A Strategic Planning Perspective of Utility and Cable Franchises as a Source of Increasing Municipal Revenue

Growth of electric power, gas and steam heat utilities provided a lifestyle of comfort and convenience for Americans during the industrial revolution. Consequently, it was competition among these companies that lead to the abuse of service and quality, causing physical destruction of city streets and the space above the ground. But municipal officials jumped on the band wagon and began to realize value in the public rights-of-way (ROWs) as the unique construction of the utility operations required passage through the streets and occupancy of the space above ground for construction of the conduits of power. This franchise privilege, however, is only granted under the condition that the general public will ultimately benefit. Franchise granting\u27authority, traditionally held by the state, is now passed down to cities. Appropriately, utility and cable companies are required to pay franchise fees as a percentage of gross revenue for this privilege ranging from five percent in the case of cable franchises, to as much as 15 percent from gas and steam heat suppliers. Legislative changes like the divestiture of AT&T and technological upgrades such as fiber-optics in the telephone and cable areas have allowed these firms to remain two steps ahead of municipalities. In many unisolated cases, cities have buried revenues from unregulated activity and literally robbed franchisers of due payments. Case in point, the City of Queens, New York recovered nearly $95,000 in unreported franchise revenue payments substantiated by a prudent franchise audit. Suffice it to say, a well thought out strategic plan inclusive of strict interpretations of the laws affecting the utility and cable industries, an understanding of technology and constant contract monitoring is likely to yield substantial franchise revenues to meet the infrastructure and operational needs of local municipalities