1. Statewide Cable Franchises AB 2987 - Digital Infrastructure and Video Competition Act

2. Digital Infrastructure and Video Competition Act California Passed in November of 2006 Established state franchises for video services Administered by the CPUC Previously administered by cities and counties

3. Why the Change? Growth in technologies eliminated the traditional categories of cable providers and telephone companies New entrants into the video service market burdened by the local franchising process

4. Assembly Bill 2987 Created to preempt local franchises and establish the State Utilities Commission as the sole franchising authority First state to do this was Indiana followed by Texas and Virginia

5. Opposition to AB 2987 Cable companies - until bill revised to allow for abrogation Current franchise holders –Concerned with effect of the new legislation including: Discrimination, build-out, redlining Customer Service Right-of-Way Management PEG Funding Franchise Fees

6. State Franchising System Franchise valid 10 years Local franchisees may seek state franchise only when another company provides notice it will be providing services Current cable operators who opt-in must provide services to all areas in its current agreement

7. State Franchising System Franchise fees will be paid directly to each local entity as compensation for use of public right of ways Fees may not exceed 5% of gross revenues State franchises will not go into affect before January 2, 2008

8. Streamlining Franchising A bipartisan bill entered Congress in March creating a nation video franchise FCC just released findings which prohibits franchising authorities from unreasonably refusing to award competitive franchises for the provision of cable services

9. How does this relate to economics? Example of how government policy can influence competition in the market place…