Federal Court Strikes Down Part of Michigan's Cable Franchise Act

Our January 2012 newsletter notified you of the then-pending fight between Comcast and the City of Detroit over the validity of Michigan’s 2006 Uniform Video Services Local Franchise Act (the Michigan Cable Act), Detroit v State of Michigan, 10-12427 (7/10/12). The parties argued their positions in December 2011, and the Court issued its decision on July 10, 2012. We summarize below the decision – which in some ways is positive news for municipalities:

1. The Michigan Cable Act is invalid on conflicting with federal cable laws insofar as it modified existing franchise agreements and barred enforcement relating to public, government, and education channels. Put another way, the Court ruled that the Michigan Cable Act’s modifying existing franchise agreements and barring enforcement relating to public, government, and educational channels conflicts with the federal cable laws and so it cannot be enforced.
2. The Michigan Cable Act’s renewal procedures and its failure to require universal build-outs are not preempted by federal law, and so are valid.
3. The Michigan Cable Act does not violate the Michigan Constitution because there is a way to interpret the Act that avoids a conflict with the Michigan Constitution – i.e., that a municipality may refuse to approve a franchise renewal application and may negotiate acceptable terms with the cable provider without the standard form agreement automatically taking effect. As a result, a municipality may refuse to approve franchise renewal proposals from cable operators if the municipality acts on the proposal within the Act’s 30-day time limit.

This decision may be beneficial to some municipalities, such as one that has cable franchises that pre-date Michigan’s Cable Act, or one that is approached by a cable operator seeking a uniform franchise under that Michigan Cable Act in the future.

If you have questions about cable franchises, feel free to contact Anne Seurynck (616.726.2240) of the Foster Swift Municipal Practice Group.

• Read the full August 2012 Municipal Law News