Santa Monica unreceptive to cable bill
CITYWIDE — A battle is brewing over legislation that could change the face of cable television statewide and potentially save consumers over $1 billion.
In one corner stands the heavyweights — State Assembly Speaker Fabian Nuñez (D-Los Angeles), AT&T, labor unions and the California Chamber of Commerce — all of whom are promising lower cable rates via competition in the open market.
In the other corner stands the challengers — the City of Santa Monica and the California League of Cities — who are concerned about the bill’s lack of consumer protections, as well as the loss of local control and enforcement of operating agreements with cable providers.
The two sides are involved in an intense lobbying effort in the state’s capital, with industry insiders scoring the bout in favor of Nuñez and the Communications Workers of America District 9 (CWA), a union with considerable clout in Sacramento.
However, that hasn’t deterred City Hall, as elected officials last week announced their unanimous opposition to Assembly Bill 2987, the “Digital Infrastructure and Video Competition Act of 2006.” Councilmembers expressed concern that gains made with the city’s current cable provider, Adelphia, would be lost if the bill is approved and signed by Gov. Arnold Schwarzenegger.
“You don’t grant sweetheart deals to companies and make consumers less off by stripping away protections and by taking away local (authority to ensure quality service,)” said Kate Vernez, City Hall’s manager of government relations, who was directed by the council to coordinate with other cities to stop AB 2987.
The bill, which is expected to go before the Assembly by the end of the month, opens the door for telephone companies to enter the cable television market by allowing them to expand their networks over a specified period of time instead of being forced to provide universal service to an entire community all at once, which is currently done in Santa Monica.
By allowing providers to expand at a pace that’s commensurate with their bottom lines, phone companies wouldn’t be required to spend a considerable amount of capital investment up front.As it stands now, a company that wants to enter a specific market would have to extend its network throughout the entire city. Phone company representatives argue that it puts them at a disadvantage because, not only do cable companies control a considerable share of the market, but they also have made previous investments in infrastructure.
In Santa Monica, Adelphia has created that network and, as a result, the monopoly on cable services. However, residents can still choose a satellite provider over cable.
The bill is seen by supporters as a way to lower cable rates, which have increased three times the rate of inflation, while simultaneously creating the infrastructure to handle new technology that can deliver more information faster.
“Our current system was designed in the 1960s and has put our state well behind the curve in increasing our broadband capabilities,” said Steve Maviglio, a spokesman for Nuñez.
Organized labor sees the bill as a chance to push nonunion cable companies out and pro-union telephone companies in.
“Competition should be based on superior technology and service … not based on which company pays lower wages or benefits or disregards labor laws,” read a statement from the CWA.
The bill also centralizes the franchise process, taking power away from local governments to negotiate operating agreements with cable providers and putting it in the hands of the state Department of Corporations.
If the bill was passed, companies would still be required to pay a franchise fee to cities and offer the same number of public access channels as the current cable provider, but instead of having to negotiate 500 separate franchise agreements, the company would need to apply just once.
“This bill will still provide cities with the same amount of revenue,” Maviglio said.“But what it doesn’t give them is the sole ability to enter into a contract with cable companies in which they are able to squeeze the companies for everything they’re worth.”
Under City Hall’s current operating agreement with Adelphia, the cable provider is required to offer six public access channels, which air programs created by citizens, as well as rebroadcasts of City Council, school board and plan-ning commission meetings. Adelphia also must provide a public access facility and training for the community at no charge, allowing residents to produce studio-quality shows.
Adelphia, at a discount, also agreed to build a fiber-optic ring around the city that links all government buildings, Santa Monica College and the school district.
Adelphia also is required to pay a 3-percent franchise fee, a 10-percent utility tax and a business license fee in exchange for permission to install and operate equipment in what is known as the public right of way, Vernez said. City Hall will receive an estimated $2.7 million in fiscal year 2005-06 from those fees and taxes.
If the bill passes, Vernez said those kinds of concessions would be lost, along with the power to enforce them.
For example, City Hall has twice sued Adelphia for failing to meet obligations under the franchise agreement. The suits have netted close to $4 million for City Hall’s coffers. The settlement money has been used for the extension of the cable network and Internet access throughout the city.
If the bill were to pass, Vernez said, the authority to sue would lie with the Department of Corporations, which is overburdened and underfunded and, therefore, can’t be trusted with that responsibility. The department is a state-funded regulatory agency that oversees private businesses, franchises and licenses.
Maviglio countered that the bill provides adequate funding to ensure proper staffing levels.
Opponents also worry that if the bill passes it will allow for companies to discriminate against certain communities — in particular, low-income households — similar to charges of redlining in the insurance industry.
Supporters of the bill said there are protections against discrimination.
Originally published in the Santa Monica Daily Press print edition on May 18, 2006. Read the original PDF.