dslreports logo
site
spacer

spacer
 
   
spc
story category
Wisconsin Realizes 'Franchise Reform' Was A Con
As cable rates continue to soar ever higher...
by Karl Bode 09:19AM Monday Oct 26 2009
When AT&T and Verizon were pushing for "franchise reform" laws to ease their entry into the pay TV market, they spent a lot of time promising how the laws would lower TV prices. In reality, the laws were largely wish lists giving the baby bells anything they wanted, including veto power over eminent domain laws, weaker local authority, the legal right to cherry pick broadband deployment, and fewer consumer protections. But dozens of States passed the laws anyway, tempted by the promise of lower TV prices.

Not surprisingly, states who passed these laws are suddenly waking up in bed next to unattractive AT&T and Verizon lobbyists, and wondering where their lower TV prices are. Wisconsin was a particular example of bad legislation written by AT&T, given the new rules obliterated consumer protection laws that protected subscribers' rights to prompt repairs, ensured refunds for service outages, mandated notice of rate increases or service deletions, and forced carriers to provide a written notice of disconnection. Many in Wisconsin aren't happy about it:
quote:
"It was a form of puffery and everyone knows it," Barry Orton, a UW-Madison telecommunications professor who formerly did consulting work for cities opposed to the law, said of the predictions of lower prices. "And those rates prove it." One local lawmaker has sought to settle the price question with a limited legislative audit. Rep. Gary Hebl, D-Sun Prairie, is also seeking to roll back some parts of the 2007 law he says limit protections for consumers and end funding for local public access channels.
Local Wisconsin data suggests that expanded basic cable increased nearly 28 percent from late 2006 to early 2009. Instead of the vibrant competition promised, states now simply get an additional monopoly provider engaging in non-price competition, but thanks to the laws -- have less authority to take action against anti-competitive behavior, resolve broadband deployment issues, or tackle higher prices.

view:
topics flat nest 
Bob61571

join:2008-08-08
Washington, IL

1 edit

Verizon FiOS, AT&T , Wisconsin

Verizon has no FiOS in Wisconsin. Unsure how these laws benefited Verizon at all in that state.
AT&T appears to be benefiting there.

Cheeseheads, do you know?
jimbo2150

join:2004-05-10
Euclid, OH

Re: Verizon FiOS, AT&T , Wisconsin

said by Bob61571:

Verizon has no FiOS in Wisconsin. Unsure how these laws benefited Verizon at all in that state.
AT&T appears to be benefiting there.

Cheeseheads, do you know?
Although the article focuses on Wisconsin, also note that it talks about other states with the same issues. Other states that include FiOS. I don't think they were refering to Wisconsin alone.
--

- "Techie" Jim

AMDUSER
Premium
join:2003-05-28
Earth,
kudos:1
Reviews:
·AT&T U-Verse
·Time Warner Cable
said by Bob61571:

Verizon has no FiOS in Wisconsin. Unsure how these laws benefited Verizon at all in that state.
AT&T appears to be benefiting there.

Cheeseheads, do you know?
Verizon did not benefit from it,- they even sold off its WI ILEC operations to Frontier.

AT&T is benifiting, it applied for a franchise with the state, instead of the individual cities, - except SE WI, due to state law.

Several of the cable providers also applied for a statewide franchise, including Charter, Time Warner Cable, and Comcast.
»saveaccess.org/node/2219

jt45

@comcast.net
they are just using wisconsin as an example. these laws where past in several other states too not just wisconsin.

n2jtx

join:2001-01-13
Glen Head, NY

Voters

Perhaps the voters in Wisconsin should dump every legislator who voted for the "reform" law and find people who will scrap it altogether. Nah, it won't happen...
--
I support the right to keep and arm bears.
openbox9
Premium
join:2004-01-26
Germany
kudos:2

Re: Voters

You mean the voters should hold their elected officials accountable if they don't satisfy the majority of the constituency....... That's just silly talk.
jay_rm

join:2002-04-12
Netville

4 edits

no-really ?

HA-HA

told 'ya so. Foolish cheesehead pols...

{wow - a big brother edit of my edit - I'm honored you noticed. I also noticed big brother didn't edit the part that AGREED with the story}
CooterCarter

join:2006-06-17
Huntsville, AL

AT&T and Alabama

The Alabama legislosers (no liberal bunch by any stretch of the imagination) deregulated AT&T in their last session (first part of the year) taking away any oversight by the Public Service Commission.

Same old promises about it would be good for competition, etc. About 2 months after the deregulation, AT&T raised the rates for landlines. What a surprise!

Don't think there has been any deployment of UVerse and I don't think Verizon has anything in AL but cell service.

richdelb
Go Hawks Go
Premium
join:2003-01-22
Algonquin, IL

Don't blam AT&T

AT&T got exactly what they wanted. If anyone in Wisconsin has a complaint, they should look directly at Madison. EVERYONE with a plus knew that prices would not go down, but the State Legislature voted for the change anyway.

