How local government gets in the way of better, faster, and cheaper broadband

Many complain about the price of cable, but few realize that key culprits can be state and local franchising authorities (LFAs), whose taxes, fees, and surcharges on top of the basic price can account for 20 percent or more of the total price. Operators need to secure a franchise agreement to build and run cable service, and that can entail acceding to all types of demands from LFAs over and above the franchise fees that operators have to pay under federal law. These exactions range from providing free cable and internet service to government buildings to support for government access channels, free fiber hookups, and taxes on broadband, voice, and other services delivered over the cable system. What’s more, some LFAs are now imposing fees on the revenues from broadband services even though the law only allows franchise fees for cable video services. As broadband becomes increasingly important for daily life, local leaders are hurting their own residents through fees that increase the cost of new broadband deployment and raise the price of internet access, thereby slowing adoption. As municipalities attempt to build their own broadband networks, they should first look at their own role in undermining efforts to make broadband better, faster, and cheaper.