A recently introduced bill in Sacramento is drawing staunch opposition from local cable TV providers who view the proposed legislation as an attempt by the nation’s largest telecom company to supersede federal powers.
At the heart of the issue is whether the state should allow phone companies the right to extend high-tech video and Internet services into communities without first seeking permission from city and county governments the way the cable industry must do.
San Diego County’s two leading cable TV providers, Cox Communications and Time Warner Cable, both oppose Assembly Bill 2987, also known as the Digital Infrastructure and Video Competition Act of 2006. Meanwhile, San Antonio-based AT & T;, Inc. is pushing for the bill’s passage.
Assembly Speaker Fabian Nunez, D-Los Angeles, introduced AB 2987 on April 6. The bill is being touted as something that will increase market competition, thus lowering cable TV rates for consumers. But Cox, which serves some 535,000 local customers, and Time Warner, which serves some 200,000 local customers and is in the process of picking up 10,000 more from Adelphia Communications Corp., each see a different angle in play.
“We just think that AT & T; should play by the rules like everyone else,” said Cox spokeswoman Ceanne Guerra. “That’s really what it all boils down to.”
Guerra also said passage of the bill would undermine the efforts put forth by local cable providers to follow the rules of the Telecommunications Act of 1996, which was approved on the federal level by the Federal Communications Commission. The act made it possible for cable providers to venture into the high-speed Internet and telephone market if they paid for the technology infrastructures and worked in partnership with local governments.
“We’ve invested a billion dollars to bring a fiber optic network to make all our phone and Internet services possible and they just want to walk right in,” Guerra said. “We don’t mind competition, but it should be done fairly with everyone following the same rules.”
D & #233;j & #341; Vu?
Time Warner spokesman Marc Farrar deferred comment on the matter to Dennis Mangers, president of the California Cable and Telecommunications Association, of which Time Warner is a member.
Mangers said that the state bill strives to supersede federal guidelines and the lawfulness of similar state legislation recently approved in Texas is spurring a legal battle.
“We’ve seen the same assault in Texas and now they’re trying to do it in California,” Mangers said.
The California Cable and Telecommunications Association is based in Sacramento and represents 200 members.
In a prepared statement, Ken McNeely, the president of AT & T; California, proclaimed his support for the bill.
“California is taking the first step today to bring video choice to consumers,” McNeely said. “We applaud Speaker Nunez and Assemblyman Levine for their efforts in crafting what we believe will serve as model legislation and help re-establish California’s leadership role in the adoption of new, innovative technologies. This legislation is designed to bring new investment and job growth to the state.”
Dollar Debate
AT & T;, Inc. is the result of a $16 billion merger in November between AT & T; Corp. and SBC Communications. The company also recently announced plans to acquire BellSouth Corp. for $67 billion.
“The cable industry believes that if AT & T; can spend $67 billion to expand itself with Bell South, it can certainly match our $10 billion investment,” said Mangers, referring to the approximately $10 billion cable companies throughout California have spent on building fiber optic networks in the past few years.
But according to published reports, AT & T;, along with New York-based Verizon Communications, which also supports the bill, has pledged to spend money on fiber optic upgrades to make the new services possible. AT & T; has committed to spending up to $1 billion through 2008, while Verizon says it will spend “hundreds of millions of dollars throughout the decade.”
Head Start
Another injustice, according to Mangers, is that under the Nunez bill, phone companies can immediately enter the marketplace with new services, while cable companies already operating under city and county agreements would have to wait until their existing contracts expire before they can make any changes to their service offerings.
“We’re pretty appalled by this bill,” Mangers said. “We were told it’d be a level playing field but it’s far from that if we’re stuck while they take a free pass.”
Several years ago, several telephone companies ventured into the cable TV market following the rules of the federal Telecommunications Act of 1996, but most divested their interests within a matter of a few years. Mangers said that AT & T; in particular is a former member of the California Cable and Telecommunications Association and one of the reasons telephone companies backed out of the TV market so quickly was because of the cost and time involved.
The state bill, which was co-written by Assembly Speaker Nunez and Assemblyman Lloyd Levine, D-Van Nuys, is scheduled to be discussed by legislators at an April 24 meeting of the Assembly’s utilities and commerce committee.
Cox Communications
Headquarters: Atlanta.
2005 revenues: $6.7 billion.
Total customers: 6.7 million.
San Diego headquarters: Oak Park.
Local customers: 535,000.
Time Warner Cable
Headquarters: Stamford, Conn.
2005 revenues: $9.5 billion.
Total customers: 10.9 million.
San Diego headquarters: Miramar area.
Local customers: 200,000.