The Fallacy of Regulatory Symmetry: An Economic Analysis of the 'Level Playing Field' in Cable TV Franchising Statutes

Abstract

Formal regulatory parity can entail counterintuitive effects. In a series of state statutes, municipal governments have been directed to issue cable TV franchises to new competitors only after (a) formal hearings considering the ‘public interest’ in competition; and (b) imposing terms and conditions which are at least as burdensome as those contained in the incumbent’s franchise. While billed as ‘level playing field’ laws, economic theory, an important case study in Connecticut, and a probit analysis of Ameritech’s cable franchise acquisition strategy suggest that these statutes actually tilt the field against entrants.

Keywords: Level Playing Field, Cable TV, Television, Franchising, Entry Deterrence

JEL Classification: L5