Ends and Means: A legislative measure would end most regulation of new wired video service

May 1, 2007

Charles N. Wheeler III
Credit WUIS/Illinois Issues

"When two elephants fight, it is the grass that gets trampled." 

 African proverb

In the legislative battle now under way between two heavyweight industries — the telephone companies and the cable television providers — what's at risk of getting trampled is the public interest.

The focus of the intense struggle is a telecom-backed measure that would strip franchising control from local governments and do away with most regulation for new entrants into the lucrative field of providing wired video service, long dominated by cable companies. As cable providers have started to offer telephone service, though, traditional phone companies have begun fighting back with plans for video over their landlines.

Led by AT&T, the phone companies argue that Illinois consumers are being gouged by the near-monopoly on video that cable companies like Comcast now enjoy, a competitive advantage owing in part to the need for would-be video providers to negotiate franchise agreements with every locality they wish to serve.

Under the pending legislation, providers no longer would have to deal with city officials. Instead, they could seek authorization from the Illinois Commerce Commission to provide video wherever they choose. Proponents say allowing the telecoms unfettered access to local markets will unleash competition that will drive down prices, attract more investment to Illinois and create thousands of new, high-tech jobs.

The cable industry responds, quite accurately, that nothing now prevents AT&T, Verizon or other telephone companies from competing for the video business under the existing rules by negotiating the same sort of franchise agreements that cable providers have with cities and villages across the state. The telecom proposal, the cable guys say, is merely a way for Ma Bell's offspring to avoid locally set service standards and to serve only those neighborhoods most likely to sign up for the most-expensive packages with lots of bells and whistles.

Fearful of being caught underfoot are the folks who run the community-based, public, educational and government channels, referred to as PEGs. They typically broadcast such fare as school board meetings, city council sessions, community arts events and educational programming.

Equally concerned are local government officials, who worry about losing control over the public rights of way in their communities and losing their ability to set service standards for the new video providers, including requiring that service be offered throughout the community.

Lawmakers face a tough challenge in sorting out fact from the public relations spin employed by the competing corporate interests. A key point to remember, though, is that neither the telecoms nor the cable companies should be expected to have the public interest at heart. After all, big corporations are supposed to make as much money as possible for shareholders. Looking out for the little guy — John Q. Public — is government's job, and it should be a top priority for elected officials.

To his credit, the telecom bill's chief sponsor, Rep. James Brosnahan, an Oak Lawn Democrat, already has removed some of the measure's more troublesome points and has been negotiating with the community groups and local officials in an effort to allay some of their other concerns.

To safeguard the public interest, however, lawmakers should focus on a couple of critical issues:

• Protecting the existing network of public access channels, including encouraging their future growth. Telecom allies profess their commitment to public access, citing a provision of the measure that earmarks 1 percent of receipts to underwrite PEGs. But public access stations in some communities enjoy higher levels of funding, which would be slashed by a statewide 1 percent cap.

Moreover, cable providers now foot the bill for hooking up the public access stations to their systems and carry the signal for free. In contrast, AT&T would like PEGs to buy the equipment needed to make their signal compatible with the phone company's technology, then pay AT&T for carrying it. And the phone company initially planned to provide a lower quality picture for PEGs — akin to a YouTube image in a computer window — rather than the full-screen TV picture viewers expect.

Advocates argue, correctly, that new entrants into video service should be required to play by the same public access rules as cable providers. That means no funding cuts, no freeze on future PEGs, no new carriage charges and no second-rate picture quality.

• Assuring that local governments maintain control over the use of public property by private business. Even if one accepts the premise that the state should issue video licenses to all comers, that's no reason to allow the telecoms to stick the refrigerator-size boxes needed for their technology where they see fit. Local regulation of equipment placement is important for public safety — think clear sight lines at intersections.

Local officials also generally have done a good job of requiring cable providers to offer service to everyone within the franchise area, thus avoiding so-called "cherry picking" in which only affluent, or demographically desirable, neighborhoods are covered. The telecoms say they want everyone for a customer, but mandating 100 percent build-out is bad business practice. At the least, though, lawmakers should set a goal of universal build-out, with reporting and enforcement provisions to stop technological redlining.

Similarly, the legislation sets out demanding standards for consumer protection, like resolving billing disputes, requiring prompt service calls and barring excessive fees, the familiar consumer headaches. All commendable, but equally necessary is oversight and enforcement, somewhere an aggrieved customer can complain, short of suing the provider, and get a fair shake. Perhaps the ICC's role could be expanded beyond mere pro forma license issuance; even better, the attorney general could be given the job.

The ultimate goal in the telecommunications war is to become a customer's sole provider of video, telephone and broadband Internet service. Lawmakers should watch out for the broader public interest along the way. 

 

Under the pending legislation, providers no longer would have to deal with city officials.

 

Charles N. Wheeler III is director of the Public Affairs Reporting program at the University of Illinois at Springfield.

Illinois Issues, May 2007