Friday, June 03, 2005

Reporters get smarter about telecom franchises

The Chicago Tribune carries a good story on the emerging issue of state-level franchise agreements. We've seen a wave of bills at the state level that attempt to circumvent the traditional—and federally mandated—franchise fees paid to local government. The immediate context for the story is the failure of the phone company to get the Texas legislature to take franchise control away from cities and towns and lodge it in the state legislature (great idea, that one). It failed. And the phone companies coolly announced they'd seek a federal remedy. (Yet a better idea, no?) The Chicago Tribune actually has a pretty good piece of reporting on this arcane but important topic that involves every level of government and some of the nation's most powerful monopolies.

Telecommunications reporting is plagued with what can only be called poor reporting. It is generally nobody's beat and so far out of the range of glamorous — or even interesting for most reporters— that it isn't even funny. Generally it gets tossed to the business reporters and that's not usually appropriate. They're used to dealing with local businesses and mostly, no offense, puff stories. (When was the last time you heard of a hard-hitting exposé of the working conditions at the local hardware store?) The idea is to help a local business look good. That approach doesn't work with the cable/phone duopolies. What people read, even in large newspapers, too often amounts to rewrites of press releases. Or, even more insidiously, unreflective pieces that assume the sugary goodness of all corporate endeavors. That's unfortunate, because telecom reporting is actually important stuff at both the national and local levels; it's a huge and growing chunk of the economy at all levels and the interests of the incumbents are distinct from the interests of the people they exist to serve—sugary goodness is not on the menu. The topic deserves good reporting by reporters whose experience leads them to question rather than accept. (I'd assign guys from the local politics beat. ;-) )

So it is a real comfort to see that some of the large regional/national media like the Chicago Tribune are beginning to carry stories that dig below the explanations that corporations like BellSouth and Cox offer the public. They still offer the "official" explanation but at least they do the work of going out and asking real questions of the opposition.

The official line is a suspiciously pious: the Bells only want to facilitate competition, they say. (We'll let pass for the moment any long dissertation on how hypocritical it is for the phone companies to claim to be for competition after pressuring these same state legislatures to simply outlaw any form of municipal competition.) It would help if they didn't have to negotiate with all those little bitty towns and cities and counties across the country. It would just be easier. They could provide competition more quickly. And that, the implication is, is all.

Of course, that's not all; nor is it particularly true. Or it is so partial a truth as to constitute a sin of omission. What is much closer to a full story is that the phone companies are aghast at the lengths cable companies have to go to please the owners of public rights of way. The phone companies don't have to deal with all that. As a matter of national policy, when we decided universal phone service was a priority we pretty much exempted phone companies from franchise negotiations. They're not used to worrying about anything smaller than state levels of government—the level at which price and service regulation takes place. That orientation to the state level of power is part of the real story. The truth is that they are good at getting what they want at the state level. And they want things that no local municipality will ever, ever give them. They want to offer their best services to the richest neighborhoods. And make big money. And use that money to go to the next most lucrative neighborhoods. Their cable-based competition gets forced into the least lucrative neighborhoods -- neighborhoods they have to service because they are contractually obligated by their local franchise agreements to do so. It's an obvious business strategy. (And one I wrote about back in December in the context of FCC regulations.) But it's not one that local politicians have allowed to cable companies and it's not one that they will allow to the phone companies if they have anything to say about it. Durel, for instance, would never survive granting BellSouth a franchise agreement that licensed wonderful new services in River Ranch but allowed northside neighborhoods to languish until Atlanta decided it was time.

Here's how it looks to municipalities and local people:
"Municipalities are interested in the fees that franchises bring as well as requirements that carriers supply public access channels.

But the biggest concern is that without franchises, telecom carriers will not offer network upgrades in the poorer parts of cities and towns.

'A primary goal for local franchise agreements is negotiating full coverage for municipal areas,' said Marilyn Mohrman-Gillis, policy affairs director of the National League of Cities. 'We're very concerned about cherry-picking by the telcos.'

The Chicago-based Ministerial Alliance Against the Digital Divide has criticized SBC's upgrade plans, saying they shortchange poorer neighborhoods.

'We're very much in support of municipal franchises,' said the Rev. James L. Demus III, the group's leader. 'They're needed to level the playing field."
It going to be a bloody fight at every level. But it's not about offering a little fair competition a bit more quickly. It's all about securing a special advantage over your competition. That is the monopolist way. What they say is not what they mean. Pretty much always. And reporters are starting to notice.

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