Senate wants guarantee that cable bill promises are kept

DON THOMPSON
Associated Press

June 27, 2006

http://www.mercurynews.com/mld/mercurynews/news/local/states/california/northern_california/14915844.htm


SACRAMENTO - State senators struggled Tuesday to ensure that promises of 
cheaper cable television rates and more viewing choices become reality if 
they let telecommunication companies such as AT&T and Verizon compete with 
existing cable companies.

Sen. Joe Dunn, D-Garden Grove, said the push to open the cable television 
market reminded him of California's experiment with energy deregulation, 
which led to price gouging and rolling blackouts in 2000 and 2001 and 
forced one of the state's major utilities into bankruptcy.

"'Through competition, we will get a better deal on price.' ... The problem 
I have is, those were words of (former Enron Corp. chairman) Ken Lay. So 
I'm dubious," Dunn said.

One of the most heavily lobbied bills of the session stalled at least 
momentarily in the Senate Energy, Utilities and Communications Committee, 
which put a vote off until Thursday after nearly three hours of testimony.

The bill passed unanimously in the Assembly earlier this month. It would 
allow telephone companies into the cable TV market and let them compete for 
franchise agreements issued by the state, rather than by cities or counties.

The television companies are seeking a piece of California's $5.3 
billion-a-year cable business, seeking to offer packages that bundle 
telephone, television and high-speed Internet service.

Interest was so high that lobbyists who couldn't squeeze into the jammed 
hearing room crowded the hallway or watched via closed circuit television 
from another committee room and were ushered in by sergeants-at-arms to 
present their brief statements.

"This is a high-stakes game," said committee Chair Martha Escutia, 
D-Norwalk. "I've been having nightmares on this bill."

California is the latest frontier for the telephone companies. They are 
seeking similar changes in about a dozen states and are pushing for federal 
legislation.

In exchange for being able to compete for cable business, the telephone 
companies say they would offer consumers television packages with 300 
channels or more and Internet speeds much faster than traditional digital 
subscriber lines.

Supporters cited Federal Communications Commission and Government 
Accountability Office studies showing subscription costs could drop 10-20 
percent.

Escutia abruptly cut off California AT&T president Ken McNeely as he told 
senators his company will invest $1 billion and hire 1,000 employees if 
lawmakers approve the bill.

"Sounds really nice," she told him. "But we have to get started on the 
nitty-gritty."

Among her concerns is whether the telephone companies would offer those 
choices to all neighborhoods, not just wealthy ones. Existing cable 
television companies compete for franchise agreements that require them to 
provide service to entire cities.

"It's only competition if they invest in your community," said Sen. Kevin 
Murray, D-Culver City. "I'd like people to be able to spend, you know, $5 
less for Nickelodeon, but I'm more concerned about people having access to 
the Internet."

"The last thing we want to do is present a bill that is going to grow the 
digital divide" between rich and poor, agreed Assembly Speaker Fabian 
Nunez, D-Los Angeles, who is carrying the bill.

Nunez said he would accept numerous Senate amendments. Those include 
measures to protect cities' loss of franchise fees and control over the 
placement of cable boxes and cable right-of-way.

Under another amendment, rates for basic residential phone service would be 
frozen for two years, until January 2009, to keep telephone companies from 
using higher rates to unfairly subsidize their foray into the cable industry.

Cable television operators support the bill, based on amendments assuring 
they can compete with the telephone companies.

Still to be debated is how to fund public and government access television 
channels and Web sites that receive their money from cable television 
franchises.

The program would be administered by the California Public Utilities 
Commission. Dunn noted that body also oversaw the state's attempt at energy 
deregulation, but Verizon spokesman Jon Davies dismissed such comparisons.

"I think you can tell by our past performance that we've always been very 
responsive and serviced our customers in a responsible manner," Davies said 
after the hearing.

If the bill clears Escutia's committee, it will go to the Senate 
Appropriations Committee for another hearing in August before heading to 
the full Senate. If passed, it would be sent back to the Assembly.

ON THE NET

Read AB2987 at http://www.assembly.ca.gov

================================
George Antunes, Political Science Dept
University of Houston; Houston, TX 77204
Voice: 713-743-3923  Fax: 713-743-3927
antunes at uh dot edu



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