Telecommunication reform in Michigan could make the state more attractive to high-tech investment, pouring billions of dollars into the state and creating as many as 34,000 new jobs over the next decade, says a new study from researchers at Ball State and Michigan State University. 

"The Economic Impact of Video Franchising and Broadband Investment in Michigan: 2006" also found that proposed video franchise reform would add as much as $13.5 billion to the state's economy over 10 years and potentially save consumers hundreds of millions of dollars annually on their cable bills.

Several states are well ahead of Michigan in adopting cable franchise reforms that would open the Michigan market to greater competition in video services and lure new investment in broadband networks across the state, said Robert Yadon, a member of Ball State's Digital Policy Institute (DPI) and coauthor of the study with Barry Litman, a professor of economics and telecommunications at Michigan State.

"In the information age, a robust broadband infrastructure is paramount for economic growth," said Yadon, a professor of information and communication sciences. "Michigan now has an opportunity to not only encourage, but also participate in the development of broadband access statewide. To attract and retain business, to guarantee an environment where the sons and daughters of current Michigan residents can stay and work, state leaders must be proactive and prepare for the future."  

Franchise reform is the subject of a hearing June 7 by the Michigan State Legislature's Committee on Energy and Technology. Rep. Mike Nofs, (R-Battle Creek) chairs the committee.

The Michigan Legislature is considering House Bill 5895 that would create a statewide video franchising system to replace municipal franchise agreements.

"As we move toward a fully digital environment, we find ourselves saddled with a legacy of regulatory environment that cannot easily rectify the imbalances new technology creates on the national telecommunications playing field," Yadon said.

Litman said inaction by the legislature would hurt consumers in the long run.

"Doing nothing or delaying reform would be to ignore these substantial enhancements in consumer welfare and economic benefits to the state," he said.

Yadon said the advent of new video technologies, including programming transmitted via broadband and telephone lines, promises to free consumers from local cable monopolies guarded by some 1,200 municipalities statewide. The pending legislation would instead create a one-stop statewide video franchise to speed the introduction of competing video and broadband services.

"Michigan ranks only 30th nationwide in the number of broadband lines per thousand residents," Yadon said. "The state needs franchise reform to propel its economy forward. Through this bill, Michigan will create an environment with new infrastructure that will make the state more conducive to new investment and job creation."

Indiana Gov. Mitch Daniels recently signed telecommunications reform legislation passed by the state legislature that was based on prior research by Yadon and his fellow DPI researchers. Texas, Kansas, Virginia and Georgia have already enacted similar legislation.

Citing the passage of Indiana's House Bill 1279 as the catalyst, AT&T Indiana declared its intent on May 31 to invest $250 million to deliver next-generation video and broadband services to consumers across the state beginning later this year. The products will provide Hoosiers with a new competitive alternative in television programming, the company said.

Ball State's study on Michigan telecommunications reform is available online at www.bsu.edu/digitalpolicy.

(Note to editors: For more information, contact Yadon at ryadon@bsu.edu or (765) 285-1515. Litman may be contacted at litman@msu.edu or (517) 353-6411.