To City’s Chagrin, Cable Concession Will Open to Competition
As of Jan. 1, cable providers who have enjoyed local monopolies will face competition from the phone companies thanks to a new statewide licensing scheme.
The legislation, which was passed in July, is intended to increase consumer choice in cable television providers and bring down prices. But the dollars saved by consumers may come out of the pockets of local governments and public access stations, according to those opposed to the change.
Municipalities have historically worked out agreements with cable companies in which the corporation would pay fees, provide public access and educational channels and any other services the city needed in exchange for a virtual monopoly. Cities and companies reasoned it would be too disruptive to install more than one cable system underneath roads and sidewalks. Telephone companies, which have their own infrastructure, have been pressuring state and federal politicians to open up the market.
“I think the bill as it was passed is probably as good as it was going to get,” said Greensboro City Manager Mitchell Johnson. “They were dealing with a juggernaut at the federal and state level with telephone companies wanting to get in on this.”
Instead of applying to cities and towns for franchises, cable companies will soon submit an application to the NC Secretary of State. Spokeswoman Liz Proctor said the agency has no authority to investigate or reject companies offering cable service. Any company that completes the application properly will be granted a franchise, she said. Complaints against cable companies will be handled by the NC Attorney General’s office.
Under the old system, cable companies had to provide service to all areas included in the agreement, regardless of income or distance. The video competition bill includes language prohibiting new companies from discriminating against lower income or minority neighborhoods – so called “cherry-picking.”
In letters sent to legislators, Johnson said cherry-picking high-income districts by new companies might actually increase prices for poorer neighborhoods and impede the spread of broadband technology to those areas.
The state will distribute taxes from cable companies to counties and cities based on population. Legislative analysts came up with a formula so cities would not lose money. Johnson said he is worried about having to pay full price for access to fiber optic cables, which city buildings accessed as part of the original agreement with Time Warner Cable.
“If we have to pay standard rates for fiber optic it’s going to be pretty expensive,” Johnson said.
Originally many cable companies housed facilities for public access channels, Johnson said. That is no longer true, but the companies do support Greensboro’s Channel 8, educational and government channels with a 16-cent fee included with every cable subscriber’s bill.
Under the new system the state will provide a $25,000 matching grant to public, education and government stations. The rest of the operating budget will have to be made up by private and non-profit funding.
“I wasn’t in favor of this bill,” said Jay Lambeth, executive director of Channel 8. “It left a lot of loose ends. It left a lot of cable access people wondering what was going to happen next.”
Lambeth said he doesn’t think the new law will provide as much funding for his station.
“Public access stations are by and for the people,” he said. “You can find a real reflection of the community on public access and it would be a real shame for it to go away.”
Proponents of the bill said they hope competition will lower prices and increase options for consumers. The Time Warner agreement in Greensboro will end in 2009 unless another company files an application with the state before then.
“Is it going to work out for the community?” Johnson asked. “Is it going to bring down prices that much? I doubt it.”
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