from: STL Today [1]

TV bill could expand options, lower cost
By Derek Kravitz
POST-DISPATCH JEFFERSON CITY BUREAU
02/16/2007

JEFFERSON CITY • Cable television customers could have more options for service and save money under a measure that cleared its first legislative hurdle on Thursday.

Under current law, cable companies negotiate individual franchise agreements with Missouri’s 550 municipalities to offer cable service, paying up to 5 percent in fees.

Under a proposed statewide video franchise law, the state would have sole power to regulate the pay-TV industry. On Thursday, language in the bill was ironed out by the Senate.

The bill is the latest attempt by telephone companies to enter the cable TV market as competitors try to provide more bundled service packages — featuring broadband Internet, phone and cable TV — at discounted prices.

AT&T Inc., the state’s largest telephone service provider, has lobbied heavily for the bill’s passage, airing hundreds of TV ads to sway public opinion. The company also pledged to invest at least $100 million in its existing fiber-optic Internet network for cable TV programming.

That figure would likely rise if a statewide video franchise bill passes, said John Sondag, AT&T Missouri’s vice president for external affairs, citing a $250 million investment for infrastructure in Kansas and a $300 million buildup in Indiana after similar legislation passed in those states.

AT&T is already negotiating with more than 100 cities in Missouri, including St. Louis and Kansas City, to obtain local franchise agreements. Five St. Louis-area communities have approved such agreements. Eleven states have passed similar legislation.
“This will allow competition in your community and it will give constituents a choice. Better yet, it will help drive down prices,” said the bill’s sponsor, Sen. John Griesheimer, R-Washington.

Cable companies have historically resisted such statewide agreements, largely out of fear of being put at a competitive disadvantage. However, one of the biggest opponents in the past of a cable TV expansion bill — St. Louis-based Charter Communications — has signed off on this year’s version.

This year’s bill allows cable companies to opt out of their existing local agreements. That puts the cable and phone companies on a level playing field, said Greg Harrison, president of the Missouri Cable Telecommunications Association.

But some consumer advocates and Missouri municipalities say the opt-out provision of the bill could violate the state constitution and put cable service in low-income areas at risk.

“The fear is that 10 to 15 years from now, when (cable carriers) have to upgrade their equipment, they might turn around and say that it’s not in their best interests to service certain areas,” said Darin Cline, chief of governmental affairs for St. Louis County Executive Charlie A. Dooley.

Cline said changes in AT&T’s coverage area could leave some “less profitable” residents without cable service.

“As (the bill) stands, it allows service providers to essentially cherry-pick profitable cities for coverage,” said Gary Markenson, executive director of the Missouri Municipal League.

Markenson said the league also has concerns over what he called the bill’s “minimum” customer service requirements, which have been modeled after FCC guidelines. Such requirements affect telephone hold times, business hours and appointment windows.

The bill will likely be voted on in the Senate next week before heading to the House, where it could face some opposition.

“A lot of the cable companies have hired additional lobbyists, and some of them have gone against the original agreement,” Griesheimer said. “They’re trying to put issues back in the bill that would bring a lot of opposition.”

The bill is SB284.

Possible impact on your cable

Possibly, but it would take time. AT&T says some larger cities could have service by the end of this year. That’s because AT&T says it has worked out the kinks from its first roll-out in 11 other markets.

Consumers would most likely see discounted rates and promotions on bundled packages, such as a discounted price on all-in-one Internet, cable TV and phone services. AT&T has publicly vowed not to get into a price war with long-standing cable TV competitors, and cable companies say rate decreases on current services are unlikely.

Under the proposed legislation, cable companies could break their existing agreements with cities and counties in favor of a new statewide service contract. But cable companies say that, with millions of dollars in equipment already in place in service areas, it’s unlikely that there would be any service blackouts.
Possibly, but it would take time. AT&T says some larger cities could have service by the end of this year. That’s because AT&T says it has worked out the kinks from its first roll-out in 11 other markets.

Consumers would most likely see discounted rates and promotions on bundled packages, such as a discounted price on all-in-one Internet, cable TV and phone services. AT&T has publicly vowed not to get into a price war with long-standing cable TV competitors, and cable companies say rate decreases on current services are unlikely.