Tennessee Should Tune in to a New Era of Television Options

April 12, 2007 11:26PM

By Drew Johnson Imagine a law limiting every town to one restaurant and giving the local government the right to choose which restaurant to allow. Let’s say your town chose to give its one restaurant license to Burger King. You don’t have to be an economist or a restaurant owner to imagine what would happen next. Without competition from other restaurants, Burger King’s customer service would begin to drop. Long waits, incorrect orders and an untidy eating area would be the order of the day. The lack of competition would also lead to price gouging. Without other restaurant options, Burger King would have no reason not to hike prices as high possible. It would become a world of the $15 Whopper. As you know, this isn’t how the restaurant business works, but it’s exactly how the cable industry operates in Tennessee. City and county governments in Tennessee require that cable companies secure a local franchise to provide cable service. While local competition among cable companies has been allowed since 1996, franchise requirements and the advantages enjoyed by the company allowed to serve a locale prior to 1996 mean that it is extremely rare for more than one franchise to be awarded in an area, leaving most Tennesseans with only one choice for cable. Since cable companies rarely compete against one another, and satellite services offer a poor alternative for many customers in Tennessee, cable customers have little alternative to paying whatever cable companies charge. In response, cable companies increase prices dramatically on these captive customers. Since 2000, residents of many Tennessee cities have watched their cable bills increase by more than 30 percent—Chattanooga has seen a staggering 52 percent increase in cable cost. This lack of competition has also resulted in poor customer service. When a company has a monopoly, as cable companies have in much of Tennessee, there is little reason to please customers. Thus, some cable companies ignore customer service, putting cable companies behind the Internal Revenue Service in a recent poll of customer satisfaction. Advances in technology have made it possible for both cable and telecommunications companies to provide voice, data and video services to most homes in Tennessee. The host of new options for consumers creates the perfect opportunity for state lawmakers to end cable’s monopoly over television service. If lawmakers overturned the current municipal franchising scheme and replaced it with a statewide franchising system, Tennesseans could choose between a variety of services from multiple companies. The result would be lower prices and better service options for consumers. In recent months, a dozen states, including California, North Carolina, South Carolina and Virginia, have ended local cable monopolies by passing franchise reform allowing telecommunications and other cable companies to compete for customers under statewide franchises. The benefits have been undeniable. In Texas, franchise reform will create over $3 billion in new telecom investments and up to 7,000 jobs. Tennessee’s legislators have the opportunity to turn the Volunteer State into a similar success story. By pulling the plug on Tennessee’s outdated system of local cable monopolies and allowing statewide franchises, state lawmakers can allow constituents to tune into a new world of television options. Just as dozens of restaurants mean a variety of food options at competitive prices, video franchise reform would result in cheaper television and video services with more channels and better customer service for millions of Tennesseans.