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Vote leaves low-income, rural consumers further behind in digital divide

April 26, 2006
House Panel Vote Leaves Low-income, Rural Consumers Further Behind in Digital Divide
Also Lets Cable and Telcos Block Consumer Access to Competitive Internet services
(Washington, DC) – Consumer groups today decried the House Energy and Commerce Committee’s reporting of legislation that eliminates basic consumer protections in cable services, which will lead to higher cable prices, reduced service quality and fewer choices of competitive Internet-based telecommunications and video service providers.
“Consumers frustrated with skyrocketing cable rates and lousy service will get more of the same, or worse, under this bill,” said Jeannine Kenney, senior policy analyst for Consumers Union.
The Committee reported the Communications Opportunity, Promotion and Enhancement Act, which exempts telephone companies seeking to provide cable services from long-standing consumer protection requirements, such as commitments to offer service to all neighborhoods regardless of income traditionally negotiated and enforced by local communities.
“This bill strips away basic protections that have prevented cable companies from discriminating against consumers within their local markets, without guaranteeing the average family will ever benefit from promised competition from the phone companies,“ added Kenney.
The legislation allows telephone companies to offer cable without any commitment to provide service to all consumers. Consumer groups say this allows phone companies to redline low- and middle-income families that cannot afford the costly package of cable, telephone and Internet services the companies want to sell.
“This action virtually ensures that low- and middle-income families who most need the price relief that new cable competition brings will be the least likely to receive it,” Kenney said. “Worse, the legislation gives free reign to existing cable monopolists to hike rates and degrade service for those consumers not served by new video providers.”
And once a telephone company offers its video services to just one household in a market, existing cable monopolies are allowed to backslide on their decades-long obligations to offer and upgrade their service to all consumers in the community, and to charge everyone the same price in those service areas. That allows cable companies to hike cable rates in areas left unserved by the telephone companies, and in turn, subsidize the price breaks they’re offering in wealthier neighborhoods where they must compete with phone companies.
Bill Allows Phone and Cable Companies to Block, Impair Access to Internet-based Competitors
The legislation also failed to restore strong “network neutrality” protections­ to ensure that telephone and cable companies that own broadband networks cannot block or impair consumer access to competitive Internet-based services, like VOIP phone service and low-cost video download sites. Consumer groups sought the protections since the Federal Communications Commission eliminated them in 2005.
“The Committee’s action today quashed consumers’ last, best hope for more competition and more affordable prices in telephone and video markets,” said Mark Cooper, director of consumer research at Consumer Federation of America. “Without strong protections to prevent giant cable and telecommunications companies from blocking their competitor’s access to customers, consumers can expect less, not more competition and innovation from the Internet-based companies.”
Bill Rolls Back Consumer Protections
The bill gives the FCC sole authority to set consumer protection standards that states and localities have traditionally set and enforced. The bill prohibits states and localities from establishing and enforcing stricter consumer service requirements.
“Consumers will have no one to turn to with their service and billing complaints,” said Ben Scott, policy director of Free Press, a public interest group focusing on telecommunications issues. “The average consumer will not call the FCC to complain that their cable company overcharged them. They’ll call City Hall, which won’t be able to offer them any relief.”
The Senate is expected to take up the broadband video competition in the coming weeks.
For more information go to www.HearUsNow.org, a Consumers Union web site dedicated to telecommunications issues.

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