It is unfortunate that Comcast has not yet negotiated a deal with the Big Ten Network, denying all of its viewers the enjoyment of watching some Michigan football games. The Big Ten Network claims that it is not creating the problem; it has successfully negotiated contracts with most of the nation’s largest cable providers, including DirecTV, Dish Network and AT&T.

What’s more unfortunate, though, is that Ann Arbor residents cannot switch to any of these other cable providers without making the tedious transition to satellite TV. In this matter, Ann Arbor residents’ supposed friend, the city government, is actually their foe. It turns out that Comcast has a contract with the city that allows it to be the sole cable provider to Ann Arbor residents. Such unnecessary government interference is the reason that there are so many monopolies in the cable market across the nation.

The Federal Communications Commission allows city governments to negotiate their own contracts with cable companies. This contract system was originally created so that each city negotiates the cable companies into wiring the entire city. But most cities negotiated with only one cable company and gave that company exclusive rights to provide cable access to the city. Municipal governments quickly learned that they could take advantage of this ability to create cable monopolies. They began charging cable companies a share of their revenue, essentially taxing cable subscriptions. The FCC had to step in and cap charges at 5 percent.

However, the FCC has found cases in which cities are attempting to subvert the 5 percent maximum by collecting additional fees. Such cases reveal that allowing city governments to collect money from cable revenues results in corruption. Cities have a vested interest in higher cable rates, which is not in the best interest of cable subscribers.

Cities avoid negotiating cable contracts with multiple cable providers, and cable companies in turn avoid entering new cities because the new city usually requires the company to rewire the entire community at great expense. Nonetheless, multiple cable providers are available to consumers in large metropolitan areas like Detroit, where 40 percent of residents can choose between two or more cable providers, according to a Detroit News special report. Unfortunately, according to the FCC, 95 percent of Americans do not have such a choice of cable providers.

For the 5 percent that does have a choice, benefits are plentiful. According to the FCC, cable rates in communities with more than one cable provider were 17 percent less than those with only one provider. A Detroit News survey of metro Detroit found that complaints about cable service dropped 90 percent in communities with multiples cable providers. Apparently, cable companies care about their customers more if there’s competition around.

In December 2006, the Michigan legislature tried to open up the cable market to competition by replacing all local cable contracts with a universal contract that all cities must follow. It eliminates the hassle of cable companies negotiating different contracts for each city.

However, this legislation is flawed. It still requires cable companies to apply for the contract in each city. The universal contract keeps the 5 percent charge on cable revenues and still requires a cable company to wire 50 percent of each new city within six years of signing the contract. While this helps deregulate the cable market, the legislation ignores the root cause of the lack of cable competition: the contract system itself.

Local cable contracts are antiquated and need to be eliminated. They reflect unnecessary government intervention in the free market. If government stopped regulating cable television, cable prices would immediately drop because of the elimination of the 5 percent cable surcharge. Cable prices would drop further as other cable providers move into the city in accordance with trends today in cities with cable competition.

Without the cable contracting system, cable companies would be more willing to establish service in new cities without having to worry about wiring the entire city at a government-imposed pace. The pace would be determined by the market. For example, if one cable provider in Ann Arbor does not provide its subscribers with access to Michigan football games, then another could quickly move in and set up cable service in the area before the season begins.

If the cable contract system had been eliminated and the free market allowed in the cable industry, Ann Arbor residents would have the choice of switching to another cable provider and watching Michigan football games carried by the Big Ten Network. It’s too bad that their own city government is denying them that option.

Patrick Zabawa can be reached at

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