The U.S. House passed a bill earlier this month that would infuse some long-awaited competition into the heavily monopolized cable television industry. It promises to change the way we view TV and how much we pay for it.
Even though it was barely a blip on the public’s radar, the bill had bipartisan sponsorship and passed the House 321-101. Who doesn’t like competition, after all?
But not everyone is buying, and there is plenty of reason for the skeptics to be concerned. The U.S. Conference of Mayors is casting a more than worried eye on the proposal because it weakens the hand of local regulation.
The House bill would eliminate all 33,000 local franchise agreements. Denver Mayor John Hickenlooper worries that local governments would not only lose leverage in regulating the industry but less affluent areas also would lose out on the latest technology. He welcomes competition but is concerned it wouldn’t be on that proverbial “level playing field.”
The House “Communications Opportunity, Promotion and Enforcement Act of 2006” would create a national cable franchise process. Now, some 33,000 local municipalities have their own franchise agreements with cable companies, severely limiting competition. (The Senate version of the bill had several amendments tacked onto it last week, but final committee approval likely won’t happen until later this week.)
Only 2 percent of the cable marketplace is being served by more than one provider, according to the bill’s proponents, and that, predictably, has led to higher prices, even with competition from the satellite services.
While dozens of companies, including all those Baby Bells spun off years ago, are waiting with remote control in hand for a piece of that marketplace, laws don’t allow it.
Under its current cable franchise agreement, the city of Denver requires the sole franchise, Comcast, to provide services to the entire city. The company, with Hickenlooper in agreement, worries that any new competitors – starting with Qwest – may just offer services to affluent areas where subscribers can afford to pay for premium video services.
“They’ll focus their attention and innovation in affluent areas,” Hickenlooper predicted. “In the end, the poor areas won’t have [the latest technologies] and schools won’t have the money to keep what they already have.”
Comcast currently provides cutting-edge Internet access to public schools as part of its franchise. If the House bill becomes law, it would void that agreement. Comcast might continue to provide access to schools as a public service, but it wouldn’t have to.
“I want competition,” Hickenlooper says. “I’m all for having a national franchise with just a few things negotiated,” including requirements for government and public access channels and citywide buildout.
Cable TV and broadband access is no longer just about entertainment, it’s about citizen access to the tools necessary to compete in the 21st century high-tech economy.
Hickenlooper says he’d be happy to give Qwest 15 years to build out so long as the result is that Denver citizens have bandwidth available to meet their needs.
As the big dog of Colorado cable TV, Comcast serves 700,000 households in the state. The company has voiced concerns about Qwest cherry-picking wealthier neighborhoods while bypassing poor folks who sign up for fewer lucrative services. But under a national franchise, Comcast could very well do the same.
The House bill tries to address the concerns of local officials by allowing local authority over rights of way and a franchise fee, while requiring cable companies to carry public, educational and government programming. But some say the bill would make the FCC the final arbiter in right- of-way disputes, which doesn’t make sense.
Many cities don’t want to lose regulatory leverage to Washington, D.C., but just as the Federal Telecommunications Act of 1996 removed many barriers to new entrants in phone and video services, such as cable TV giant Comcast, it might be time to do the same for cable TV.
We favor free markets, especially if they bring healthy competition to mature industries that grew under monopoly protection, such as cable TV. However, there needs to be some room for compromise, giving cities a greater role in the agreements. Why should the FCC have power to decide when city streets can be dug up?
Hickenlooper also says if cable companies are going to use city rights of way, cities should be able to say that all citizens should have access to cable and broadband advancements. It’s not an empty argument by any means.
A similar bill will go before the Senate sometime this summer. Sens. Wayne Allard and Ken Salazar should weigh the benefits and potential pitfalls before they’re blinded by the allure of competition, as it seems many House members were.
