Langberg: State tries its hand at telecom regulation
By Mike Langberg
Before you go any further, please get two toothpicks and prop open your
eyes to keep from falling asleep.
I'm going to talk about changes in state regulation of
telecommunications, a topic that's usually a sure cure for insomnia.
But don't give up.
This involves how much you pay and where you get Internet access, TV and
phone service. (And don't really put toothpicks in your eyes -- it's
dangerous.) So here goes: This week, Gov. Arnold Schwarzenegger is
expected to sign the Digital Infrastructure and Video Competition Act of
2006, also known by its designation in the Legislature, AB 2987. The new
law will accelerate a profound transformation in the way information and
entertainment comes into our homes.
Telephone companies, most notably AT&T and Verizon, will be able to
obtain a single statewide franchise agreement to offer TV service
through their wires.
Cable companies, most notably Comcast, will also get to switch to a
single statewide franchise once the phone companies start providing TV.
This ends the previous system, in place for nearly half a century, by
which cable companies negotiated franchise agreements with each city
where they offered service.
Almost no one, other than the cities themselves, is mourning the end of
The process was time-consuming and expensive, and it yielded little for
City councils, routinely outgunned by big cable companies with high-paid
lobbyists and lawyers, would bargain for trinkets, such as an extra TV
camera at the local community-access studio, during franchise renewal talks.
The politicians would ignore, or were powerless to change, what
consumers really cared about: abysmal customer service and high prices.
Cable companies have cleaned up their act somewhat in recent years, but
only because of the competitive threat from satellite TV services such
as DirecTV and Dish Network.
The poor track record of local cable franchise agreements, along with
millions of dollars in lobbying money from AT&T and others, explains why
AB 2987 sailed through the Legislature.
The Assembly passed the bill by a vote of 77-0 on May 31, and the Senate
followed with a 33-4 vote on Aug. 29.
AT&T and Verizon are now promising to rapidly improve their home
broadband connections in California, making them fast enough to deliver
TV along with regular Internet access.
``We needed to remove this barrier'' of local franchise agreements, Jeff
Weber, vice president for broadband strategy at AT&T headquarters in San
Antonio, said in an interview earlier this month.
The new law ``gives us the certainty that we'll be able to obtain a
franchise to make this massive investment,'' added Tim McCallion, West
region president for Verizon, which provides phone service locally in
Los Gatos, Morgan Hill and Gilroy.
The cable industry initially opposed the bill because it wouldn't have
allowed statewide franchising for cable companies, but immediately
switched sides when the bill was amended to let cable companies phase
out local franchise agreements.
If everything proceeds as expected -- never a sure bet with big telecom
providers -- most homes in California should within a few years be able
to choose between two ultra-high-speed broadband connections: one from
the cable company, and one from the phone company.
Whichever of these fat pipes you choose, it would be the only connection
you'd need for Internet access, phone calls, TV and other online services.
In theory, at least, the struggle between the two behemoths will hold
There is indeed evidence that TV rates are lower in the handful of
communities around the nation where the local phone company is offering
video service in competition with the local cable company.
Fortunately, we'll have additional protection. DirecTV and Dish Network
are looking at ways to offer home broadband service, and future wireless
networks could also keep the phone and cable companies from turning into
a two-headed monopoly.
Some consumer advocates did object to AB 2987, more out of concern that
phone and cable companies would be too lightly regulated than out of any
nostalgia for local franchise agreements.
It's important, I believe, not to confuse the two issues.
The end of local franchising for TV service is a good thing. City
councils aren't the right place to tackle something as complicated as
But we still need appropriate regulation, especially around the
much-discussed concept of network neutrality.
The fat pipes coming into our homes must be an open link to the digital
world. We need to be able to go anywhere online, without AT&T or Verizon
or Comcast unfairly favoring their own offerings.
As long as the state's politicians and regulators refuse to be
intimidated, AB 2987 could ultimately do as much for consumers as for
the big telecom companies that pushed the bill forward.
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