Schwarzenegger Signs Pay-TV Deregulation Bill Devoid Of Consumer Protections As Telecom Money Greases Bipartisan Support

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Los Angeles, CA — The Foundation for Taxpayer and Consumer Rights said pay-tv deregulation signed today by Governor Arnold Schwarzenegger threatens consumers with higher prices, inequitable access and poorer customer service because of the loss of local accountability under the legislation and the failure to compensate for it with new consumer protections. The bill was authored by Assembly Speaker Fabian Nunez.

“This deregulation legislation is the biggest gift to any special interest in Sacramento this year,” said FTCR president Jamie Court. “The legislature and the governor took power from cities and from consumers to give to the AT&Ts, the Verizons and the TimeWarners without adding necessary consumer protections. Shame on the Governor and the Speaker for pandering to telecom and cable companies that have pumped up their parties’ campaign war chests with millions of dollars. 500 local franchise agreements have basically been replaced with an application form that has few requirements.”

Governor Schwarzenegger has received $284,940 in campaign contributed from AT&T, SBC (AT&T‘s parent) and Verizon — the main beneficiaries of the bill. The California Cable and Telecommunications PAC contributed $54,600 to Schwarzenegger.

The bill would grant telephone companies and current cable television providers a statewide franchise without statewide enforcement of consumer rights or terms of service. Localities, lacking the power granted by their current franchise rights, will have no incentive or avenue of appeal to safeguard customers from abusive service or deceptive sales of bundles of video, internet and phone services. The Public Utilities Commission cannot withdraw franchises, thus has little leverage over the companies.

“This will bring as about much competition to the pay-tv market as Enron brought to the electricity market,” said Court. “The competition without regulation will be over who cheat consumers the most.”

AT&T, while publicly billing the deregulation as beneficial competition in the video market, has not promised any rate reductions or other specific consumer benefits. It has poured nearly $18 million into lobbying efforts over the last few months, and $500,000 into direct political contributions during this election cycle, noted FTCR. That does not include contribution pledges made during legislators’ mad dash of fund-raising during the last three weeks of the legislative session.

“The big bucks to leaders of both political parties that wired passage of this anti-consumer legislation is the best case for Proposition 89, which eliminates special interest control over Sacramento,” said Court. “If private campaign contributions are removed from California politics, this legislation would not stand a chance of passage.”

FTCR supports Proposition 89, the Clean Elections Initiative, on the November ballot. The voter initiative would, through broad restrictions on campaign contributions and voluntary public funding of candidates, suppress the power of large special interests to influence legislation and public policy.

Learn more about Proposition 89 at:

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Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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