Monday, January 24, 2005

Digital Divide: Universal Service vs. Redlining

Quietly receding into the background of our Lafayette debate, because the issue is largely settled, is the fact that LUS has made clear that fiber-optic cable will run in front of every home in our community, no matter how poor or wealthy. That being settled, the conversation shifted to cost and LUS has made it abundantly clear that its pricing structure is, at least in part, designed to let folks purchase real broadband plus telephone and cable TV for the same price as they would have formerly paid for phone and cable alone. We are now moving on to issues of making access available through community centers and providing things like advanced ISP services and education.

Just how far ahead of the game we are is evidenced by legislation pending in Virginia (reported in the story: "Cable to Fight Bell Attempts to "Circumvent" Local Franchising Laws") which would (in the name of competition) allow the local Baby Bell to cherry-pick the wealthy areas and redline out the poorer areas. (See Mike on Redlining.) The mechanism is a proposed state law that wouldn effectively exempt the telecos from the standard contracts with local communities that require cablecos to provide universal service in order to use citizen-owned rights of way and poles. Interestingly, universal service is the only real issue. Fees, the complexity of public channel provision and other public service issues are conceeded. All we really want, says the telco is the right to not serve all the public. The cable companies, whose builds have always had to comply with universal service provisions, are adamantly opposed.
There's nothing in the legislation that would require Verizon or other phone companies to build out the entire community, [cable representative] Janucik said. "We don't believe that we should have the same build-out requirement as cable has," countered Hoewing. The reason, he said, was cable had the "luxury of time" and didn't face competition. "So they had to build out their network to an entire franchise area." Verizon, on the other hand, is facing a competitor, he said: "So we should be able to make the build-out economic and competitive." Having the same build-out requirements as cable "doesn't make any sense in today's environment," Hoewing added. He said Verizon isn't opposed to paying franchise fees and is prepared to meet public, educational and govt. access (PEG) requirements but should have flexibility to negotiate. "We should not have to just lock, stock and barrel accept everything that cable has had." The conditions and requirements should be the same irrespective of who provides the video service, said Janucik...
The cable representative in the story is coy about discussing the competitive disadvantage this law would put them in. But that is all this story is about. I am not nearly so coy and you can get my analysis on just this issue at an earlier post that responded to proposed federal regulation with similar intent: The Phone Company Sharks are Circling. As you go deeper into the article it becomes apparent that cable companies across the country are bracing for a blitzkrieg in teleco-dominated state legislatures where, as here in Louisiana, telecos have historically been hugely influential in any telecommunications legislation with well-established lobbyist relationships ready to hand. (They've invested in controlling the state regulatory processes, a layer of regulation that cable companies have not had to contend with. This is precisely why it was BellSouth and not Cox who wrote the original law intended to ban Lafayette's project.)

But spill no crocodile tears for the cableco's--when it was to their advantage vis-a-vis satellite companies they have no hesitation to do exactly the same: Buy state legislators to put their competitors at an unfair advantage.

So rest assured that the cable company's objection is strategic and not principled. Should states pass such "fair competition" acts cable companies will first get themselves exempted for future builds as well. (The proposed Virigina law apparently does so already.) They will then engage in a race with teleco's to snatch up rich districts and give them everything the can as cheaply as they can. (Expect special rates sold door to door in River Ranch, for instance.) And anticipate that poorer neighborhoods will languish and in cases where the finances of even maintaining the current system don't, block by block justify maintenance, to be actually abandoned. (Expect some areas of the northside to simply no longer have access to cable, much less advanced telecom right after our next hurricane.)

There is a huge storm brewing in the states with large implications for digital divide issues and as far as I know few are attending to it. This isn't a distant quarrel between the Bells and the Cablecos--it's about the continuing erosion of the very idea of universal service on any level with both Federal and state pressures coming to bear on the last bastion of that ideal: local franchising agreements.

If folks in the states don't get on this right now, only rare places like Lafayette with its own utility-based advanced telecom system, will have equitable access. We're doing the right thing here in Lafayette. The nation could listen and learn.

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