SaveAccess.org, January 21, 2008

Letter to Tennessee PEG from TATOA

Texas Association of Telecommunication Officers and Advisors(TATOA)
P.O. Box 1088, Austin, Texas 78767

January 22, 2008

Dear Tennessee colleagues:

I understand that you are considering legislation that would undo the current system of local franchising for cable television services in favor of a state-issued certificate for new entrants such as AT&T. Because Texas is frequently referenced by proponents of this legislation (such as AT&T and "astroturf" groups like TV4US) as a "success story" for state-issued franchising legislation, we felt it would be important to correct some popular misconceptions about our experience in the Lone Star State.

While there are those who suggest that usurping the traditional role of local officials in approving local franchises (which include anti-discrimination provisions, customer service standards and the carriage of public, educational and governmental channels) has showered the state of Texas with benefits without any costs whatsoever, the reality is in fact quite different.

For starters, video prices have not decreased anywhere near the 25 to 50 percent suggested by telephone companies. In fact, nearly every video provider operating in Texas has raised its prices in the past two years. This includes AT&T and Verizon, the major proponents of Texas SB 5. AT&T has raised the prices it charges for U-Verse, and Verizon has raised its rates for FiOS twice in the past year and a half, including a most recent price hike of 11.6 percent, leading one major analyst to comment that "the increase should serve as a reminder (in regulatory circles) that the forces driving price increases are not limited to a 'lack of competition.'*" Furthermore, in May 2007 the Texas Association of Telecommunications Officers and Advisors released a survey of cable rates from more than two dozen municipalities throughout Texas. Our results showed that in the more than two years since Texas passed SB 5, the vast majority of Texas residents have witnessed only further increases in the rates they pay for video service from both incumbent operators and new entrants like AT&T and Verizon.

Two and a half years since Texas passed SB 5, AT&T U-Verse service has been deployed in only parts of San Antonio, Houston, Dallas and Austin. Within those regions, we have little to no assurance that low- and middle-income neighborhoods will ever receive service, since state-issued franchise legislation exempted new entrants from anti-discrimination (or "build out") obligations. We are not permitted to require AT&T to serve all residents or all income categories, and have no access to AT&T's deployment plans. In short, we have little ability to protect low-income residents from discrimination that would deny them the benefits of competition to which their wealthier neighbors get access.

On top of these alarming trends, PEG channels have been put at risk of going dark. On January 5, 2006, Time Warner under its state-issued franchise dropped the City of San Antonio public access channel based on the argument that the City failed to provide eight hours of daily programming as required by SB5. It took 6 months of negotiations to get the channel back on the air. And when customers suffer from poor customer service or technical problems and place a call to their local municipality for help, state-issued franchise legislation prevents local officials from enforcing any customer service standards whatsoever.

As the first state in the nation to have state issued franchising, we have perhaps the best vantage point to assess the legislation's strengths and weaknesses. Two and a half years later, there is little evidence of widespread investment throughout the State, competition or price cuts, and much evidence that the role of local officials in protecting consumers has been undermined.

Since day one, we have wholehearted endorsed the prospect of increased competition from telephone companies entering into the video business. Grande Communications has been successful in providing competition to Time Warner since the 1990s and Verizon received a franchise from the City of Keller and began offering its FIOS there before SB5 was passed. There is no evidence that local franchising is standing in their way of providing competition.

Many thanks for your consideration of our experiences, and best of luck in the 2008 legislative session.

Sincerely,

Margaret Somereve
TATOA President

* Bernstein Research, 11/20/2007
Texas Association of Telecommunication Officers and Advisors(TATOA)
P.O. Box 1088, Austin, Texas 78767

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