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from: Bradenton Herald

Debate over state cable bill intensifies

BY JIM WYSS
jwyss@MiamiHerald.com
Posted on Sun, Mar. 25, 2007

TALLAHASSEE - One of the most watched dramas unfolding here isn't on TV -- it's over TV. For the second year running, telecommunications and cable representatives have descended on the state Capitol to battle over The Consumer Choice Act, a bill that rewrites the rules that govern entry into the cable television market.

''Last year we called this bill, for the lack of a better term, the Lobbyist Relief Act,'' Sen. Lee Constantine, R-Altamonte Springs, told a committee hearing packed full of smartly dressed lobbyists and bearded professors who came to debate the issue. ``And you can see it still is.''

At issue is Florida's aging cable franchise system.

Under current law, a cable service contract must be negotiated with each of the 476 city and county governments. It's a cumbersome process that has given rise to virtual monopolies. While there are almost 300 cable companies in the state, only 2 percent of households have a choice in cable service.

Telecommunications firms and their allies in the House want to replace that system with a single statewide contract.

Both newcomers and existing cable companies could apply for the statewide licenses and the measures proponents say the competition would drive down prices.

On the other side of the debate are entrenched cable providers backing the Senate's version of the plan, which requires new competitors to provide service to low-income and rural areas. Without those safeguards, they argue, newcomers might solely focus on wealthy enclaves, denying most Floridians the benefits of competition.

Just how much money competition would save Floridians depends on who you ask.

The American Consumer Institute, a nonprofit that receives funding from telephone companies, says when cable companies went head-to-head in Texas, prices dropped 30 percent.

And Rep. Trey Traviesa, R-Tampa, who is leading the House effort, has said if his bill passes, consumers might save up to 40 percent.

Barry Orton, a professor of telecommunications at the University of Wisconsin-Madison, disagrees.

Orton, who has represented state governments in their franchise negotiations, said studies in other markets, including Chicago and Washington, showed competition has no lasting effect.

''The reality is, there is very often a quick, short-lasting price war, and then prices start going up again,'' he said.

What is driving the rates are programming costs, he said, ``and programming costs are the same whether you are the first company in the market or the second.''

The fight over cable goes well beyond cheap TV, advocates say.

In an age when cable is becoming the conduit for Internet, voice and other services, it's vital to make sure poor and rural communities don't miss out on the digital revolution, said Brad Ashwell, the head of Florida PIRG, a nonprofit consumer rights group.

''I could care less whether or not a low-income person sees the Sopranos,'' he said. ``But I do care that they have access to high-speed Internet and public health information.''

But trying to protect vulnerable communities by imposing such rules could ultimately hurt them, said Larry Irving, a Washington consultant, who traveled to Tallahassee to oppose the ''build out'' requirements the Senate is asking for.

Those rules only chase away competitors and are cynical attempts to benefit incumbent cable providers, he said.

Felix Boccucci is the vice president of business management at Knology, a niche cable provider with 115,000 subscribers in Panama City and Pinellas County. While the AT&Ts and Verizons have deep pockets and might be able to deal with state-imposed requirements to build to sub-prime communities, smaller companies like his do not.

''There's not an investor out there who will give you money when the market has build out requirements,'' he said. ``They will spend that money somewhere else.''

While the House version of the bill -- HB 529, which is favored by telecommunication firms -- passed the full chamber last week, the Senate's version of the bill, SB 998, is just starting to pick up steam. And with more than a month to go before session's end, it's far from clear if the opposing views can be reconciled.

''I think it's a poison pill,'' said Traviesa of the build-out requirements in the Senate's version. ``I am convinced that [these build out requirements] are anti-competitive and anti-consumer. Everywhere they have done build out capital runs the other way.''