Taking a HARD look at the Business of Politics

Last fall the Telecomms tried, and failed to get a federal level franchise system put in place for delivery of TV content. The move was defeated at Senate level because of the Net Neutrality issue. Since the Telecomms only had a partial victory on the Fed level so far, with Kevin Martin’s ruling re time limitations on municipal franchise approval, they’ve since taken it to the state level and overturned local authority in more than one state, New Jersey, California and Michigan being among them.

There is still a battle being waged at the state level though, and it isn’t always going the way the Telecomms want it.

If you search the term “Cable choice and competition” you’ll be amazed at the amount of glowing reportage going on in big media about this issue. Oddly enough, if you really read it, it looks like all the articles were done from the same Press Release, and it doesn’t matter which state or Telecomm is in question, whether it’s Georgia and AT&T or Verizon and Massachussetts. The language and promises are always the same, and even the names given the legislation are eerily similar. Here’s an example from Verizon’s website re Massachussetts:

The Massachusetts Cable Choice and Competition Act will accelerate cable competition in Massachusetts. It will allow video providers such as Verizon to apply to the Department of Telecommunications and Energy for permission to offer cable TV service, rather than negotiate a license with each individual town - a lengthy process that delays competition.

This bill is a win for our customers and for local governments. It preserves many local benefits, including franchise fees paid to municipalities, financial support for public, educational, and government channels, and free cable service at municipal buildings. Municipalities also retain full authority over their rights-of-way. In addition to streamlining the process for new competitors, the bill will enable current cable providers to apply for licenses to expand their reach by entering new markets.

This legislation is good for the Commonwealth. It will enable Verizon, which continues to invest hundreds of millions of dollars into our advanced fiber optic network, as well as other providers, the ability to expand technology investment to consumers in many more Massachusetts communities. It also will spur innovation, provides incentives to increase investment and help retain and create jobs in Massachusetts.

Now, here’s an example from an article re California and AT&T– “AT&T’s president says its a matter of choice and competition . . . Ken McNeely, president, AT&T California: “Competition forces the incumbent to provide a better product at better prices. So I think all consumers will win as a result of this.” ”

And Tennessee, where both Verizon and AT&T have a share of the market:

Legislation was introduced today in the Tennessee General Assembly that its sponsors say will provide for more consumer choice, more control, better service and better prices in the state’s cable-TV market.

The bill, “The Competitive Cable and Video Services Act” (SB 1933 and HB 1421) provides for increased competition in the cable industry in Tennessee by granting a statewide franchise to companies willing to compete against monopoly cable-TV providers, who, over the 10-year period from 1995 to 2005, increased cable prices by 93 percent. In areas of the country where competition has been introduced, cable customers have saved an average of $22.30 per month.

Sponsors include state Senators Bill Ketron (R-Murfreesboro) and Doug Jackson (D-Dickson) as well as state Reps. Charles Curtiss (D-Sparta) and Steve McDaniel (R-Parkers Crossroads).

“More than anything else, this bill is about choice and bringing the future to the residents of all communities throughout Tennessee. Through the facilitation of competition across the state, cable-TV customers statewide will enjoy better service and lower prices,” Ketron said.

And Michigan with AT&T:

As the current video programming laws are written, new providers must acquire local franchises for each city before they can compete with existing cable providers. Because of these costly and time consuming barriers to entry, Michigan cable customers have fewer options when their rates increase. These laws also prevent new technologies from emerging in Michigan, leaving consumers with fewer choices and less innovative products. FreedomWorks Chief Economist Dr. Wayne Brough estimates the employment impact of this bill to be over 30,000 new jobs.

Last year Texas was the first state to replace local franchise restrictions in favor of a statewide franchise. When exposed to competition, incumbent cable companies responded by reducing rates by nearly 25 percent in some areas. Indiana recently followed suit and became the second state in the nation to updates its telecom laws to reflect cutting edge technology. Michigan consumers can see similar results if S.B. 1157 is passed as written.

“American families are stuck with annual price increases imposed by cable providers operating without effective local competition,” said Dick Armey, FreedomWorks’ Chairman and former House Majority Leader. “Competition, not regulation, provides innovation, choice, and lower prices. We have seen this in the telephone voice market, and we could see the same thing in the video programming market if we eliminate outdated regulations.”

But in states where this cookie cutter legislation has been passed, the result has not been as promised. Usually what happens is a slight decrease immediately followed by an increase by all providers a few scant months later as happened with all TV providers in Maryland (in the same MONTH yet!). It’ll be interesting to hear what happens in Georgia.

And there are other problems. Across the board the various versions of this legislation throws out buildout requirements, which allows redlining of poor districts, rural districts, and districts where deployment would be more costly. Also, Public Access Channels are threatened by ridiculous requirement. And as to franchise fees being protected, that’s bull in most cases, since the blanket laws have no requirement for the connection of Libraries, schools and other public buildings, which would result in a real cost to municipalities who have in the past received those services free as part of a franchise agreement, a loss which will have to be made up in some other way, such as a tax increase.

Some states, such as Florida and Pennsylvania, who have been dealing with the steamroller approach of the Telecomms in this, have started to fight back. Pennsylvania municipalities overrode the Cable Choice and Competition legislation last fall, and a bill is pending now which would reverse an earlier bill that trashed the rights of municipalities to build their own Wifi networks in the absence of other options. In Florida an amendment to the current legislation calls for a buildout requirement, and the Telco lobbyists are already spinning it as a guarantee that they won’t invest in Florida infrastructure if this happens, despite the fact that in states where statewide initiatives have been defeated and buildouts still exist, Telecomms are still moving ahead with gaining municipal level cable franchises, which shows this to be so much hot air they’re blowing in order to get more favorable terms on cable franchising. It will also be interesting to see how Vermont does with its own fiber infrastructure controlled at state level.

Is your state facing legislative changes re “Cable Choice and Competition“? Find out if there is pending Telecomm/Cable legislation in your state.

Technorati Tags: Telecomm, Cable, Cable Choice and Competition, Cable Franchise, Municipal Franchise, State Cable Franchise

BitchSlapped on 03/28/07, 9:02 AM
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