Cable competition bill clears Senate

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Contra Costa Times (California)

Television viewers will ultimately wind up with one-stop shopping for video, phone and Internet services, under legislation approved by the state Senate that would open the video services market to telephone companies.

Consumer groups called the bill, approved on a 33-4 vote, a giveaway to AT&T and Verizon, which poured in millions in lobbying efforts to win legislative support. Proponents, however, said the bill will alter the landscape of high-tech video services to offer consumers a broad array of choices.

“Until now, the state has dragged its knuckles on updating its decades old cable franchise laws,” said Assembly Speaker Fabian Nunez, D-Los Angeles, a co-sponsor. “California has led the way in the evolution of new technology. Senate passage of this legislation marks a definitive maturing in our state’s policy towards contemporary TV and entertainment technology.”

With more than 200 amendments tacked on in the Senate, the measure will go back to the Assembly for a final vote before it heads to the governor’s desk.

The measure sailed through the Senate — though Bay Area Democrats Carole Migden and Jackie Speier were among the four no votes — and is expected to also pass easily in the Assembly.

Telephone companies could obtain statewide licenses to offer video services — rather than being forced to go from locality to locality to obtain a franchise — while cable companies could opt into statewide franchises if they face competition from telephone companies.

While competition was initially sold as a way to lower cost for consumers, proponents have more recently touted the “value” of services that will come from competition. Telephone companies are promising to bundle a “triple play” offering: video, phone and Internet services from the same provider.

Opponents said bundling packages will do nothing to save costs or add choice for customers.

“This is not going to bring down any prices,” said Regina Costa, telecommunications director for the Utility Reform Network in San Francisco. “Part of competition is pricing and choice and getting the best level of services. When you get bundles, you’re stuck with them. If what you’re using is not as good as when you’re free to choose, that’s not a savings. That’s gross inefficiency.”

Thomas Hazlett, a George Mason University law professor and expert on telecommunications policy, said he expects competition to produce a “diversity” in pricing.

“If the better product is more available at the same price, that amounts to a price reduction,” he said. “And, I wouldn’t be at all surprised if AT&T and Verizon offer lower-priced packages.”

But weakened regulations will eliminate the Public Utility Commission’s ability to require the phone companies to offer services in low-income neighborhoods, and to provide quality service, said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights.

“If the PUC doesn’t have the power to take away a license, what good is a regulation?” Court said. “There’s literally no one watching. And, with all these new amendments, it was done very secretively in a back room. They’re trying as much as they can to avoid consumer protections.”

That’s not so, Assemblyman Lloyd Levine, D-Van Nuys, who co-sponsored the bill with Nunez.

“The speaker and I never wanted to allow cherry picking — we’ve both got districts with a significant amount of poverty, and we’re staunch Democrats,” Levine said. “We wouldn’t support a bill that allowed cherry picking. We believe this allows for companies to build up (their customer base) in a non-discriminatory way.”

Telephone company executives said consumers will gain from the competition.

“We certainly have to have something competitively priced, but we will be competing on value,” AT&T spokesman Gordon Diamond said. “Consumers haven’t had much of a choice and have seen the cable rates go up 86 percent in the last 10 years as a direct result of no competition.”

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