Friday, April 18, 2008

"Vehemently Opposed" To AT&T's Law

As you were warned on these pages AT&T's state-wide video franchise bill is back again. The title: "Consumer Choice Television Act" is as deceptive a label as the infamous "Fair Competition Act" that the same corporate players used to attempt to kill competition from LUS when the network was little more than an idea. The idea that any law that the state legislature could pass would change the fundamental economic situation so much that AT&T would change its investment plan for rural Louisiana as consequence is a dumber idea than most that come out of the capital building.

The Louisiana Municipal Association (LMA) has come out as "vehemently opposed" to the proposed law. (They've issued a dramatic alert to their members calling for local officials to talk with their senators in advance of the Senate Hearing on the 23rd.)

They are right to do so.

It is an astonishingly bad idea.

In a nutshell: 1) It's astonishingly bad policy, 2) such laws don't work, and 3) there's no need in Louisiana anyway.

1) ASTONISHINGLY bad policy:
The state legislature proposes to take local property—our rights of way—from the governments that own and maintain them and substitute the Louisiana legislature's idea of what would be good for each community for what the people of the community have decided would be best.

This is plain flat bad policy and the law should be defeated for this reason and this reason alone: the guys in Baton Rouge should NOT be deciding what we do with our own property.

Even worse the plan is the "brainchild" of a single huge out-of-state corporation whose sole motivation in our state is find a way to get the most money out of our people while putting the least into building and maintaining their network here. Our state government should not be in the business of handing over local community assets to private enterprise.

The legislature overriding the will of local communities and telling them that they can't use their own property in the way they see fit in order to benefit some private concern simply cannot be justified.

But justify it they do... or at least try to. Which brings us to:

(The Justification)
The justification for telling local people to "act right" is that big brother in the state house is just doing this for your own good....(You knew that, right?)

Here's how it works: AT&T told their lobbyists to tell our legislators that keeping local governments from writing their own contracts about using Lafayette's and Bunkie's and Folsom's rights of way along the roads and ditches they own and maintain will "encourage competition" in cable TV. The idea is that AT&T is just too big a guy and too important to ask to talk to the mayors of little Bunkie and Folsom if they want to want to use local property. It takes too much time and they're busy. The AT&T execs flatteringly let it be known that they'd much prefer to deal with the "big boys" over in Baton Rouge and not trouble with all those tedious little people in backwoods. Dealing with the actual owners might have been good enough for all those cable companies who've been doing business locally for decades but it is beneath the dignity of the phone company.

As god is my witness! Really. They won't tell the story just like that but the basic rationale for the whole thing is that it just takes too much time to go to all those local people and that they're so anxious to give us competition that they just can't stand to wait. (Don't expect any legislator to notice that when they tried for this law two years ago saying they were just raring to go and offer every town and crossroads "competition." They weren't so eager that they used those two years to actually negotiate. Legislators should notice that they haven't been so eager to compete that they have actually done any negotiating in any town that law would have effected.—That's not what we call eager in my part of the state.)

What they don't mention much while they are promising the moon of quick competition in return for imposing state control is that they'd also, just incidentally, like to see a few fine-print items included as well like to avoiding certain fees, paying for public access channels like AOC, providing services to the owner of the land (your local government), and having to deal with being brought to heel for lousy customer relations by those little councilmen and, most of all eliminating the requirement that if they are to use the people's property to offer their product that they have to offer it to all the people--not just the most profitable few....they'd like all that eliminated while you're at Mr. Legislator. (wink, nod)

What's more: the legislators of 19 states have bought this sort of stuff. Starting with our neighbor Texas back in 05. So there is at least the beginning of the a record as to whether or not this thing works.

It doesn't. At least not quickly. And, least we forget, working quickly was the rationale....

2) Such laws don't work.
Some studies which have relied on asking the telephone companies whether or not they've rolled out more services because of these laws have, to no one's surprise, found that the companies tell you that yes. Of course they've rolled out more services. AT&T says: "All the expansion that we've done is because of those nice guys in the statehouse. We're mighty grateful, too." These studies don't ask about rollouts in comparable locales that don't have such laws.

Note: Verizon, who actually was eager to build new Fiber To The Home networks and actually is offering advanced new services over much of the the Northeast lost an attempt to get the feds to pass a law similar to the one proposed in our state and (gasp) is actually negotiating, quite successfully, with the local owners of the land they want to use. Of course, the explanation might be that they are actually radically upgrading their system and want to use it to offer new services, and really can't afford to wait. Unlike, frankly, AT&T. Who, on the evidence, just wants to slide by on the cheap and easy road.

If asking the phone company if they did what they promised they'd do when the solicited favors from state legislators resulted in "discovering" that they had kept their promises, studies which actually looked at hard figures had a radically different result. The whole point of competition is to lower prices, right? So if these laws work you'd expect lower prices...or at least no rise in prices. --Incidentally, not even AT&T is willing to say in public that it will offer video services in those rural areas that cable companies don't currently serve. Extending service is NOT on the table...only, supposedly, "competition."

But on prices, which is a nice hard measurable, Texans haven't gotten much of that competition thing. Since their "Consumer Choice" law came in their cable prices did not fall at any point and have actually risen substantially. Keep in mind that the Feds year after year issue findings that document that in those rare places where real head-to-head competition exists between cable companies the prices for cable are substantially cheaper—and AT&T (then BellSouth) showed those statistics to legislators two years ago. If real competition was going on you'd expect cheaper prices. It's just not true. If the law worked you'd expect cheaper prices.

