Bill would give TV viewers more choice

Peter and Sylvia Reiss like to watch certain television channels, like Hallmark and The History Channel.

But to get those stations, they have to buy a special package from their cable company or satellite provider. They think that’s unfair.

“These companies have the market pretty much sewn up, and that’s not fair to consumers,” Peter Reiss said. “I think if I’m paying for the service, I should be able to choose which channels I want to watch.”

The Sugarloaf Township couple, along with most consumers in Pennsylvania, don’t have a choice when it comes to cable providers.

Ever since the cable industry boom began decades ago, municipalities have been signing exclusivity contracts with certain providers. For instance, if you live in Wilkes-Barre, your only cable option is Service Electric Cable TV & Communications of Lehigh Valley. In Plains Township and other Wyoming Valley towns, Comcast is the lone cable provider.

A bill pending in the state Legislature seeks to change that. House Bill 1490, introduced by state Rep. Todd Eachus, D-Butler Township, would allow consumers to choose their cable television provider, programming and service level. It proposes state oversight of an industry that currently offers customers no independent arbitrators when disputes occur.

“This proposal is all about giving the public a voice and giving the public the chance to get informed about expanding their power to choose,” Eachus said.

The legislation would provide a statewide contract that would allow municipalities to opt for a second cable provider if they desire.

“The original contracts would still be honored,” Eachus said. “But down the road, if a second company wanted to provide service in a municipality, the state contract would give them that option.”

Competition could provide better rates and more channel options for consumers, he said.

Support and opposition

But, allowing a second cable company to enter a market would be a second investment, said Larry Shewack, general manager at Service Electric’s Wilkes-Barre office.

“Another cable company can come in and apply for a franchise,” Shewack said, “but the capital cost would be enormous.”

But Eachus said there may be provisions made in the future that would allow for sharing of certain services and equipment.

“I support it (the bill) because I believe we need more competition in the industry,” said state Rep. Phyllis Mundy, D-Kingston, a co-sponsor. “The current setup is monopolistic, and I think that leads to higher than necessary rates. I have received many calls from constituents complaining about high cable rates and also service complaints.”

The measure is supported by a coalition of consumer groups, local governments and municipalities, religious groups, and labor unions. It would create a statewide cable TV franchise law and give the Pennsylvania Public Utility Commission oversight of the cable TV industry.

Other service companies doing business in the state, such as water, gas and electric companies are regulated, but cable TV currently has no state oversight to offer reasonable protection for consumers and encourage fair competition.

Opponents say the legislation isn’t needed; they maintain the current system is working. Attorney Daniel S. Cohen of Pittsburgh, who represents approximately 250 municipalities in Pennsylvania in cable and telecommunications matters, testified at the Feb. 7 committee hearing on the bill, arguing against statewide franchising.

“In short, House Bill 1490 would undermine municipal franchising authority, eliminate consumer service standards, potentially decelerate the build-out of competitive networks, reduce franchise fee revenue and accountability for municipalities’ legal exposure, and weaken enforcement of cable operator violations,” Cohen testified.

Cohen said enforcement of customer service is more effective at the local level than at the state level. He said local enforcement is faster and more efficient and municipalities have the option to impose fines for unresolved issues.

Lower prices, more costs?

Shaun Sparks, an assistant state consumer advocate, said HB 1490 would provide a statewide franchise approval process for businesses seeking to provide cable television services.

Eachus acknowledges cable companies need to make money, but said it is equally important consumers be treated fairly when purchasing services such as high-speed Internet, phone technologies and TV programming. The companies utilize public assets, like right-of-way, and he said it is part of the government’s responsibility to protect the public from unfair practices and to hold companies accountable.

The Communications Workers of America supports the measure because it would create a mechanism to break the cable monopoly, stimulate competition and expand high-speed broadband to all Pennsylvania communities.

The CWA represents more than 25,000 workers in the state, including 9,000 employed by Verizon and hundreds employed by AT&T, Frontier Communications, Comcast and other cable companies.

Alex J. Minishak Jr., international staff representative, said cable companies can obtain a franchise by negotiating with every franchise authority, often the municipality, where it wants to provide service. He said HB 1490 would enable more competition, thereby lowering prices.

“Studies show that when a second cable provider enters a market, consumers see rate decreases of 28 percent,” Minishak said.

He cites several studies supporting his claims including: In December 2006, the Federal Communications Commission issued a report that showed cable rates rose 93 percent over a 10-year period – double the rate of inflation.

The American Customer Satisfaction Index and its National Quality Research Center said in 2007 that cable ranks the lowest of 44 industries in customer satisfaction. CWA reported in July 2007 that Pennsylvania ranked 33rd among the states in broadband speeds.

But, industry insiders insist passage of the bill would have an adverse effect on consumer costs and availability.

Brian Barno, vice president of government affairs for the Broadband Cable Association of Pennsylvania, said the proposal would reduce broadband availability, decrease investment and lead to higher costs.

“One has to question how government bureaucrats in Harrisburg are better equipped to provide oversight than local elected officials in the community,” Barno told the committee. “HB 1490 is unnecessary.”

Robert K. Johnson, president of Consumers for Competitive Choice, said the proposed legislation would discourage investment in Pennsylvania’s broadband and video infrastructure. Its intent to give everybody broadband access is commendable, he said, but he doubts it can be achieved. He believes companies looking to invest in broadband will opt to do business in states with less-stringent regulatory policies.

Dan Tunnel, president of the Broadband Cable Association of Pennsylvania, said members of his organization have invested more than $7 billion of private risk capital in Pennsylvania over the last 10 years. He said the proposal would “unquestionably be an enormous step backwards for Pennsylvania.”

“The explosion of broadband and wireless communications would not have occurred if government hadn’t gotten out of the way to let consumers, not bureaucrats, determine how and what technology they wanted,” Tunnel said. “It threatens to freeze deployment of – and investment in – the evolving broadband cable technology.

“The broadband cable and wireless industries would never have the penetration, and customer satisfaction, enjoyed today had a regulatory agency had the chance to stop all the forward motion,” he said.

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Support and opposition

Lower prices, more costs?

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