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from: Iowa City Press

Cable competition could be on way

By the Associated Press
Tuesday, March 20, 2007

DES MOINES — The state could grant a statewide cable television franchise under a measure approved today by the Senate.

Supporters said the proposal would bring new competition to a monopoly industry and drive down consumer costs.

``The present process prevents competition,'' said Sen. Steve Warnstadt, D-Sioux City. ``A lack of competition means fewer services and higher costs.''

The Senate approved the measure on a 44-6 vote, sending it to the House and likely approval there as well.

Under the state's current cable television system, franchises are granted by local governments, and Mediacom is the major player in that system. Cable TV providers that are granted a license to provide service in a community pay a franchise fee to the local government.

Under the measure approved today, the state could grant a statewide franchise to offer cable television service. The measure has been pushed by telephone giant Qwest and was resisted by Mediacom in one of the hottest lobbying battles of this year's session.

Qwest had argued that the current system made it tough for competitors to get a foothold in a local market, and the resulting lack of competition increased prices.

Critics warned that local governments rely on the franchise fees they get from Mediacom and allowing competition would reduce those collections and cause budget snarls.

``Many of those municipalities have certified their budgets based on a current agreement,'' warned Sen. Jeff Danielson, D-Cedar Falls.

Danielson said lawmakers are meddling in a complex and rapidly changing communications industry.

Warnstadt agreed that cities are already facing a drain in revenues from cable television franchises. He noted that the number of consumers using satellite dishes has grown by more than 50 percent.

Warnstadt said 10 other states have injected competition into the cable franchise business and that rates in those states have fallen as much as 41 percent. The Missouri Legislature has already approved a similar measure, which is awaiting the governor's signature.

``This measure is the right thing to do for consumers,'' said Warnstadt.