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"Neither group would disclose how much money it gets from the phone companies"

Know the Players:
Kelley Gannon, is the NACDS (The National Association of Chain Drug Stores ) Vice President of Communications. Gannon is a former Special Assistant to the President and White House Director of Press Advance in the Bush Administration

Heartland Institute, a Chicago-based think tank played a role as a pliant mouthpiece for the tobacco industry which can be documented by searching the industry's internal document archives. More info at: (http://www.sourcewatch.org/index.php?title=Heartland_Institute).

Steven Titch, senior fellow for information technology and telecom policy at the Heartland Institute, a Chicago-based think tank. He previously spoke against municipal provided broadband. See http://www.democracynow.org/print.pl?sid=04/12/07/1451247

from: TMC Net
[May 29, 2006]

Ads urge cable competition: Telecoms seek support for a national franchise system

(Milwaukee Journal Sentinel, The (KRT) Via Thomson Dialog NewsEdge) May 29--Telecommunications companies are supporting the ads running on television and in newspapers, touting competition as the way to bring down prices for cable television.

"What if your power over cable TV went beyond the remote?" asks an ad running in the Journal Sentinel this month. A similar broadcast ad says prices for other communications services have gone down because of competition.

The ads direct consumers to www.wewantchoice.com, a Web site that aims to generate support for U.S. House of Representatives Bill 5252, known as the Barton-Rush bill, but more formally named the Communications Opportunity, Promotion and Enhancement Act of 2006, or the COPE Act.

The bill, which has been endorsed by the House Committee on Energy and Commerce, would allow new providers of cable television service to bypass the existing system for granting cable television franchises by local municipalities in favor of a national franchise system.

Proponents say it would make it easier for competitors to get into areas where cable providers now have a monopoly.

The bill has yet to come up for a vote of the full House.

The bill's timing coincides with AT&T's announced debut as a cable television provider with Project Lightspeed, which is expected to be introduced in 41 markets around the country this year. The company has not announced specific locations for the rollout of the TV product, which will use phone wires to bring cable television channels to homes.

Unless existing cable franchising laws change, AT&T and other providers, such as Verizon, will have to strike franchise agreements with each municipality they hope to serve.

Wewantchoice.com is supported by the TV4US Coalition, which includes AT&T, a number of vendors to the telecommunications industry, several minority business associations, civic groups, the National Association of Manufacturers, the National Association of Neighborhoods, the National Taxpayers Union and the Small Business & Entrepreneurship Council. TV4US gets money from its business members, not from the community groups, a spokeswoman said.

Bill has support

Another group, Consumers for Cable Choice, based in Indianapolis, also supports the COPE Act. The group operates a Web site, www.consumers4choice.org, and has disclosed that it has received money from telecommunications providers. Consumers for Cable Choice lists a membership roster that includes consumer groups, rural and agricultural trade groups, minority groups and senior citizen groups.

Neither group would disclose how much money it gets from the phone companies, and AT&T would not share the information.

"It's really very much a grass-roots effort," said Jeff Bentoff, the Milwaukee spokesman for AT&T. "Cable rates have been going up on an annual basis. There's a large number of organizations that want more competition."

But the National Cable & Telecommunications Association calls the groups pushing the COPE Act "front groups" for the telecommunications companies.

"It's hard to regard them as anything else," said Brian Dietz, spokesman for the cable association. "They were created recently and they get their funding from the telephone companies." He said his group is neutral on the COPE Act.

Cable providers are refusing to carry the ads from TV4US.

"We are disappointed that local cable companies won't carry our advertising," said Kelley Gannon, spokeswoman for TV4US. "That could be perceived as not caring about the consumer."

The ads have been refused because Dietz said they include false and distorted claims.

For example, the ads cite a report from the Federal Communications Commission that says cable rates have increased 86% on average in the past 10 years. The National Cable & Telecommunications Association says the number of cable channels has increased during that time, and when the per-channel rate is considered and adjusted for inflation, the cost of cable actually has decreased in the past decade.

Consumers Union sees problem

Consumers Union, which publishes Consumer Reports magazine, says the COPE Act falls short on consumer protection.

Jeannine Kenney, senior policy analyst for the Consumers Union, said the bill opens the door to redlining. It would abolish local communities' authority to ensure that all residents are served by new and existing cable providers without establishing reasonable requirements for geographic coverage, Kenney noted.

The Consumers Union expressed skepticism that AT&T would offer its new video services to all residents rather than just the wealthiest, citing SBC's statements last year that it would roll out Project Lightspeed to 90% of its high-value customers, meaning those willing to spend up to $200 per month on communications services.

"The phone companies want a free pass into the communities without the obligation to build out the whole community," Kenney said.

AT&T, formerly SBC, recently announced that it plans to make Lightspeed services available within three years to more than 5.5 million lower-income households in the 41 markets in the initial rollout.

Rates the issue

Consumers Union also fears that the COPE Act won't mean lower prices, as backers promise. As soon as a telephone company offers video service to just a single company in a franchise area, the incumbent cable provider will be eligible for a national franchise, whether or not real competition exists. The national franchise would free the existing cable operator of prior obligations to charge uniform rates and uniformly upgrade service to all of its customers, the Consumers Union said. As a result, it said, the cable provider can subsidize rate cuts offered to wealthier consumers in competitive areas and jack up rates and deny upgrades to low-income consumers not served by the new entrant.

The Consumers Union also thinks that the COPE Act rolls back state and local authority to establish and enforce strong consumer protections without providing for strong federal consumer protections. The Federal Communications Commission would have to deal with tens of thousands of consumer complaints if the bill is passed, the Consumers Union said.

It has lobbied for amendments to the bill to address these concerns, but those attempts have failed, Kenney said.

Steven Titch, senior fellow for information technology and telecommunications at the Heartland Institute, a Chicago-based think tank, says there is no reason to block the COPE Act because of concerns that the phone companies won't serve all areas of the market.

"What we don't want is a requirement that a service provider has to build out an entire area before serving a single customer," Titch said. "The phone company is going to invest a lot of marketing dollars. They're going to need to get as many subscribers as they can."

Statewide franchises in Texas

Most people agree that cable bills have gone down in areas where the cable companies have new competition from the telecoms. Several states have passed their own laws that grant cable franchises on a statewide level, and telecoms are rolling out service in those areas.

In Texas, the first state to pass a statewide franchise law, there are reports of price reductions of more than 25% for cable service when competitors entered the market.

The National Cable & Telecommunications Association argues that government studies that show competition brought down prices were too narrow and says that over time, prices will go up because the new entrants to the market won't be able to sustain their low prices.