The article below by Dennis Shook appeared in this week's edition of the Shepherd Express.
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The Legislature will decideShepherd Express: April 04, 2007
By Dennis Shoook
Cable TV, as Wisconsin viewers have known it, could soon be dead and buried.
Currently, cable TV systems have contracts that give them monopolies in municipalities. But AT&T is trying to convince consumers they will save money through competition. The telephone giant wants to provide TV watchers another option with its own Internet-based TV system, called "U-verse."
The cable TV companies have responded by saying "It's not TV for us. It's TV for them."
But consumers may not have a choice, since the matter will be decided in the state Legislature. A bill that would allow for those new providers to offer alternative video service is being considered in Madison and could pass as early as May.
Will Competition Hurt Consumers?
There are arguments on both sides. On the one side, there is the argument that competition will lower monthly fees. On the other hand, one longtime cable TV expert says the possible death of cable TV franchises would actually hurt consumers in many ways.
Barry Orton, telecommunications professor at the University of Wisconsin-Madison, has closely tracked the cable TV industry in the state for nearly 30 years. Orton said the so-called Video Competition Act being considered would not only allow for AT&T to enter the market, but the rule changes would also allow cable companies to renege on all of their existing deals.
The bill would allow the state to become the one and only video franchiser, replacing all the municipalities that have agreed to cable TV franchises until this point. The state would collect all the franchise revenues from new video providers, such as AT&T, as well as the current cable TV companies. Orton said that change alone would mean a loss of revenue to municipalities, an end to some existing consumer protections set up by municipalities and even the demise of the local public, education and government (PEG) channels that have been successfully developed in places like Milwaukee, Kenosha and Oshkosh.
Perhaps the key problem with the bill, which is being fast-tracked through the state Legislature, is the lack of any kind of meaningful regulatory control on the new television service industry.
Orton said if the measure passes as currently written, some major changes will result:
• Regulating the video industry will be the responsibility of the state Department of Financial Institutions. But that department will have no power to regulate or fine providers such as AT&T or Time Warner for any problems customers might have with service. Unlike current cable franchise agreements, which specify the years of the term, the bill does not currently place any time limits on agreements between the state and video providers.
• The franchise fees currently paid to municipalities, and used in lieu of property taxes, will be eliminated. Orton calls that "a back-door tax increase" in any municipality that currently has cable. It will mean a loss of $350,000 to the City of Milwaukee, based on city estimates.
• As the sole franchiser, the state of Wisconsin would be the government entity that gathers the fees and makes the rules. So the state can decide how much it wants to share with local municipalities. The current projection is the state would share about 2% of all the revenues it collects. But there are no guarantees.
• Funding for PEG channels, such as the Milwaukee Access Telecommunications Authority (MATA), would not be required, as it is in many cable TV agreements. The bill would also require that each local access channel produce 10 hours of local, original programming each day in order to retain its channel allocation, an all but impossibly high standard. MATA Executive Director Vel Wiley said if the bill passes in its current state, Channels 14 and 96 would certainly die off very quickly. There would also likely be no coverage of governmental or school meetings on those channels, based on those rules, she said.
• The current cable TV promise of a repair within 72 hours will be null and void.
• The mandate of 30-day notices for changes in programming or rate increases will be eliminated, as will the 10-day notice for disconnections.
The argument for competition lowering the price hasn't worked that well in other states.
"After the first year of competition, prices only lowered for a little while," Orton said of experiences in other states. "But they will continue to increase after that."
Room for Improvement
State Sen. Jeff Plale (D-South Milwaukee), a co-author of the bill, vowed that many aspects of the b
