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Wednesday, July 13, 2011

Franchise Fee (a.k.a. Kickback)

Okay, here is a scenario for you:  I run a business and I want a monopoly in a particular geographic area for my specific service.  How do I do it?  Well I figure out a way so that I can charge my customers an extra fee and then funnel that money back to the governing entities that gave me monopoly rights.

The politicians win, as they get a new form of tax revenue just for giving me the monopoly.

I win because I get my secure monopoly.

The customers lose, because not only do they have to pay more for my service (with that "more" being the kickback), but they can't buy my specific services from a competitor.  Do they get the best possible service from me?  Honestly, it does't matter:  what matters is that I kick-back money to the city.  If another service provider offered a better, cheaper product it wouldn't matter, as the fee I charge and kick-back I provide is really what drives the decision to exclusively offer my services to the city.  Screw such esoteric concepts as "service" and "value".


Yes, here you have the City of Scranton's insane agreement with Comcast/Xfinity cable.  I like cable television...while I don't watch much of it, I have to confess a soft-spot for such educational programs as "Hoarders" and "Falling Skies".  Rumor has it I also have something called "On-Demand" that allows me to watch old shows.

What I don't know though is whether or not Comcast offers the best possible value to the residents of the City of Scranton.  Nor will I ever know, because as long as Comcast has this franchise fee arrangement with the city, they are virtually guaranteed to continue the monopoly they have always enjoyed.

Now could I move to, say, satellite dish service? Sure I could, but that misses the point of this rant.  What point?  Simply that a franchise fee is just another back-door tax, all be it with a pretty dress on and sweet smelling perfume designed to mask the stench of things like inefficiency, greed, corporate welfare and ineffective/self-serving politicians.

Now I understand that the City of Scranton's contract with Comcast lasts something like a billion years (kind of like the contract Scientologist sign with the C of $), but when it eventually comes up, maybe some genius on North Washington avenue can actually consider the concept of eliminating monopoly cable service in Scranton.  Maybe.

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