Franchise Battles Persist

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Battles to reform video franchising rules in several states remain pitched, with strategies ranging from statesmanlike negotiations between all stakeholders to the distribution of plastic pigs on the steps of the Tennessee Capitol.

Tennessee is the site of the most vocal battle. TV4US, an advocacy group which includes AT&T, has kept an especially high profile there.

TV4US has been branded an “Astroturf” group by cable interests, who argue its affiliation with AT&T ruins its claim to be a grass-roots citizens group.

TV4US has completed two resident mailings. One mailing included an 11-by-5 inch postcard carrying a tear-off postcard to be mailed back to the group. On April 3, the group delivered 14,000 of these return postcards to state legislators.

MESSAGE IS 'WRONG’

The cards asserted that cable rates have gone down 28% to 42% in communities where competition exists. The cited source is a January 2006 Bank of America Equity Research study. The card asserts that reform laws in other states have brought lower prices and better services.

“Why should Tennessee be left behind?” the copy asks.

“The message is completely wrong,” said Stacey Briggs, executive director of the Tennessee Cable Telecommunications Association. The TCTA and municipal groups such as the National Association of Telecommunications Officers and Advisors are critical of such statements, questioning whether those rate estimates include unpublished, short-term acquisition rates. Cable incumbents also note that telephone companies, in discussing their video plans, state they don’t intend to compete on price.

A second mailing by TV4US was personalized: Recipients got a card bearing the name and office telephone number of their local legislator.

The cable association has countered with its own Web site, keepitlocaltennesssee.com. Briggs said 18,000 visitors to the site have opted to send an e-mail or a fax to legislators, arguing against the telco-friendly bills pending in both chambers there.

Two weeks ago, TV4US supporters passed out pink plastic pigs in the legislative plaza in Nashville. The message: When pigs fly, cable rates will go down. Briggs said the effort played upon “consumer misconceptions” that alternative providers will charge lower rates. Few legislators are citing rate cuts as a reason to pass franchising reform, however, he said.

So far, there have been no floor votes on the Tennessee bills, which would shift franchising authority to the secretary of state. Cable incumbents and municipalities remain adamantly opposed to the measures, arguing that new providers can already compete without legislative assistance.

In Wisconsin, the trade association chief said the bill there has come a long way.

“Frankly … we’d like to see it passed,” Wisconsin Cable Communications Association executive director Tom Moore said.

Franchise reform was introduced last session, a version incumbent cable operators believed was totally unbalanced in its treatment of new and existing providers. This session’s bill has been negotiated in a way that gives some regulatory relief to both sides. For instance, the bill has a revised definition of gross receipts that may benefit incumbent operators financially.

There was one unique player in the debate over the bill in Wisconsin. At the request of the chairmen of the House Committee on Energy and Utilities and the Senate Committee on Commerce Utilities and Rail, the antitrust division of the U.S. Department of Justice weighed in on the issue. The letter, from assistant attorney general Thomas Barnett, did not address any anti-trust issues, but applauded Wisconsin for taking steps to allow competitors in the market, adding revised laws in other states have “yielded significant consumer benefits.”

Barnett based his statements on reports from the U.S. Government Accountability Office and the American Consumer Institute. Municipal consultants said it was the first time they recall the Justice Department weighing in on a state bill. The WCCA’s Moore said the letter was not a detailed legal analysis, just a statement that competition is good for consumers. “We agree,” he added.

BOXES IN ILLINOIS

In Illinois, the point of contention on video reform has been largely about boxes. Municipal officials there complain about the powering vaults needed by AT&T, the chief reform proponent in the state, in order to move into the video delivery business. HB1500 hasn’t been to the floor for a vote, said Gary Mack, a consultant to the Cable Television & Communications Association of Illinois.

Stakeholders have submitted amendments to the bill, as has the state attorney general, he said. The major issue remains build-out; telephone companies resist build-out standards in every state in which bills are introduced. Incumbents also believe state consumer service standards should be applied to AT&T. That company argues, however, that its video product is not cable TV and should not be regulated as such.

Mack noted that the state faces a “protracted legislative session,” the focus of which will be the budget. Franchising reform could be “dragged along” until after monetary issues are resolved, he predicted.

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