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from: The Daily New Journal

Leonhirth: Media giants go toe-to-toe

A goal of media companies for the past few years has been "one world, one wire," of the provision of all media services through one wire. With the convergence of television, telephone and Internet access, the only question that appears to remain is: "Which wire?"

The two major contenders are firms that once were known as telephone companies and firms that once were known as cable companies.

Those terms are obsolete because "cable" companies such as Comcast now offer television, Internet access and telephone services and "telephone" companies such as AT&T now offer telephone, Internet access and television services.

For the consumer, battles between these companies seems to be a grand realization of Congress' goal in the Telecommunications Act of 1996 to have competition between providers of media services that could result in lower rates.

That competition is now under way in Tennessee.

The "new" AT&T and cable companies are engaged in a battle in the Legislature over a bill, which Sen. Bill Ketron, a Murfreesboro Republican, is co-sponsoring, that would allow AT&T to obtain a single television franchise for the state instead of requiring the company to get franchises from local governments as cable companies do now.

Supporters of the bill are arguing that such competition would bring down prices for the consumer and would speed installation of high-speed access to the Internet in the state.

Opponents, including cable companies and the Tennessee Municipal League, which represents cities, are arguing about "level playing fields" and lack of adequate oversight with a statewide franchise.

Not surprisingly, everyone involved is protecting his or her own "turf." Cities do not want to lose any authority or the revenue from cable-franchise fees.

That cable companies and cities are allies in this current battle is interesting because that has not always been the case in regard to cable regulation.

Cities once had more power in regard to cable franchises, including the setting of cable rates, but the cable industry effectively lobbied Congress to remove that authority.

That cities have any involvement at all is because cable television began as grass-roots enterprises to provide broadcast television programs to areas that could not receive broadcast signals because of distance from or geographical barriers to the broadcast signals.

The Federal Communications Commission, which now regulates broadcasting, telephone service and cable television, tried to avoid regulation of cable television as long as it could. It even barred installation of cable systems in the nation's 100 largest TV markets for a while, as it tried to figure out what to do.

Eventually, when "distant signals" that cable television companies began to import brought in programs in competition with broadcast-license holders, the FCC mediated that dispute.

A resolution required a compromise between the National Cable Television Association and the National League of Cities. The cities feared federal intervention would only erode their authority over cable systems, and they were correct.

Development of satellite communications helped cable television boom. Cable companies made grand promises about home entertainment and home information centers to gain franchises in the nation's largest TV markets.

When the cable companies began to renege on these promises, cities and consumers began filing lawsuits.

Congress, however, came to the rescue of the cable industry, and in 1984 passed a law that included a provision that said the cable industry did not have to meet any franchise promises that were "impracticable." That act also removed the authority of franchise holders, such as cities, to set cable rates.

A statewide franchise for cable television service, which several states already have approved, would be a further erosion of municipal authority over cable systems.

Many consumers probably would argue that municipal regulation of cable systems has not provided much help for them with either cable rates or quality of service.