WI: Cable TV bill called a blow to consumer

Posted on March 10, 2007 - 7:50pm.

from: Capital Times

Cable TV bill called a blow to consumer
Critics say proposed law is riddled with problems
By Jeff Richgels

Consumers would lose what little protection they have under a proposed statewide cable TV franchising law introduced Thursday, critics of the bill said today.

For example, under current law, the thousands of Madison area customers who lost all Charter Communications services in a huge outage last month were entitled to credit from the company for a day's worth of service if their service was out for at least four hours.

Under the proposed new law, "There would be no recourse for the subscriber other than to ask very nicely for some money back," said Barry Orton, a University of Wisconsin professor of telecommunications who advises many communities in their dealings with cable companies.

The bill also makes the Department of Financial Institutions the regulating body, rather than the Public Service Commission or Department of Agriculture, Trade and Consumer Protection.

"They have no expertise in this at all," Orton said of DFI.

Orton said the Legislative Audit Bureau's explanation of the bill states that it "prohibits DFI from promulgating any rules interpreting the bill's provisions or establishing procedures for the bill's requirements," and it "repeals requirements enforced by DATCP and district attorneys regarding cable television subscriber rights regarding service interruptions and disconnections, repairs, program service deletions and rate increases."

The bill also prohibits DFI or municipalities from setting any additional customer service standards beyond the FCC standards, and prohibits enforcement of the FCC standards, Orton said.

"But the FCC doesn't enforce the standards because they're meant to be enforced by local governments," he said. "It's so funny it's almost ludicrous."

"When it comes to consumer protections, customers will be left out in the midwinter cold in their underwear," Orton added. "They had some kind of a T-shirt on but it will be gone. And the designated referee (DFI) has never seen a game in his life and is prohibited from blowing a whistle or calling time or penalizing any of the participants."

The aim of the bill is to increase competition in the cable TV market, by easing the entry into video services for phone companies like AT&T and Verizon. AT&T has begun marketing its U-verse Internet TV service in parts of Milwaukee and Racine and is expected to offer it in the Madison area later this year.

The bill would provide a statewide franchise process for companies offering video services, instead of requiring them to negotiate agreements with local governments, as traditional cable companies have done through the years.

Competition in Wisconsin has been hindered by the local franchising requirement because of the time and expense involved, said state Rep. Phil Montgomery, R-Green Bay, a sponsor. The bill is co-sponsored by state Sen. Jeff Plale, D-Milwaukee.

The bipartisan bill is modeled after laws passed in 11 states, and those states have seen a decrease of up to 20 percent in cable fees charged to consumers and an increase in jobs as a result of the competition, Montgomery said.

Orton said there is no such data, since most of those laws have just been passed. The data being referenced is extrapolated from data from the Federal Communications Commission from the 1990s, he said.

"The reality is where Verizon has been in business more than a year they've raised rates just like the cable companies," Orton said. "And while cable companies may have cut prices at first they've also risen since."

Orton added that AT&T Chairman and CEO Ed Whitacre has told Wall Street analysts that AT&T would not be competing on price in TV services and that the company expected its prices to be in the same range as traditional cable companies.

"The idea that there will be price wars is false," he said.

Gov. Jim Doyle has not had an opportunity to review the bill, spokesman Matt Canter said.

State Rep. Spencer Black, D-Madison, who authored the bill that provided the current protections, said he is not opposed to the concept of providing more competition in cable TV, "as long as it's done fairly to local governments and consumers."

In addition to mandating credits for extended outages, current law requires that repairs be made within 72 hours, and mandates advance notice of channel changes, rate increases and disconnections. It also gives the state the ability to approve or disapprove transfer of ownership.

"Those important protections were put into law because of problems consumers experienced," Black said. "Eliminating those protections is a big mistake."

Proponents say competition will protect consumers.

The bill includes language that prohibits "redlining" - serving only affluent areas of a service territory and excluding low-income areas such as the south side of Madison - but "there's enough loopholes that they can really serve wherever they want," Orton said.

The Wisconsin Alliance of Cities hasn't had a chance to take a formal position on the bill, "but I think I know where we're going to go," spokesman Rich Eggleston said.

"Nobody that I've talked to in local government is happy with this," Eggleston said.

The bill stemmed from negotiations between cable companies, AT&T and members of the legislature, with local government excluded from the table, Eggleston said, adding that "when you're not at the table too often you end up on the menu."

A hearing on the proposal is scheduled for March 27 before the Assembly's Energy and Utilities Committee.

The Associated Press contributed to this report.

E-mail: jrichgels@madison.com

( categories: State Franchises | WISCONSIN )