Cable TV. It’s a luxury, not a necessity, but one heavily consumed in America, even by the poor.  More than 60 percent of poor households (for a family of four less than $20,000 income) have cable or satellite TV.  Limited competition has helped those families (and all others) suffer annual price increases for for TV of 7.5 percent.

But the long awaited breakthrough for cable competition is finally here. The nation’s two largest telephone companies, AT&T and Verizon, have begun to roll out video services in their territories. Qwest reportedly is mulling bids for a major fiber-optic upgrade that will support multichannel cable TV-like services. Consumers are savoring the possibility of a head-to-head choice and hope to see the end of service ethics where “your service person will arrive between 11am and 4pm tomorrow.”

Consider an example.  A little over a year ago in Keller and Plano, Texas, just outside of Dallas, Charter Communications was charging $68.99 for cable TV service in the area. But after Texas passed statewide franchise reform, Verizon jumped into the Keller and Plano markets offering 180 channels for just $43.95 or 35 channels for just $12.95. Charter responded by slashing its prices and offering a bundle of 240 channels – plus high-speed Internet – for just $50, $18.99 less than they were charging previously for cable alone.

But there is a catch. Policymakers will embrace technological change and more allow competition in video services and more choices for consumers.

State legislators and city councils are considering video franchise reform changing the revenue-sharing agreements that cable TV companies sign with local governments in return for the exclusive right to offer video services to customers.  Video service is highly regulated at the local level and many local governments are dependant on the revenue produced by lucrative cable franchise agreements.  Reforms lower the legal burdens traditionally imposed by local franchise agencies—burdens that have made it costly, time-consuming and difficult for competitors to enter—and restrict or eliminate the sometimes arbitrary concessions imposed by local franchise agencies. Franchise reform, however, does not eliminate the fees which are paid by cable or video broadband providers to local franchise agencies, so in most cases consumers will continue to pay this semi-hidden tax.

George Mason University recently demonstrated franchise reform could save Americans $9 billion a year. University of California-Berkeley Professor Yale Braunstein found cable competition in California would drop the average cable bill by 15 to 22 percent, saving consumers in the state $690 million to $1 billion. Arizona, California, Indiana, Kansas, Michigan, New Jersey, North Carolina, South Carolina, Texas and Virginia passed video franchise reform laws in 2005 or 2006.

Critics of franchise reform have worried that statewide reforms, which lack build-out provisions requiring broadband providers to serve low-income communities, will privilege wealthy households at the expense of the poor, such concerns have not been borne out by experience.

In Indiana, the second state to pass franchise reform, Verizon’s FiOS deployment in Ft.Wayne’s started with the low-income Hanna-Creighton neighborhood. Even where video franchises are still negotiated locally, the phone companies are not applying for franchises in only the richest communities. Verizon in October began offering FiOS service across Nassau and Suffolk counties, the two counties that make up suburban Long Island outside New York City. To be sure, Verizon is offering FiOS in Laurel Hollow, where per capita income is $83,366. But the company is also offering service in Massapequa, Mineola, Valley Stream and Roosevelt, where per capita incomes are $32,532, $28,840, $25,636 and $16,950 respectively.

Cable and video reform is a nonpartisan issue.  In today's age of web videos and on-demand services, there are so many phone and tech companies itching to enter markets across the country that Democrats and Republicans are finding they can save taxpayers a lot of money by simply allowing competition in the video service industry.