Langberg: State tries its hand at telecom regulation
By Mike Langberg
Mercury News

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 local franchising.

The process was time-consuming and expensive, and it yielded little for consumers.

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 down prices.

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 telecommunications regulation.

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.

http://www.mercurynews.com/mld/mercurynews/business/technology/personal_technology/15602893.htm
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