Update: Survey: No price relief from state cable franchising laws
Cable franchising laws like the one enacted in Wisconsin late last year have provided virtually no price relief while eroding support for public access channels, according to a survey commissioned by opponents of such laws.
The Alliance for Community Media (ACM), which represents more than 3,000 public, educational and governmental (PEG) access centers across the country, initiated the online survey in May involving members of ACM and the National Association of Telecommunications Officers and Advisors. There were 204 respondents from 33 states, representing PEG access television centers. ACM's summary of the results focuses on the 140 respondents from 18 states that now have a state video franchise law in effect.
Supporters of state franchising bills have often testified that competition spurred by such bills would lower prices.
But 66 percent of the respondents said basic cable prices have increased in their communities, while just 1 percent said prices had decreased.
AT&T, which was a leader in the effort to pass Wisconsin's state video franchising bill and often touted the benefits of competition for consumers, did not respond to efforts seeking comment.
TV4US, the industry-funded, "astroturf" interest group that led the lobbying effort for the legislation, also did not respond to efforts seeking comment.
AT&T is selling its U-verse cable-like TV service that is delivered to homes through its fiber and copper phone lines in parts of the Milwaukee, Racine, Green Bay and Fox Valley areas but hasn't revealed when it will offer it in the Madison area.
John Miller, spokesman for Charter Communications, the dominant cable provider in the Madison area, said in a statement that "cable operators have not espoused the position that prices would fall as new providers enter the market."
He added that prices "will rise and fall based primarily on the cost of obtaining that programming" and that the "price-per-channel of our product has consistently fallen over the last decade," although overall prices have risen.
"The impact of new competition on overall prices cited in the article, combined with Wall Street performance of cable stocks, does, however, provide solid confirmation that cable prices are fair and competitive as the industry has stated for many years," Miller said.
Sixty-eight percent of respondents reported that new entrants have applied for state franchises, while 52 percent of existing providers applied for state franchises to replace their local franchises, typically reducing their regulatory framework.
In Wisconsin, AT&T is a new entrant with U-verse, while Charter is among the existing providers that have applied for a state franchise to replace local franchises.
"Naturally, incumbent cable operators will avail themselves of the new regulations in order to maintain a competitive neutrality with new entrants providing 'terrestrial' competition," Miller said.
About 20 percent of respondents report PEG funding has decreased since the advent of statewide franchising. Nearly 25 percent said they lost or expect to lose channels since the advent of statewide franchising. And respondents from 29 communities in 12 states report PEG channels being moved by incumbent cable operators to digital-only channels.
In Madison, Charter on Aug. 12 will be moving Madison City Channel to digital channel 994 on its new "Public Affairs Neighborhood" at 980-999 from Basic and Expanded Basic channel 12. Madison City Channel provides coverage of government meetings such as City Council meetings.
Financing also is an issue for Madison City Channel as all financing for PEG channels is set to end by February 2011 under the new law. Charter provided more than $400,000 annually in PEG access fees for Madison City Channel and WYOU.
The Madison Metropolitan School District's two access channels also are moving. Now on Charter channels 10 and 19, the channels will move to digital 992 and 993, next to Madison City Channel.
The Public Affairs Neighborhood will not cost extra, but since they are digital channels, customers will need a digital TV or a digital box if they have an analog TV. Marcia Standiford, manager of cable and video services for the school district, is sending out a letter to friends of the district's access channels advising them to ask Charter for a free digital converter box (a monthly charge is required now) to receive basic cable channels being moved to digital.
Standiford also told The Capital Times in an e-mail that with the state franchising law, Charter was released of its obligation to provide free cable to schools and municipal buildings at no charge, and that the district "fully expects" the service to be cut off "in the near future."
"The school district will be required to pay a cable subscription fee just to see the return signal for our own channels," she said.
Miller said that Charter's support for PEG channels "remains intact under the state franchise until Feb. 1, 2011 along with dedicated channel space to provide the same number of PEG channels going forward as were provided immediately prior to enactment of Wisconsin's legislation."
Miller said local franchise fees paid to communities will be the same percentage of a cable provider's revenue as was paid under the prior local franchise, while the sunset of dedicated PEG fees in 2011 will decrease costs for customers in those communities who charge such a fee over-and-above the franchise fees.
"Local municipalities that place a high value on their local public access channels can continue to provide financial support for those channels directly through their local cable TV franchise fees," Miller said, noting that many communities — including Fitchburg, Lake Mills and Portage — used such an arrangement under local franchising. "In this manner, PEG channels remain in operation for those who place value on them while eliminating an additional customer charge in communities who require PEG fees over and above the franchise fees."
Respondents from 17 communities in eight states report loss of access to PEG facilities managed by cable operators soon after state video franchise laws removed local obligations from those companies.
About two-thirds of affected survey respondents from 13 states report that new state franchise service providers deliver PEG channels with impaired signal quality and functionality.
"Even in the early stages of adoption and implementation, the negative fallout from the state video franchise laws has been substantial and will continue to mount," the report concluded. "As incumbents and new entrants apply to operate under these new franchises, more communities will experience the cutbacks and degradation of PEG services reported in this survey, leaving many communities in the nation without the diverse, local programming provided through PEG channels. This outcome directly contradicts the purpose stated in the Cable Act of 1984, that franchises be responsive to the needs and interests of the local community."
The survey and report can be viewed at www.natoa.org/policy-advocacy/Documents/HarmSurveyReportACM08.jpg.
