Cable TV operators approve amendments on competition
THE SAN FRANCISCO CHRONICLE
Sacramento, CA — The state’s cable television operators, defusing one of the biggest battles in the Legislature this year, removed their opposition Tuesday to a landmark
bill aimed at bringing new competition to the high-speed Internet and television
entertainment market.
The legislation, which has already passed the state Assembly, would allow telecommunications companies like AT&T and Verizon to bypass local government regulators and obtain cable franchise agreements from the state for access to local markets, now the exclusive domain of cable operators.
The bill’s author, Assembly Speaker Fabian Núñez, D-Los Angeles, has said that opening the market to competition would cause rates to drop and service to improve.
Some have said the saving to customers could be as much as $1 billion a year.
Cable companies had been the bill’s biggest opponent, arguing that new state franchises could give competitors an unfair advantage. They said cable companies could be locked into long-term contracts with cities and counties that might be more costly.
But Dennis Mangers, president of the California Cable & Telecommunications Association, told members of a Senate committee Tuesday that amendments proposed by Núñez would allow cable operators to opt out of local contracts when new competition arrives in a market. Mangers said his group would no longer oppose the legislation assuming the amendments are included.
“We were very concerned that until now, this bill did not represent a level playing field,” Mangers said after the hearing. “It wouldn’t be fair to our customers if we had a contract that had more fees and expenses that we would have to pass on.”
But the complex bill drew new criticism before a state Senate committee from city and county officials and consumer groups, both fearful over the loss of local control. The outstanding issues were significant enough that senators delayed voting on the bill, AB2987, and scheduled another public hearing on Thursday.
Local officials now pose the biggest opposition to the bill’s passage. They are worried both about the loss of authority over cable businesses as well as the loss of franchise fees.
More than $300 million in franchise fees are paid annually to cities and counties by cable companies for the right to provide service. Local officials said they are unsure of how that money will be handled under the proposed legislation.
Officials said they are also concerned about having leverage over telecommunication giants when it comes to the operation of the systems, use of public access channels and even where and when streets can be dug up for line installation.
Some complained that details of the amendments had not been distributed and that lawmakers were trying to rush things.
“This is starting to feel a lot like what happen with energy deregulation,” said Megan Taylor, spokeswoman for the League of California Cities. “They keep telling us that competition is going to solve all the problems, that competition is going to lower rates and bring in new services — it didn’t work that way with energy deregulations and we want to make sure that people take their time on this.”
Jamie Court, president of the Foundation for Taxpayer and Consumer Rights, said one amendment he supports is a plan to put the state’s Public Utility Commission in charge of issuing the new state franchises. Court said, however, that giving cable companies the right to tear up existing contracts is a bad idea.
“This basically robs control from more than 500 local franchises,” he said. “It creates a problem that wasn’t there before.”
Núñez said he has already drafted changes to the law that protect local governments’ revenue as well as their authority over right-of-way issues. He said that the final bill will not make everyone happy, but that overall, the benefits outweigh the risks.
“This is about fostering widespread access to cable,” he said. “This is about fostering widespread access to video and broadband services. And doing it in a
nondiscriminatory manner.”
