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Telecom legislation will leave many consumers worse off

June 9, 2006

Consumer Groups Decry House Passage of Video Bill That Makes Average Consumers Worse Off
Legislation will Produce Cable Rate Hikes, Deny Competition to Low-Income Communities and Reduce Choice on the Internet

Washington, D.C. ― Consumer groups decried House passage late yesterday of telecommunications legislation that will leave many consumers worse off, facing cable rate hikes, declines in service quality, inadequate consumer protections, and reduced access to competitive Internet content and services.
The House passed H.R. 5252, the Communications Opportunity, Promotion and Enhancement Act, legislation that allows telephone companies to offer video services in competition with cable companies without negotiating with local communities before doing so. The Act replaces the local process with a federal system that eliminates fundamental state and local consumer protections and service requirements without imposing comparable federal protections.
“By granting telephone companies a license to redline, the COPE Act offers only false promises of sorely needed cable competition,” said Jeannine Kenney, senior policy analyst for Consumers Union. “In reality, consumers who most need the benefits of competition, are the least likely to see it. Instead, their already bloated cable bills will get even bigger, their service quality will decline further, and their recourse against cable and telephone company abuse will disappear.”
The COPE Act eliminates local authority to require that telephone companies offer their video services to all consumers within a community ― an obligation that prevents redlining of low-income and minority communities; strikes state and local authority to establish and enforce strong consumer protections, providing sole standard-setting authority in the Federal Communications Commission; eliminates existing local requirements that incumbent cable providers continue to offer cable service to all consumers in a community, allowing cable companies to withdraw cable service or refuse to upgrade service to the households they currently serve; and eliminates requirements that cable companies offer all consumers within a community the same price for the same services, allowing them to hike rates to consumers the telephone companies’ refuse to serve to offset price breaks offered in areas with competition.
“This legislation slams the door on any meaningful video competition and opens a wide window to anti-competitive discrimination over broadband networks,” said Mark Cooper, director of consumer research for Consumer Federation of America. “The House turned an opportunity to foster vibrant competition in both video and Internet services into a major give-away to giant telephone and cable companies who’ve demonstrated for decades that they’ll use their market power to shut out competition whenever they can. This legislation gives them nearly unlimited ability to do so.”
In one of the most contentious battles over the legislation, the House rejected by a vote of 152-269 a “network neutrality” amendment offered by Congressman Ed Markey (D-MA) that would restore federal rules that prevent telephone and cable companies that own broadband networks from discriminating against content and service providers in favor of their own commercial offerings.
“The public favors an open and neutral Internet and does not want gatekeepers taxing innovation and throttling the free market,” said Ben Scott, policy director for Free Press. “The House has seriously undermined access to information, competitive and innovative services and democratic communication. Despite the revisionist history propagated by the telephone companies, until last year, telephone companies had always been required to operate their networks in a neutral manner. It is the central reason for the Internet’s overwhelming success. Last night, Congress handed over control of the Internet to a handful of giant cable and telephone companies.”
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Jeannine Kenney
(202) 238-9249
Ben Scott
(202) 265-1490