from: Badger Herald [1]

OPINION & EDITORIAL
State cable bill phoned in by AT&T

by Adi Lev-er
Wednesday, November 7, 2007

The state Senate will vote on a bill tomorrow that would deregulate the cable industry in Wisconsin. Currently, local municipalities are in control of the industry; they grant the necessary franchise contracts to cable companies. The proposed bill would transfer that control over to the state. Instead of relying on the local government to consider each cable company individually and set up a contract, the state would create a standard by which companies would be granted franchises.

The proponents of this bill make a convincing argument. State control of cable would allow any company that pays $2,000 to receive a permanent franchise, thus creating competition within the industry. Competition, as we all learned from famous economist Adam Smith in Econ 101, should drive down cable prices for consumers.

Unfortunately, the issue is not that simple. Similar bills have been passed in other states and the results have not been consistently positive. Research conducted in Texas showed that after two years of the state regulating cable franchising, prices did not fall.

Why aren’t Adam Smith’s ideas holding up in this circumstance? The answer is that under this model, a single company is usually manufacturing competition in order to create profits as opposed to opening up the market for natural competition. As an example, in Wisconsin, AT&T has given money to 15 lobbyists in order to get this bill passed.

Members of the telecommunications industry as well as the Legislature are presenting this bill as a win for consumers — finally, a choice for cable TV. But in reality, it is one company’s not-so-subtle campaign to increase profits. Certainly lobbyists have played a large role regarding legislation for or against their interests in the past, but do we really want our government making decisions based on a private company’s bottom line?

This issue is about more than television. The constituents of this state are being pushed aside in favor of AT&T, a company with a record of paying a great deal of money to Wisconsin political parties to ensure that its interests are met. Not only are Wisconsin residents being misled about the proposal’s impact on their cable bills, but politicians are also promising them the same level of service they receive today. In reality, cable companies would be under much more lenient regulations.

On top of that, the proposed bill shows a general disregard for consumer protection. It would eliminate certain standards, such as those requiring companies to notify consumers of a rate increase with 30 days’ notice. Also, customers today are credited when a service interruption lasts more than four hours. Under the proposed bill, the limit would be raised to 24 hours without service. Consumers’ rights will be severely limited if this bill is allowed to pass.

Another aspect that would suffer because of this bill is local programming. Under the current system, cable companies are required to pay a certain amount of money to local governments in order to maintain their franchises. This money is used to fund local channels. The new bill will limit the amount that companies pay to local municipalities to 5 percent of their revenue. Local programming that currently relies on revenues beyond 5 percent will consequently have its business put in jeopardy. Contracts that currently promise payment of greater fees will only be required to continue these payments for a maximum of three years. Therefore, local networks will be shut down if they are unable to find an alternative source of funding.

We rely on our representatives to address the people’s interests. When a private company dictates the passage of a bill, whose interests are really being represented?

Lobbyists have been a part of our political system for years, and money has continually been thrown around in order to sway votes. But in a case as obvious as this, when AT&T clearly funded this bill from its inception in order to reap profits, our representatives should at least feign a certain level of morality and vote down the bill.

Adi Lev-Er (alever@wisc.edu) is a freshman majoring in journalism and communication arts.