As someone who works in government/public access, I have a dog in this race. I also have a closer view of it than most people.
Here are some observations:
What you saw in the video is factually correct. Years ago, the FCC used to mandate that local TV stations carry a certain amount of local content. That, like the Fairness Doctrine, vanished over the years. However unlike the Fairness Doctrine (which has never been adequately replaced by anything), local PEG (public/educational/government) channels appeared to fill the local void.
The last couple of years, however, companies like AT&T and Time-Warner have sought legislation which benefits them but reduces options for subscribers. New rules allow cable companies like Time-Warner, which used to sign agreements to serve individual communities, to sign franchise agreements with entire states instead.
One thing this means to the consumer is that if you don't like the way your cable company is operating, you no longer have anyone in your local government to complain to. My boss at present fields complaints from subscribers who are not able to receive satisfaction going through the cable company's usual channels. As often as not, these complaints are justified. (And sometimes there is no subscriber complaint; sometimes the companies just try to pull a fast one, like moving channel locations around when their local franchise agreement says they can't.)
The upshot of the conversion to state franchises is that if you have a complaint, you have to find someone on the state level to complain to. In Ohio, for those of us who live near Cleveland, this means Columbus. Frankly, we don't trust this situation. It's not only a matter of distance. It was obvious to us from the beginning that the GOP majority which approved this was in the pocket of the telecoms. How much satisfaction do you think you're going to get from the people who put you in this situation in the first place?
In our own case, the state franchise which passed in Ohio still doesn't kick in until later this year. But there is a landmine built in. If the cable company (like Time-Warner) can prove that there is sufficient state-wide competition (U-Verse, Dish Network, etc.), they can scrap local agreements immediately and replace them with the state one.
To us, this literally could make our access center homeless. We have a local agreement to operate our TV studio in the same building as the cable company. We figured we could very well lose that when the state franchise kicks in later this year, and we have been looking at alternate locations -- but if the landmine goes off before that, we could literally find ourselves kicked out immediately.
Too, the telecoms fought hard to get the PEG channels in Ohio banished into "digital Siberia", as the one woman put it. Right now viewers get them as part of their basic service; on a digital tier, people would have to pay extra to see them. We've been lucky to have successfully fought this so far, but in some places PEG channels have vanished from cable and are now only viewable via streaming video on the internet.
Add to this the problems the video mentioned, of not being able to record shows on a DVR, etc., and you have numerous reasons not to like systems like this.
This has been going on all over the country. On a state-by-state basis, companies have been spending a lot of money to get legislation passed to allow them to do things like this. This is hardly something which consumers are demanding.