Expert Comment: Blanco Veto Cheats Cable Customers

Published July 18, 2006

(July 18, 2006 – Chicago, Illinois) On July 13, Louisiana Gov. Kathleen Blanco vetoed an important piece of telecommunications legislation that had been passed by both houses of the state legislature. The bill would have reformed the way in which cable franchise agreements are negotiated, making it easier for competing providers to enter local markets.

The following comments are from telecom expert Steven Titch, senior fellow for IT and telecom policy at The Heartland Institute and managing editor of IT&T News. For more information about Heartland or to schedule an interview with Titch, please contact me at 312/377-4000 or by email at [email protected]. Titch can be reached by email at [email protected].

“It should come as no surprise that Cox Communications raised cable rates in Louisiana within 24 hours of the governor’s decision to veto a bill that would have encouraged competition.

“When government creates and protects monopolies, high rates and delayed investment are inevitable. In the end, consumers lose. Competition would have meant lower rates and faster deployment of innovative technology, such as Internet Protocol TV. Consumers win when there’s competition.

“Tellingly, while boosting cable rates by as much as $6, Cox did not increase rates on its Internet-based telephone service, the one area where it competes head-to-head with BellSouth.

“Louisiana’s experience now stands in stark contrast to neighboring states like Texas, which last year enacted a similar bill giving the state authority to grant permission for new entrants, mostly telephone companies, to compete with cable monopolies. Subsequently, Verizon launched service in northern Texas and AT&T followed in San Antonio. Not only did consumers see prices drop, they are enjoying innovations such as fiber-to-the-home and IPTV.

“In her veto, Blanco said she was more concerned with safeguarding the revenue flow municipalities receive from the existing franchise fees … even though the bill provided that franchise fees from new competitors would have gone directly to these municipalities.

“In other words, in Louisiana, the voracious demands of the tax man, combined with bureaucratic fears of any change in the regulatory status quo, trumped the documented consumer benefits of increasing cable competition.”