Sunday, May 27, 2007

Just Not True: Cable Rates Not Falling in Texas

Here's something to think about:
Competition has not led to lower basic cable-rates in Texas. (MultiChannel News)
That's the long and the short of it according to a study by the Texas chapter of NATOA.

Two years ago Texas' Telephone companies (basically SBC (now AT&T) and Verizon) used the Texas legislature's famous penchant for failed deregulation to initiate a national push to move control of cable franchise from local communities to the state. The phone companies' purpose was to avoid the demand that cable companies serve the entire community—and not just the most profitable part--if the companies wanted to use the right-of-way property owned by the community to turn a profit on the people living there. Local counties and municipalities consistently insisted on this principle....and the new state "regulators" (deregulators) do not. Louisiana dodged a bullet last year when Governor Blanco vetoed a similar bill approved by our legislators.

The Texas legislators were promised that they'd see "competition" and dramatic reductions in prices in exchange for removing local government's ability to determine what is done with local property. And as the phone company juggernaut rolled through state legislatures they promised state after state the same -- and told them it had worked in Texas, the first state in the union to enact such a law. They told that story about the success of competition in the halls of Congress as well. It was easy to believe; after all everyone knows that competition brings lower prices.

Except it hadn't worked. And it still isn't working....

You can take a look at the data gathered by the Texas chapter of NATAO. What is clearly shown is that the cable companies are not lowering their rates to compete with Verizon and SBC/BS/AT&T's very limited rollout.

This is very similar to the disappointment that has accompanied the fashionable deregulation of electricity in a number of states. The data shows that the electricity is cheaper in the regulated states--and the gap is growing.

What's wrong with picture? Why hasn't "competition" worked? Legislators across the nation have endorsed the politically correct argument raised by the monopoly corporations that owned the electrical and telecom wires and bet their citizen's money on the faith that deregulation would lead to falling prices. They, and their constituents, have lost that bet. And a whole lot of people are trying to make sure that the public does not notice.

Here is a hard truth: The blind faith that "deregulation" leads to true price competition is a false faith. In natural monopoly markets regulation--or public ownership--is the only real way to establish fair prices. Utility markets are monopoly markets...and giving the monopolists free reign won't lower prices--quite the contrary. Utility deregulation is a failed experiment.

It is something the country as a whole ought to be thinking through rationally. The honest solution is to reinstitute real regulation where markets don't work. Most places don't have the resources to resist the drain on community wealth that private energy utilities and private telecommunications utilities represent. But a few communities, like Lafayette, can choose to opt out of the mistakes that the rest of the country is making. Lafayette has done so and will have its own locally-regulated power and telecom utilities.

Lafayette made the right choice on July 16th two years ago.

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