Wisconsin Legislature Holds Public Hearing on AT&T's Video Bill

The Wisconsin Assembly Committee on Energy and Utilities and the Wisconsin Senate Committee on Commerce Utilities and Rail are holding a joint public hearing today (Tuesday) on AB/SB 207, the AT&T-backed, fast-tracked legislation that would create a new, almost entirely unregulated state-level franchise for video service and eliminate the current system of municipal cable franchises.  We've bored you with the subject again and again and again.

The hearing is in Room 412 East at 10 am. That's where I'll be until the last high school-aged access producer testifies.  I'll post my testimony later, after it's been capsulized for the hearing and distributed.  I'm told we'll have about three minutes each, so I'll read key sentences from each paragraph of my 2-page statement.

In Saturday's Wisconsin State Journal, Mark Pitsch did a very good job outlining the problems with the bill:

Wisconsin residents would lose their rights to cable television repairs within 72 hours, credit for service interruptions and advance notice of rate increases, under a bill on the fast track in the state Legislature.

The proposal, designed to increase competition in an industry dominated by cable companies, is supported by the lobbying muscle of telecommunications giant AT&T.

It's part of AT&T's challenge to cable companies such as Charter Communications, which are licensed by local governments.

There is little agreement on whether the proposal would help consumers or hurt them.

Local governments worry the so-called "video franchise" bill would lower the payments they get from cable providers up to 30 percent, which they say would mean cutting city services or increasing property taxes to cover the losses, they say.

Opponents also say the bill would mean less money for low-budget public-access channels.

One part of the story leaped out at me:

Cities that negotiate licensing agreements with cable companies don't have a reason to negotiate lower rates because they get a portion of revenues, Montgomery said.

"What incentive has there been on the city's behalf to hold down rates? None. That's their cash cow," he said.

Surely Representative Montgomery, the prime sponsor of AB 207 and the Chair of the Assembly Committee on Energy and Utilities, knows that cities are prohibited by federal law from being able to "negotiate lower rates."   If he doesn't know, he should, since one of the basic assumptions behind his thinking is wrong. If he does know, maybe he was misquoted; Rep. Montgomery wouldn't be distorting the facts to fit his arguments.

Aside from all the nonsense about consumers saving money, the most outrageous parts of the bill are:

     1. The placement of regulation in the Dept. of Financial Institutions (DFI)  with specific language that prohibits the DFI from enforcing or interpreting the law, or reviewing the qualifications of applicants, or reviewing new owners of franchises. Under AB/SB 207, the DFI could issue a statewide franchise, file it in a cabinet, and do almost nothing else. It's a particularly egregious case of legislative chutzpah (look it up) that would result in video services being not deregulated, but unregulated. Senior legislative staff have told me this level of handcuffing of a state agency has never been tried before.

    2. Eliminating consumers' rights to get rebates if the service goes out, get 30 days notice if the rates go up or services get dropped, and get 10 days notice when they are disconnected for non- payment, and only after being 45 days late paying.  That's all in State Statues 100.209 and the bill eliminates it all.  Those subscriber rights were enacted in 1991 with support of the cable industry.  If this passes, cable and phone/video customers would have no rights other than take providers to court and sue them.

- Barry Orton

Comments

[John Foust]

I parked myself in the hearing from 9:30 until 4:30. It's frightening to watch the sausage being made. It was horrifying to hear Rep. Phil Montgomery (R-Ashwaubenon) describe how they'd written the bill over the course of many months of meetings with AT&T, and how other interested and affected parties were deliberately excluded from the process. He said there were lots of "gets and puts" with AT&T but given the language and loopholes in the bill, it's hard to imagine how that was done.

When AT&T asked for the clause that said that DFI couldn't reject any application for any reason, or to ever make a rule to control a franchise, what exactly was Montgomery's response? When AT&T asked for a half-dozen excuses to never carry an existing PEG channel, what exactly was the give and take? Over and over I imagined an AT&T lobbyist slipping a pre-written bill into Montgomery's coat pocket along with a campaign contribution.

It was scary to hear Rep. Montgomery laugh about how he'd first learned what YouTube was just a few weeks ago. We can't expect every lawmaker to be smart about technology, but I think we should expect them to seek experienced advice. I don't know how any guy from Ashwabenon can be expected to understand a century of telecom law, but he does seem confident that he's smart enough to write a law that'll undo decades of complicated and subtle court precedents, hundreds of contracts made between cable providers and cities, and decimate PEG channels all around the state. Montgomery and Sen. Plale rolled their eyes at yet another PEG producer giving testimony about the wonderful high school programs they produce, but Montgomery said his 17-year-old son made shows at his local PEG station.

