04.03.2006 02:57 PM
Franchise bill could hurt telco video customers

Consumer groups told a House panel last week that Americans frustrated with skyrocketing cable TV prices, spotty customer service, and limited choice may just get more of the same under a new bill that allows telephone companies to offer video services.

The legislation allows telephone companies to enter the cable TV market without negotiating with local communities on where and how video services will be provided, as cable companies have been required to do for decades. That process is called video franchising.

The Consumers Union told a House Energy and Commerce Subcommittee that although new video services offered by telephone companies could offer consumers relief from cable rate hikes, the pending legislation may represent a significant step backward for consumers.

The consumer groups said the bill fails to ensure that telephone companies offer or build-out their new services under a proposed national franchise agreement to all consumers within a franchise area. Under current law, communities have the authority to require video providers to do so through the local franchise process.

Without reasonable requirements that telephone companies build-out their video services to all consumers within the community, telephone companies will be free to redline middle and low-income neighborhoods, denying competition to those most needy consumers, said Jeannine Kenney, senior policy analyst for Consumers Union, who testified on behalf of the Consumer Federation of America and Free Press.

Kenney noted that, to date, telephone companies have offered their new video services to largely affluent communities. Under the legislation telephone companies could offer service to just one customer in the franchise area, she said. The incumbent cable provider will be free to deny service upgrades to lower income communities and increase their rates, while upgrading and cutting prices in areas where they compete with telephone companies.

The consumer groups approved a provision in the bill that protects the right of local communities to build their own broadband networks, but said the legislation's so-called “network neutrality” provisions fail to ensure that dominant broadband companies won't block or impair consumer access to competitive video, telecommunications and other services offered over the Internet.

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