^{Democracy & Technology Blog} Franchise reform would increase revenue to local government

Local officials act as if eliminating cable franchising will be the end of civilization — er, “livable” communities — but a new paper demonstrates the link between increased competition in video programming, increased consumption and increased local franchising receipts, which local officials can use to raise teacher salaries and expand Medicaid benefits. The study, by Robert W. Crandall and Robert Litan, estimates that if Congress eliminates franchising, local franchise fee receipts would increase by between $249 million and $413 million per year. (See “The Benefits of New Wireline Video Competition for Consumers and Local Government Finances,” available at Criterion Economics, LLP.)
Local officials claim they’re not opposed to competition — they embrace it! — of course. But franchises are an unnecessary transaction cost that continue to exist only for the purpose of tending to preserve an important source of local government revenue, inkind contributions and occasional goodies for city leaders.