Franchise fees are a line item on your cable bill. Yes, they are in effect a local tax, created and approved by city councils across the state. It's not as if the cable companies are paying them. They just pass them along. Yes, the FCC allowed cities to collect this and they put no restrictions on how it should be spent. Some use it all for PEG, some use a little, and some keep it all for general revenue. Yes, cities are still reeling from the limits and reductions in shared revenue from the state, so they're eager to take any allowed revenue source up to the maximum - in this case, 5% of gross revenues of franchise holders. If Montgomery really wants to shave the bottom line of consumer cable bills by 5%, he should convince city governments to reduce their franchise fee to zero percent. Instead, this bill doesn't affect the franchise fees paid to cities. If they'd proposed to eliminate them, cities would have screamed very, very loudly. But there's always the possibility that AT&T has written themselves a loophole or plans a larger court case that ultimately exempts themselves.

Competition? Lower prices? Doesn't everyone welcome that? The word "monopoly" was tossed out again and again by proponents of the bill, but there isn't a city in Wisconsin that has an exclusive contract with a cable provider. If AT&T wanted to enter a city, as they did in Milwaukee, the established method to do that was to negotiate a franchise agreement. The very definition of "monopoly" implies a sole supplier of a good without reasonable substitutes, and in which there's some barrier to entry into that market. Yet again and again Montgomery made the comparison to satellite video providers, claiming they were 30% of the market of people who pay for video. If there are alternatives and no barriers to entry, there's no monopoly. Yes, there are many rural locations without cable and satellite is the only choice apart from off-air TV.

Level the playing field? Sure, why not. Except for those new closet-sized AT&T fiber boxes at first base and third base that we can't control. And it was laughable to see astroturf organizations like TV4US, pulling the old "Miracle on 34th St." trick of hauling in the dolly with 30,000 postcards from "people who want choice". Who paid the $10,000+ to print and mail those pre-paid reply cards?

[A friend of the people]

What is real HDTV?
The definition of HDTV is relatively new. AT&T say's they are re-inventing it. What does that mean? Think freeze dried coffee.

You can get a lot of coffee into a little jar. All you need to add is the water that has been removed. So it goes with AT&T's new version of HDTV. You might go to the TV store and plop down good dollars for a great picture. You might even replace all your TVs with the new technology. Like any good tv you give it a good signal it gives you a
good picture.

That's the way it was. With AT&T's proposed U-Verse, which may get an incredible sweethart deal from the state legislature unless you all act loudly, the TV signal is shared with the Internet signal and the Telephone signal and all of those signals in all the other rooms of your house.

To make it happen they are using new compression schemes that take the TV signals and make them smaller. That way, as with freeze dried coffee, they can fit more into the jar. How much more?

That's the hitch. You can watch one HDTV channel in the house. With some tweaking they might get us the ability to watch two HDTV channels in the house at the same time. But are these really HDTV? Well... no, but they might look good... until you try looking at a third TV, recording, surfing the web or talking on your phone. Do all of those, or just a few, and you will soon see your internet slow down. You might see, as some have, your TV pictures with a series of block-like defects.

This is because the sweetheart deal that the senate and assembly bills give to AT&T lets them sell more services with less line capacity than our citizens deserve.

If the state is going to be giving passes to avoid consumer protection and peg support, then the state better make sure they are getting something in return. This state needs better connectivity, especially in rural and other underserved areas. By backing this bill the state will be allowing the company to do what it wants... no better service required... no oversight... no consumer protections.

This is just a bad deal for our citizens and our communities and municipalities. The communities would otherwise be regulating the companies and making sure that we get the best deal for our citizens.

Soon state law will forbid any such protections and good community deals. What are these folks thinking? Sell the store for some campaign contributions? Why not? Isn't that the way things work these days?
We should get more.

And now the worst. AT&T has been in the cable business, but sold their systems off. AT&T has been in the satellite business, but their shareholders forced the sell-off because so much of the revenues were coming from the sale of porno. This is a sweetheart deal for a company that might say, as they have in the past, that this service is something they don't want or need anymore.

Cable companies come and cable companies go. The municipalities have great experience in dealing with those changes. The state has no such experience. Is it any wonder why AT&T wants to cut a deal with the State?

Heaven might help us on this, but let's help ourselves by letting our assembly people and senate people know we should get better from them.
AT&T may contribute to their campaigns, but taxpayers pay for their health care benefits.

Make no mistake. Connectivity and bandwidth are important enough to fight for. Access is important enough to fight for. We are losing domestic jobs to far away places because, in part, they are wired better than we are. This AT&T deal steps us backward in technology rather than ahead.