But: Such laws don't work.

Lagniappe: Texas was first to the slaughter and our neighbor but, hey, these laws don't work in North Carolina either. And the telecos aren't even
pretending to build out there.

But even if this lousy public policy could be justified, and even if these laws worked the truth is:

3) There's no need in Louisiana anyway
If AT&T is being truthful when it says that it just wants to quickly be able to get services to the poor, suffering little people of Louisiana (without having to actually talk to any of them) then you'd expect that they'd be thrilled to have an easy, quick way to bring almost all of the people of the state under a quick and easy franchise. And the fact is that this law won't speed up much of anything....

AT&T has made it perfectly clear that it isn't about to roll this out to everyone that has an AT&T telephone in their home. That would be too expensive. In fact they plan to serve, mostly what they call "high value" customers. And to serve as few as possible of their "low value" ones. That's what they tell their investors, and lying about investments can get you put in jail, while lying to legislators...well, that's a sport in Louisiana.

All in all they plan to serve, eventually, about 50% of
all their current customers...In individual states that are rich and densely populated that number will be substantially higher. But in poorer, rural states like Louisiana you can count on it being lower. They just don't want to bother and when they have to be honest about this they say so.

So let's generously say that they plan to serve maybe 40% of Louisiana.

Which 40%? Well the "wealthy cities" a reasonable person might guess. Densely packed, relatively wealthy cities are where major buildouts are occuring.

But, and here is the real kicker: Those cities aren't available in Lousiana. New Orleans, Baton Rouge, Shreveport, Alexandria, and Lake Charles are all "old home rule charter" cities. The legislature can't force any such law on them. Lafayette was also included in the exempted cities in the 06 law and you can expect our legislators to work for that again. Even if they don't succeed this time (and I'd be surprised if they don't) AT&T would be foolish to spend a small fortune to beef up its network so it could remain the least powerful network in Lafayette. (Both LUS and Cox will have much more capable networks than the one that AT&T hopes to upgrade to.) So the big cities of Louisiana, comprising 35-40% of the population will live in places where AT&T will have to deal with local governments anyway.

In fact Baton Rouge has already negotiated a franchise agreement already. (And did so surprisingly quickly and apparently painlessly...see the bottom of the linked post.)

That 35-40% of the population is most of where AT&T will want to build anyway. And the LMA has put together a simple model franchise, it has gotten over a 100 of the remaining cities and towns to invite "cable competition" from their telephone company and to promise a quick and easy deal. That's a pretty credible invitation, if you ask me. I can't imagine the local councilman, alderman, or police juror who could manage to be reelected if he was seen blocking competition for the local cable company!



No, there is no real need to run over the rights of local communities to accomplish the goals a state-wide franchise is supposed to serve. AT&T doesn't need and probably won't use state-wide franchises--just as it hasn't used them in rural, relatively poor North Carolina.

But perhaps, as in North Carolina, the cable companies will benefit. Though the North Carolina legislators were assured that municipalities would not loose revenue, they did--they retained only about 62% of their former income from the lease of their land to cable companies as cable opted out of their contractual obligations to local communities and adopted the "good deal" offered by the legislators' law—a law that was supposedly passed to encourage the telecos to offer new, cheaper services which, in fact, they have not. That didn't work. No competition. Higher prices. Loss of local income. But the Legislators got the warm satisfaction of having been patted on the back by the big boys at AT&T.

North Carolina's legislators were played for fools. And their people were the ones who suffered. I'd hate to see Louisiana follow that path.

You can do your bit to help by calling your legislators and urging them to oppose SB 422.

The LMA says it well:
There’s ample time between now and April 23 to speak to your Senators about this harmful legislation. If your Senator is on the Commerce Committee, please contact him or her to discuss the measure. The Senate Commerce Committee’s members are – Sens. Duplessis (chair), Crowe (vice chair), Alario, Nick Gautreaux, Marionneaux, Michot, and Scalise. The Senate switchboard is (225) 342-2040.
Lafayette residents, in particular should note that Michot is our senator and Gautreaux is one of the Acadiana caucus senators. Both should hear your plea. While you're at it also oppose HB 869 by Rep. Arnold and HB 1009 by Rep. Ellington. Arnold's bill focuses narrowly on giving control of local property to corporations. Ellington is a special case: this house member was term limited out of the senate where he was the guy who signed his name to the (un)Fair Competition Act that would have prevented Lafayette from building its fiber network had it passed in the form that Ellington submitted. To see him carrying AT&T's water by introducing the house version of this franchise bill is completely in character.

4 comments:

Anonymous said...

SAME BILL WAS BAD FOR NC: After 16 months since this same bill passed in North Carolina - we have NO COMPETITION. AT&T is Nowhere to be seen. But 114 local cable companies have filed for state franchises and been deregulated.(The only enforcement is for a customer/city to sue) Our cable and phone rates have gone up 5%, PEG Channels are being slowly dismantled from lack of funding, and cities were not kept financially whole. Also no build-out requirements and current operators are even reducing their service areas. NC IS PROOF THESE BILLS ARE A BIG LIE.

John said...

Anon,

...I'm hunting for data sources and you mention 114 cable operations have dropped their local franchises in favor of the state deal. I know I've seen some such number...can you point me to the data.

Thanks

Anonymous said...

You can find the number of NC State Cable franchises here. The total is actually up to 117 now. 120 entries are listed, two are Annual Service Reports and one is a Notice of service.
http://www.secretary.state.nc.us/cable/searchresults.aspx?Name=&County=All&City=All

John said...

Thanks, anon—