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From Morris News Service, November 26, 2006

Telephone Giant Looks to Move in on Cable Service

By Vicky Eckenrode

Competition could help lower bills and improve service for television owners across the state, said officials from BellSouth, which wants to launch its own video service in Georgia.

But before the telecommunications company takes on cable providers, it wants state lawmakers to overhaul how local contracts are handled on the local level.

As it has done in other Southeastern states, BellSouth is pushing legislation to create a statewide video franchising system that would replace the patchwork of contracts city and county governments negotiate with cable companies to provide service.

Lawmakers in South Carolina, North Carolina and Virginia approved moving to statewide plans earlier this year.

Under the existing system, cable companies pay local governments franchising fees — up to 5 percent of the revenue they take in from area customers — in order to bury cable beside public roads.

The contracts also often contain measures giving local governments free access to public access channels used to broadcast commission or council meetings as well as a way for customers to complain about cable service to their locally elected officials.

Observers wary of a switch to a uniform, statewide oversight system are worried those local community protections could get dropped under the proposed changes.

BellSouth representatives spoke recently to members of a state Senate utility regulation committee about the need for a statewide franchise system.

If the company were to roll out its television video service now, it would have to set up individual local franchises with nearly 690 governments across the state.

Based on the amount of time each contract typically takes to be negotiated, it could take up to 15 years for BellSouth to offer video service statewide, said Kevin Curtin, the company’s director of public affairs for Georgia.

“What we’re trying to do is streamline that outdated process,” Curtin said about the proposal.

Curtin cited a Federal Communications Commission study from last year that showed that cable prices had increased 77 percent between 1995 and 2003 to an average of $43.

“We’re trying to eliminate a market barrier entry and allow for competition to take hold,” Curtin said.

BellSouth has expanded beyond its traditional telephone service to offer high-speed Internet access, wireless cell phone service by acquiring part of Cingular and digital satellite television through a contract with Direct TV.

“This would be the last piece of the puzzle,” Curtin said.

The newest product would provide Internet protocol television, or IPTV, moving video programming over BellSouth’s extensive fiber-optic cable system that already reaches more than a million houses.

The intent is to go head-to-head with cable companies, which also have begun expanding into telephone service.

If a single statewide approval process is set up, BellSouth would avoid the individualized franchise contracts cable companies have had to set up locally throughout the years.

But BellSouth said the amount of fees being paid to local governments and tacked onto customers’ monthly bills would not change in much of the state because most local governments already are charging the maximum 5 percent allowed.

State Sen. David Shafer, R-Duluth, chairman of the Senate Regulated Industries and Utilities Committee, said he will probably introduce a bill during the upcoming legislative session for the statewide system.

Shafer said, however, that he wants to make sure the process is available to all video competitors, including existing cable companies “so long as the local government retains control of the right of ways” and so long as the local governments don’t lose revenue.

The details also are what have the state’s cable industry planning to keep a watchful eye on how the legislation develops.

Nancy Horne, president of the Cable Television Association of Georgia, pointed out that when Texas became the first to move to a statewide franchising system last year, the cable companies had to remain under the older local government agreements while telephone companies like Verizon were allowed to take advantage of the single statewide approval.

“First of all, this is not our idea,” Horne said. “If there’s going to be legislation, the key for us is that all of us are treated in the same fashion.

“When you go to the remote and push that button and turn on the TV, you’re not thinking if that video technology is coming from the cable company or the phone company or the satellite company.”