Don't blame AT&T.

Once the law passed, the blame for higher cable rates rests 100 percent with Madison.
goillini

join:2006-04-26
Madison, WI

Re: Don't blam AT&T

said by richdelb:

AT&T got exactly what they wanted. If anyone in Wisconsin has a complaint, they should look directly at Madison. EVERYONE with a plus knew that prices would not go down, but the State Legislature voted for the change anyway.

Don't blame AT&T.

Once the law passed, the blame for higher cable rates rests 100 percent with Madison.
I think it's fair to lay some of the blame on AT&T -- they're the ones that bankrolled the TV4US sock puppet. TV4US ran constant ads promising lower cable bills and urging people to call their representatives in support of the bill. TV4US also put together bogus lists of supporters (including people adamantly against the bill) and then presented its list of subscribers to the legislature.

Yes, the fault is mostly with the nimwit legislators who voted for the bill, but AT&T isn't blameless here, either.
decifal

join:2007-03-10
Bon Aqua, TN
kudos:1

but but

(ATT fan boy)

But, but, its has more than double ATT's profits by ripping people off!! We clap our hands and walk sideways for you guys! Our service is great for all and all for non! People not living within the city just cry because they don't get any of the fun features we offer.. Too bad, if you don't like it switch to another provider... Oh thats right, your stuck with us LOL.. Guess you can always do without! I have another solution that we love to tell people.... MOVE!!!! Ahahahahhaahhahahahahahahaha

(/end ATT fan boy)

Alakar
Facts do not cease to exist when ignored

join:2001-03-23
Milwaukee, WI

1 recommendation

As usual Karl cherry picks the facts....

Editorials aren't journalism Karl. If you want to be a journalist, you need to present all the facts; not just the ones that support your point of view.

First off, the article that you quote doesn't say "Many in Wisconsin aren't happy about it". Right after the section you quoted is this opposing view:

But critics say Hebl's wide-ranging bill would harm the cable industry and prove a setback to the video competition law just as it is starting to work.

"It's so mindboggling to me that just when we're starting to see some of the fruit blossom on this tree, there are some people who want to chop the thing down," said Sen. Jeff Plale, D-South Milwaukee, a co-author of the 2007 law.
In addition, the study you and the story from the The Wisconsin State Journal quote are using numbers that include a full year of price changes prior to the Wisconsin law going into effect. Since Wisconsin wasn't a subject of the study, and only used for comparative purposes we don't have numbers to show what price changes are like only since the law went into effect. The 28% quote that you use also doesn't take into account inflation, which the study does. Adjusted for inflation the increase is 19.3% overall and 17.54% on a per channel basis.

The subject of the study was 3 states: California, Texas and Michigan. It shows prices rose dramatically in California, moderately in Michigan and dropped in Texas. The study also shows price changes for all states that have passed this type of reform (including Wisconsin) to compare to Minnesota (which hasn't passed a statewide franchise law). Minnesota ranks 5th in price increases, well ahead of Wisconsin at 13th. There are also 12 states listed that show prices drops after passing statewide franchise laws.

Here is the conclusion from the report:

»www.hhh.umn.edu/centers/stpp/pdf ··· port.pdf

Table 3 reports the results of this procedure. It is clear from these calculations that SVF does not necessarily
lead to increased competition, which in turn is expected to lead to lower prices. This is the conclusion that the
newly published FCC report reaches as well. California and Michigan both experienced nominal and real price
increases in video services even while statewide franchising was available. Real prices (corrected for core inflation)
grew by 69 percent and approximately 22 percent for California and Michigan, respectively, over a twoyear
period. Commodity bundling by telecommunications companies and expensive infrastructure build-outs
by telecommunications companies (particularly Verizon) can lead to higher prices even when there is increased
rivalry. In this environment, the incumbent (cable) providers do not have an incentive to lower their prices,
since their rivals are raising theirs. Escalating prices can be the result of this type of oligopolistic competition.
In the case of Texas, real prices fell by 7.4 percent over the three-year period that state-issued franchises had
been attainable. There are several cable companies vying for market share in Texas. The FCC report shows
that overbuild by cable companies was the main correlative factor in the reduction of video service prices. In
addition, it is possible that the longer time horizon for competition to take hold in Texas allows prices to eventually
fall as competition heats up. Nevertheless, there is no one outcome in the data; the presence of SVF is
not necessarily correlated with lower video service prices.

