This Act establishes fair market value requirements for local governments taking over or selling cable systems after franchise revocation and limits local government control over franchise transfers.
Erin Houchin
Representative
IN-9
The CABLE Competition Act aims to establish clear rules for the transfer and sale of existing cable systems, particularly after a local government revokes a franchise. It mandates that local authorities must pay the fair market value if they take over a system following a franchise revocation. Furthermore, the bill prevents local governments from arbitrarily blocking the transfer of an existing franchise to a new operator who agrees to honor the original terms.
CABLE Competition Act Forces Cities to Pay 'Fair Market Value' for Seized Cable Systems
The Consumer Access to Broadband for Local Economies and Competition Act—or the CABLE Competition Act—is stepping in to change the rules of the game between cable companies and the local governments that grant them franchises. Specifically, Section 2 deals with what happens when a city or county decides to revoke a cable company’s operating license and either takes over the system or sells it to someone else.
The Municipal Buyout Rule: Fair Market Value
If a local government revokes a cable operator’s franchise (for failing to meet the terms, for example) and then decides to buy the physical cable system itself or sell it to a new provider, the bill mandates that the city must pay the cable company “fair market value” for that system. This is a big deal because it puts a major financial barrier in front of municipalities that want to revoke a franchise. Previously, local governments might have had more leverage or different valuation methods; now, they are on the hook for what the system is currently worth. This provision kicks in six months after the Act becomes law and applies to new franchises or those already active.
Limits on Local Control Over Transfers
The bill also limits the local government’s ability to block a cable operator from selling or transferring their franchise to a new company. As long as the new buyer agrees to honor all the existing terms of the franchise agreement—meaning they step into the original company’s shoes—the city can’t say no. They can only require a 15-day written notice before the transfer happens. This is intended to promote competition by ensuring cable companies can easily sell their assets, but it also reduces the local government’s oversight regarding who is providing essential service to their community.
What Does This Mean for Your City Budget?
If you live in a city that is unhappy with its current cable provider’s service or pricing, this bill makes it much harder and more expensive for local officials to intervene. Imagine a small city trying to get better service by revoking a franchise and inviting a new provider. Now, that city might have to budget millions of dollars to buy out the old system at “fair market value,” which can be a highly subjective and litigated number. This new financial burden could make local governments think twice—or three times—before revoking a franchise, potentially leaving consumers stuck with subpar service because the city can’t afford the buyout.
The bill also defines what a “transfer of a franchise” means, covering everything from selling the physical system to merging the company or simply changing corporate control. While this clarity is helpful for investors and lawyers, it reinforces the idea that the local authority’s primary role in these transfers is simply to rubber-stamp the deal, provided the new company agrees to the old contract terms. Ultimately, this section of the CABLE Competition Act shifts power and financial risk away from cable operators and toward local governments, affecting how quickly and effectively your community can change providers.