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TX: No Texas-Sized Rate Declines in Texas

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Created 05/25/2007 - 10:04am

Note: Texas was the first state video franchise to pass and was touted by the industry and politicians as legislation that would save consumers money in cable TV subscriptions. The public interest community has always discredited this misinformation - now it seems the industry press is finally looking closer too.

from: MultiChannel News [1]

No Texas-Sized Rate Declines in Texas
NATOA’s Texas Chapter Finds that Video-Subscription Rates Have Actually Risen

By Linda Haugsted -- Multichannel News, 5/24/2007

Basic-cable rates have not declined in any of the Texas communities where there are competitive providers, according to a survey done by the Texas chapter of the National Association of Telecommunications Officers and Advisors [2].

Rates for the tier including off-air signals and public, educational and government channels have actually increased over the past two years, according to the study posted May 22 on the group's Web site [3].

The greatest hike, according to the group, was in Denton. There, Charter Communications raised basic rates from $12.78 per month in 2005 to $19.05 today despite competition from Grande Communications [4] and Verizon Communications [5].

However, the arrival of Verizon as a video competitor provided a lower-cost alternative for consumers of basic and expanded-basic services. According to the survey, the disparity in rates was greatest in Southlake, where Verizon charges $34.95 for what it terms standard service, compared with $48.99 charged for the same type of service level from Charter, a 27% difference. (Municipal officials used the tier terms utilized by the providers, noting that the number and type of video channels in that level may be different provider to provider.)

NATOA members were prompted to begin tracking rates after a Federal Communications Commission meeting that was held in Keller, Texas, in February 2006, explained Margaret Somereve, assistant to the director of public works for Farmers Branch, Texas, and the NATOA chapter president.

Testimony at the hearing tossed out figures of rates 25%-45% lower in Texas due to the passage of the nation's first franchise reform bill, SB5 [6], in September 2005, Somereve said, adding that NATOA members "knew there was no such decrease, but we had to get hard facts together."

Civic officials nationally have criticized rate-decrease claims, such as those stated in a January 2007 Bank of America Equity Research report [7]. That report quoted double-digit rate drops in Texas competitive markets, and the figures have been used in testimony in several states to buttress support for franchise-reform bills.

Civic officials countered that such figures are based on short-term, nonpublished special acquisition rates. The rates in the Texas study reflect regular, published video-subscription rates that consumers will pay long-term, NATOA officials said.

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