Detroit Challenges Statewide Cable Franchise Law

The City of Detroit is taking a stand against Michigan's statewide cable franchising law, according to a complaint filed against Comcast in US District Court for the Eastern District of Michigan on Monday.

Detroit's primary issue is that Federal Law (here, the Federal Cable Communications Policy Act of 1984, 47 U.S.C. Section 521 and after) and Michigan's constitution both give local governments the right to regulate cable services within their communities, and the State law takes that right away. The State law is questionable, in part, because Federal law explicitly preempts contrary state law. Detroit points to Federal consumer protection standards as being undermined by, and therefore contrary to, the State rules. In Detroit's complaint, Comcast is faulted with usurping the local franchise regulations, which included Federal consumer protection standards.

Over 20 states have adopted statewide cable franchising laws [pdf]. The intent of these laws is to lower barriers to entry in the multichannel video services marketplace, thereby improving competition and ultimately lowering prices while increasing consumer choice. Detroit's complaint comes in the wake of research that indicates statewide franchising tends not to lower prices [pdf, see p. 16], as the competition in statewide video markets is still oligopolistic. Others have reported state-level problems in complaint resolution against the cable operators [pdf, see p. 6]. Local access public, educational, and government (PEG) channels have also lost support in several states due to statewide franchising rules.

This case may establish valuable precedent or persuasive authority for other communities interested in regaining local franchising control. However, the challenge should not be read too broadly. First, Michigan's constitution is somewhat unusual in providing an exclusive right to local governments to grant franchises (though many state statutes include such provisions), if cable franchises are considered to be included in this edict; and the complaint, at least in part, hinges on a claim of unconstitutionality of the state law. Second, Detroit's franchise with Comcast had expired, and Comcast had rejected the city's offer of another local franchise. The date of expiration coincided with the effective date of the uniform statewide franchising law. For cities with incumbent agreements still in effect, and for cities that acquiesced to their statewide rules, the analysis may differ significantly.

Notably, Detroit filed suit against Comcast during the FCC's comment period for the Comcast / NBCU merger.