Bad deal for cable customers;

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AT&T, Assembly Dems bill’s winners

San Francisco Chronicle

The following Op-Ed commentary by FTCR President Jamie Court, was published in the San Francisco Chronicle on Sunday, June 25th, 2006.:

AT&T is spending tens of millions of dollars on advertising, lobbying and campaign contributions in California to bring what it claims is more choice and greater competition to the cable television industry. That’s half right. There would be more choices. But not for you and me, just for AT&T.

A telephone and cable deregulation bill that passed the California Assembly by a 77-0 vote in the dead of night last month would relieve telecommunications companies of their obligations to win franchises from local elected officials before laying down video and Internet pipelines in their communities. Instead, telephone and cable companies alike would simply have to file an application with the state to build and offer services with almost no strings attached. The state Senate is scheduled to
take up the legislation this week.

How did the phone companies get such royal treatment from legislators? Was it simply that, as Ken McNeely, president of AT&T California, said after the vote, “It’s hard to be against competition and choice for consumers.” Hardly. As usual, it was about money.

AT&T‘s wooing of the bill’s sponsor, Assembly Speaker Fabian Núñez, included hosting a Pebble Beach golf fundraiser for Núñez’s Assembly Democrats, raising $1.7 million for their re-election. Perhaps not coincidentally, Núñez threw out the opening pitch at the Giants’ AT&T Park on Monday.

Gov. Arnold Schwarzenegger has already received $374,000 in campaign
contributions from the telecommunications industry.

No one likes cable companies that gouge consumers or the cable guy who keeps you waiting, but here’s some of what consumers will face in a “free market” where AT&T, Verizon and Comcast are free to do what they like without accountability to local government:

Prices for new Internet/video services will skyrocket. Currently, local franchises negotiate rates that cable companies charge for basic service. Under the Núñez/AT&T plan, companies may charge whatever they want, with consumers left to hope that competition will keep prices down. Like it does at the gas station, no doubt.

Industry analysts say prices will be high, in part because telephone companies will have to invest billions in a parallel infrastructure. “None of these players wants to enter into a price war,” said Jimmy Schaeffler, an analyst for the Carmel Group.

The League of California Cities, which opposes most of the bill, has even identified threats to real estate values if AT&T can bypass cities and lay down its new “light speed” Internet/video lines without asking permission. The League warns against the coming “crate on every corner”: a 5-foot-tall and 3-foot-wide metal cabinet installed above ground for every 362 potential customers for AT&T‘s service.

This utility box is actually more like a refrigerator on every corner. Not only is it an eyesore, it’s an irresistible graffiti magnet, as demonstrated on existing boxes filmed by the league. AT&T boasts of technical expertise, but says it can’t make the boxes smaller or bury them. Without local control, tens of thousands of boxes are bound to wind up in all the wrong places.

Homeowners are likely to face more street tear-ups. All these cable boxes have to be connected to a complex buried system. Cities now can restrict the amount of disruption and enforce street restoration. Under the state proposal, providers can bring in the bulldozers. Good luck getting help for your cul-de-sac from Sacramento if AT&T tears up your sewer connection or leaves lumps and sinkholes. Cable customer service is also likely to devolve to cell-hell customer service without local regulation. Also disappearing could be televised city council meetings, public interest
channels and free Internet service for libraries and schools.

But take heart. We will always have AT&T.
Jamie Court is president of the Santa Monica-based Foundation for Taxpayer
and Consumer Rights. Contact us at [email protected]

Consumer Watchdog
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