 PM
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My life's been basically bland today. More or less nothing seems worth thinking about. My mind is like an empty room. I've more or less been doing nothing to speak of. Not much on my mind recently.
Comment by: Sten73106 at January 26, 2007 08:25 PM
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retty much nothing seems worth thinking about. My life's been completely dull , not that it matters. I've just been staying at home waiting for something to happen.
Comment by: Sten84868 at January 28, 2007 10:42 AM
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I haven't been up to anything recently, but so it goes. Such is life. What can I say? Pretty much not much exciting going on to speak of. I haven't gotten much done lately, but I don't care.
Comment by: Sten3815 at January 28, 2007 05:00 PM
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I've just been staying at home not getting anything done. I've basically been doing nothing worth mentioning. My life's been pretty unremarkable these days. Eh.
Comment by: Sten89952 at January 29, 2007 02:57 AM
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I've just been staying at home not getting anything done. I've basically been doing nothing worth mentioning. My life's been pretty unremarkable these days. Eh.
Comment by: Sten88338 at January 29, 2007 08:37 AM
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I've more or less been doing nothing worth mentioning, but eh. My life's been really bland today. I don't care. I've just been letting everything happen without me these days. That's how it is.
Comment by: Sten64412 at January 30, 2007 02:07 AM
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retty much nothing seems worth thinking about. My life's been completely dull , not that it matters. I've just been staying at home waiting for something to happen.
Comment by: Sten41582 at January 31, 2007 09:47 AM
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I've just been staying at home waiting for something to happen, but I don't care. Basically nothing seems worth thinking about. I can't be bothered with anything recently.
Comment by: Sten92754 at January 31, 2007 04:18 PM
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Not much on my mind right now, but it's not important. I've just been letting everything happen without me. I just don't have anything to say right now.
Comment by: Sten73870 at February 1, 2007 12:25 AM
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Not much on my mind. I don't care. I've just been letting everything happen without me , but shrug. Whatever. I feel like a void.
Comment by: Sten97340 at February 1, 2007 05:34 AM
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My mind is like a bunch of nothing, but I guess it doesn't bother me. I haven't been up to anything recently. I've pretty much been doing nothing to speak of.
Comment by: Sten78214 at February 1, 2007 08:22 AM
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I haven't gotten anything done today. I feel like a fog, but what can I say? I've just been letting everything wash over me lately, not that it matters. Shrug.
Comment by: Sten16378 at February 1, 2007 10:21 AM
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I feel like a complete blank, but I don't care. Pfft. I've pretty much been doing nothing worth mentioning.
Comment by: Sten83634 at February 1, 2007 10:34 PM
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I just don't have anything to say right now. I haven't been up to anything recently, but it's not important. I've just been sitting around waiting for something to happen, but shrug.
Comment by: Sten78559 at February 2, 2007 02:08 AM
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I haven't been up to anything today. I can't be bothered with anything recently. Nothing seems worth thinking about. I haven't gotten anything done recently, but oh well. Not much noteworthy going on worth mentioning.
Comment by: Sten30242 at February 3, 2007 05:04 PM
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I've just been staying at home not getting anything done. I guess it doesn't bother me. Shrug. I haven't been up to anything. I haven't gotten much done today.
Comment by: Sten75245 at February 3, 2007 09:38 PM
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I haven't gotten anything done recently. I've just been hanging out doing nothing. I haven't been up to anything these days, but it's not important. Today was a total loss.
Comment by: Sten29692 at February 4, 2007 06:48 AM
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I've just been staying at home waiting for something to happen, but I don't care. Basically nothing seems worth thinking about. I can't be bothered with anything recently.
Comment by: Sten69496 at February 4, 2007 11:02 PM
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I haven't been up to much today. I've just been letting everything happen without me. Basically nothing seems worth bothering with. I've just been hanging out doing nothing. I just don't have anything to say right now. More or less nothing happening.
Comment by: Sten81422 at February 5, 2007 04:34 PM
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I just don't have anything to say. Not that it matters. Eh. I've just been staying at home doing nothing, but I don't care. That's how it is.
Comment by: Sten96964 at February 6, 2007 08:03 AM
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