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House bill promising relief from high cable bills & more price competition, fails to deliver, consumer groups say

March 30, 2006
Jeannine Kenney, CU 202-462-6262 – kennje@consumer.org
Ben Scott, Free Press
Mark Cooper, CFA (301) 384-2204

House Bill Promising Relief from High Cable Bills &
More Price Competition, Fails to Deliver, Consumer Groups Say

(Washington, DC) – Consumer groups today told a House panel that Americans frustrated with skyrocketing cable TV prices, spotty customer service and limited choice may just get more of the same under a new bill that allows telephone companies to offer video services.
Consumers Union told a House Energy and Commerce Subcommittee that although new video services offered by telephone companies could offer consumers relief from cable rate hikes, the Communications Opportunity, Promotion and Enhancement (COPE) Act may represent a significant step backward for consumers.
“Congress has the opportunity to pass legislation that could provide new choices and lower prices for consumers frustrated by a decade of spiraling cable TV bills, but this bill rolls back important consumer protections without providing any assurance that average families will ever benefit from telephone company video services,” said Jeannine Kenney, senior policy analyst for Consumers Union, who testified on behalf of Consumer Federation of America and Free Press.
“The bill not only fails to ensure that consumers will benefit from promised new video competition, it exposes them to the risk of higher cable rates, reduced quality and reduced access to competitive choices offered through the Internet,” she said.
The legislation allows telephone companies to enter the cable TV market without negotiating with local communities on where and how video services will be provided, as cable companies have been required to do for decades. That process, called video franchising, is the subject of a massive TV advertising blitz by both the cable TV and telephone industries, who are hotly vying in Congress over the issue.
The consumer groups said the bill fails to ensure that telephone companies offer?or build-out? their new services under a proposed national franchise agreement to all consumers within a franchise area. Under current law, communities have the authority to require video providers to do so through the local franchise process.
“Without reasonable requirements that telephone companies build-out their video services to all consumers within the community,” Kenney said, “telephone companies will be free to redline middle and low-income neighborhoods, denying competition to consumers who most need cable rate relief.” Kenney noted that, to date, telephone companies have offered their new video services to largely affluent communities.
The measure also allows monopoly cable providers to backslide on their existing obligations to serve the entire community and charge consumers uniform rates across a franchise area. Kenney said that as soon as a telephone company offers service to just one customer in the franchise area, the incumbent cable provider will be free to deny service upgrades to lower income communities and increase their rates, while upgrading and cutting prices in areas where they compete with telephone companies.
The consumer groups lauded a provision in the bill that protects the right of local communities to build their own broadband networks, but said the legislation’s so-called “network neutrality” provisions fail to ensure dominant broadband companies won’t block or impair consumer access to competitive video, telecommunications and other services offered over the Internet.
“Rather than provide for meaningful protections to ensure that large cable and telecommunications companies don’t use their network ownership to impede competition, the bill strips the Federal Communications Commission of its authority to establish meaningful rules to protect consumers from these discriminatory practices,” Kenney said. “Without meaningful network neutrality protections, consumers will have fewer choices of innovative and affordable services offered over the Internet and will likely face higher rates.
The groups also said the measure scales back existing consumer protections, most notably the ability for states and local agencies to impose more stringent customer service standards on local cable companies.
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