Video Competition: Much Ado About Something

by on February 16, 2006 · 8 comments

Aftersimmering on the back burner for months, the debate over video franchise reform came to a rapid boil over the past two weeks, with developments seeming to bubble up on every front. Last Friday, the FCC held a meeting in Keller, Texas–not so coincidentally the site of Verizon’s FIOS TV launch last fall. At the meeting, the Commission officially adopted its annual report on video competition. On the following Monday, comments were filed in the FCC’s proceeding on whether local franchise authorities are unreasonably limiting competition by in delaying application by (former) telephone companies. Then came Tuesday’s hearing in the Senate Commerce Committee, where–you guesed it–video competiton was the issues of the day. Add to that the nearly ubiquitious advertising campaign launched by Verizon and AT&T for cable choice, and the issue was nearly impossible to avoid.

Will anything come of all this? Perhaps yes. Senator Ted Stevens–the Commerce Committee chair, made news by expressing sympathy for telephone company entry into the cable TV markets, and saying he’d soon introduce a bill to reform franchise rules. That’s good news. But what would it say? Earlier this month, Sens. Burns and Inouye teamed up to release a set of “principles” for franchise reform, which called for elimination of “unnecesary” delays in franchising, but also warned of writing a “blank check” to new entrants, and endorsing a “deliberately structured dualism” with a strong local role in regulation. Get past all the buzz words, and that’s a pretty weak brew of reform.

The Burns-Inouye principles were met (also this week) with counter-statement from a surprisingly diverse group of six senators, including Republicans John Ensign and John McCain and Democrat John Kerry. This statement, stressing the consumer benefits of broadband called for congressional action “this year” to reform franchising. This “gang of six” letter gave a nod to some continued local role, but the overall implication was clear–local regulators are slowing down competition, hurting consumers, and Congress should step in to stop that.

After this week, video franchise reform seems to have real momentum. In the Senate, the next move is up to Sen. Stevens, who’s bill is expected soon. The question is: will he take this opportunity to push for real change, or stick with politics as usual? Stay tuned.

  • Kristina Rasmussen

    The United States prides itself on being a leader in technological advancements, but 15 other countries currently have a greater percentage of homes with broadband service than us. South Korea and Japan have better coverage than we do! Why? The answer is simple. One of the main obstacles preventing extensive broadband deployment consists of hefty taxes — often described as “fees” and “tariffs” — as well as a plethora of regulatory hurdles new competitors in the communications services industry face on the local, state, and federal levels.

    For instance, in the video-services market, new entrants (like companies offering IPTV�¢â?¬â?Internet Protocol Television) are forced to negotiate franchise fees with over 33,000 local boards across the country. That unreasonable burden is a perfect example of a regulatory scheme that drains resources from businesses, drives up prices, and ultimately deprives consumers of a competitive choice.

    Lowering the tax and regulatory liability these companies face in today’s global economy will lead to greater competition in the telecommunications industry. Fortunately, consumer-friendly legislation is being considered in Congress that will reduce some of these hurdles and finally allow more participants in the telecommunications market.

    For example, Senator John Ensign has introduced the “Broadband Investment and Consumer Choice Act” that, among other things, will permit new video providers to enter the marketplace without having to obtain thousands of approvals from municipalities across the country. Despite what you may hear from local elected officials and the big cable companies, this legislation ensures that city and county governments will continue to be compensated for rights-of-way and guaranteed public education and government access channels.

    If the cable companies don’t like this legislation, it is probably because they have been able to raise prices on captive customers at will. In fact, cable rates have increased 45 percent since the 1996 Telecommunications Act was passed, or more than three times the rate of inflation! The market is ripe for some healthy competition.

  • Kristina Rasmussen

    The United States prides itself on being a leader in technological advancements, but 15 other countries currently have a greater percentage of homes with broadband service than us. South Korea and Japan have better coverage than we do! Why? The answer is simple. One of the main obstacles preventing extensive broadband deployment consists of hefty taxes — often described as “fees” and “tariffs” — as well as a plethora of regulatory hurdles new competitors in the communications services industry face on the local, state, and federal levels.

    For instance, in the video-services market, new entrants (like companies offering IPTV�¢â?¬â?Internet Protocol Television) are forced to negotiate franchise fees with over 33,000 local boards across the country. That unreasonable burden is a perfect example of a regulatory scheme that drains resources from businesses, drives up prices, and ultimately deprives consumers of a competitive choice.

    Lowering the tax and regulatory liability these companies face in today’s global economy will lead to greater competition in the telecommunications industry. Fortunately, consumer-friendly legislation is being considered in Congress that will reduce some of these hurdles and finally allow more participants in the telecommunications market.

    For example, Senator John Ensign has introduced the “Broadband Investment and Consumer Choice Act” that, among other things, will permit new video providers to enter the marketplace without having to obtain thousands of approvals from municipalities across the country. Despite what you may hear from local elected officials and the big cable companies, this legislation ensures that city and county governments will continue to be compensated for rights-of-way and guaranteed public education and government access channels.

    If the cable companies don’t like this legislation, it is probably because they have been able to raise prices on captive customers at will. In fact, cable rates have increased 45 percent since the 1996 Telecommunications Act was passed, or more than three times the rate of inflation! The market is ripe for some healthy competition.

  • http://WWW.AmericanHomeowners.org Bruce Hahn

    The most recent data on the amounts homeowners can save through TV services competition is $240 annually (Bank of America study, Feb., 2006) and up to $600 annually (the amount of the cable TV company’s price cut on premium services when a telephone company was about to enter their market in Keller Texas, last fall.
    These numbers are mind numbing and by themselves all the reason Congress and the states need to enact legislation allowing new competitors into the TV services markets NOW!
    Bruce Hahn

  • http://WWW.AmericanHomeowners.org Bruce Hahn

    The most recent data on the amounts homeowners can save through TV services competition is $240 annually (Bank of America study, Feb., 2006) and up to $600 annually (the amount of the cable TV company’s price cut on premium services when a telephone company was about to enter their market in Keller Texas, last fall.
    These numbers are mind numbing and by themselves all the reason Congress and the states need to enact legislation allowing new competitors into the TV services markets NOW!
    Bruce Hahn

  • Grover Hahn

    Most reasonable folks are very upset and feel like they are being held hostage by their cable franchise operators. This is one area of American life that has been locked up for far too long. I simply am tired of paying for services and channels that I never watch nor do I use! Sanity and consumer choice is far overdue in the cable/video franchise arena. This needs to cahnge now!

  • Grover Hahn

    Most reasonable folks are very upset and feel like they are being held hostage by their cable franchise operators. This is one area of American life that has been locked up for far too long. I simply am tired of paying for services and channels that I never watch nor do I use! Sanity and consumer choice is far overdue in the cable/video franchise arena. This needs to cahnge now!

  • BudgetMan

    I still can not understand what regulatory beast lurks in this country preventing consumers from choices in the cable TV industry? There must be huge amounts of money involved, because this country was founded on freedom and cable franchises have offered no freedom whatsoever!

  • BudgetMan

    I still can not understand what regulatory beast lurks in this country preventing consumers from choices in the cable TV industry? There must be huge amounts of money involved, because this country was founded on freedom and cable franchises have offered no freedom whatsoever!

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