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Florida Cable Bill Has Too Many Flaws

May 11, 2007

We never cease to be amazed by the willingness of Republicans in the Florida Legislature to talk “less government” and “smaller government” while they amass power for themselves and state agencies in Tallahassee, and shovel their responsibilities, and much of the costs thereof, onto local governments.

Various property tax “reforms” floating around offer a good example. Even though the people have the power, through elections, to directly control tax levels for services by choosing their representatives in city and county government, the Legislature, at no risk to itself, stands ready to dictate tax policies to the locals, who face losing millions in tax revenue as well as incurring the wrath of voters when services are halted, go unfunded, or become more expensive.

When it comes to the new legislation deregulating cable TV services, however, the difference is that GOP lawmakers were able to take many Democrats along for the ride.

In overwhelming votes — 117-1 in the House and 30-3 in the Senate — lawmakers allowed telephone companies to enter into local cable TV markets. They can do so simply by applying to the state Department of Agriculture and Consumer Services for a statewide franchise, instead of winning approval from individual city councils and county commissions.

Advocates of the measure, which awaits Gov. Charlie Crist’s signature or veto, say rates will go down with more competition in local markets by eradicating the cable giants’ minor monopolies created by the current franchise-awarding system.

Research bears that out. One AP report cited a Federal Communications Commission study that said across the country bills for consumers in competitive markets dropped 21 percent since deregulation.

Proponents also point out that the phone companies had to surrender the final phase of a three-part local service rate hike adopted by lawmakers in 2003. Rep. Trey Traviesa, a Tampa Republican who sponsored the cable TV deregulation bill, pegged that amount at $150 million.

One more point in the phone companies’ favor is that the cable companies are already infringing on their turf by offering telephone service through a high-speeed Internet connection. So it seems fair to let them into the cable TV industry.

Competition, of course, is healthy for all. More providers of any good or service offers freedom of choice, and that, in most cases, means the benefit of lower prices.

But the deregulation proposal offers plenty of reasons to be skeptical of the claims.

The foremost is that the last time the phone companies lobbied for and got deregulation, Florida consumers got hit with a record-setting rate increase. Brad Ashwell of the independent Florida Public Interest Research Group said the 2003 bill allowed phone companies to pocket an extra $300 million in higher rates. We can’t help but wonder why phone companies would forgo a guaranteed $150 million in new rates when they could come up empty in an expanded cable TV market. We also are curious about what precludes them from challenging existing cable company franchises, whose market share has already eroded somewhat by competition from satellite providers, when those come up for renewal before local governments.

Ashwell also noted in an opinion piece that AT&T told investors it planned to cherry pick wealthy customers, defined as those who spend $160 or more a month in cable TV, phone and Internet service. Only 5 percent of so-called “low value” consumers, or those who spend less than $110 a month, would be able to get such services.

The measure also repeals a provision that forces the cable companies to “build out” to all the customers in their service areas, which opponents say will curtail access to customers in rural or low-income areas. And it could spell the end of public access channels, such as the top-notch one run by the Marion County School Board, that broadcast government meetings as well as alternative or educational programming.

And, of course, the final down side is that lawmakers turn cable regulation over to faceless state bureaucrats in Tallahassee instead of leaving it to people from the community the cable companies now serve.

The current method is likely flawed, and could probably be improved with more options for consumers. But this plan has too many flaws and inspires too many doubts. Gov. Crist should veto it until the bugs are worked out.