Real prices do not correct for all of the systemic changes in the market for video. It is possible that higher prices
reflect higher quality services. That is, video service customers might be paying higher prices and getting
access to more programming—more channels. The price data were, therefore, corrected for changes in the
number of channels provided. The second page of Table 3 shows nominal and real changes of video service
prices, based on a rate-per-channel calculation. Interestingly, all three states see prices increase, with Texas
now presenting the most dramatic increase in prices. That would be the case if there was little movement in
the number of channels offered, while prices escalated. It should be noted that if changes in prices and the
number of channels in Texas are calculated from 2006 instead of from 2005, then the dramatic increase in
quality adjusted prices vanishes.

This quality-adjusted price calculation tells an interesting story about the markets in only three states. Yet,
what happened in the other states that have SVF? How do price changes in Minnesota—which does not have
SVF—match up with those in other states that passed statewide franchising laws? Table 4 presents a cross
section of pricing calculations from December 2006 to January 2009, even for those states that initiated SVF
in 2005. For comparison’s sake, calculations for price changes are included with those for states that have SVF
and Minnesota. The states are rank ordered from largest to smallest change in real prices on a rate per chanel
basis.

Interestingly, Minnesota’s real price increases during the two-year time period rank near the top.22 Yet there
are two states—California and North Carolina—that have even higher increases in video service prices. This
begs the question: Would statewide video franchising lead to downward pressure on prices in Minnesota?
Based on the analysis in this report, the answer to this question depends on which companies would enter the
market, the nature of technology utilized by the companies and the type of products offered.
It looks to me from this report that there is no solid conclusion that SVF lead to lower or higher prices. In some states prices have gone up, in others they've gone down. In some cases the laws haven't been in place long enough to show what the final result will be.
--
"Necessity is the plea for every infringement of human freedom; it is the argument of tyrants; it is the creed of slaves." William Pitt the Younger

ArgMeMatey

join:2001-08-09
Milwaukee, WI
kudos:2
Reviews:
·voip.ms
·AT&T Midwest
·Time Warner Cable

Re: As usual Karl cherry picks the facts....

It is hard to draw conclusions, but I've been following the comments of Barry Orton for years and I don't see a lot of evidence to contradict his points.

It was disappointing to see grass-roots regulation usurped by politicians hungry for campaign donations. There are issues affecting one's domain where there is a big difference between one-size-fits-all and local control. Yes, there are fiefdoms but they're still more democratic fiefdoms to most people than the state legislature.

A carrier is going to benefit from having to answer to fewer regulators. But citizens benefit more from local control than they would from lower prices: Even as video sources continue to diversify, 'lower prices' still just means smaller increases.

The HHH report discusses "higher quality" possibly being a factor in prices not dropping. Well, once they've tackled the barriers to entry, any gravy they can ladle on to retain market share will pay off grandly as opposed to an actual drop in revenues.

My point is that increasingly providers push cheap bastards like me from saying "Who's got a better deal?" to "The cost-per-channel-I-actually-want is ridiculous" when you add in all the bells and whistles. But on the other hand, the key factor working in providers' favor is that most TV fans are too lazy to get off their butts and unplug.

So yeah, regulate them until they bleed. If their accountants tell them it's not worth it to make money here, they can go somewhere else. It's pretty much a reverse sewer anyway; I pay a princely $17 a month to have mostly sh*t pumped into my house.
--
USNG:
16TDN2870
Find your Lat-Long:
Geocoder

Re: As usual Karl cherry picks the facts....

Of course, Barry Orton used to get paid to negotiate contracts for cities. No wonder he hates the change that took his business away. Oh for the good old days when cable rates went up and Barry got paid. The cable companies may be money grubbing whores, but Barry is a money grubbing whore too. The difference is the Barry tries to hide it.
hottboiinnc
ME

join:2003-10-15
Cleveland, OH
That's why BBR and Savethecap.com and other sites of such are NOTHING but a BLOG

Bill Neilson
Premium
join:2009-07-08
Arlington, VA

Re: As usual Karl cherry picks the facts....

Blogs that have employees of these companies on here posting

marigolds
Gainfully employed, finally
Premium,MVM
join:2002-05-13
Saint Louis, MO
kudos:2
said by Alakar:

There are also 12 states listed that show prices drops after passing statewide franchise laws.

...
It looks to me from this report that there is no solid conclusion that SVF lead to lower or higher prices. In some states prices have gone up, in others they've gone down. In some cases the laws haven't been in place long enough to show what the final result will be.
You misread the table. That table has all 50 states, not just the 28 that passed statewide franchising.
Of those 28 states, the only state that say a real value decrease in the price of expanded basic was Florida (-1.84%).
More telling, of the 18 states that had less than a 10% real value increase, only Florida, Virginia, Texas, Iowa and Kansas had state wide franchising. 5 of 28 with statewide franchise; 13 of 22 that did not.
--
ISCABBS - the oldest and largest BBS on the Internet
telnet://bbs.iscabbs.com
Professional Geographer
Geographic Information Science researcher
jjeffeory

join:2002-12-04
USA

Not news

They knew about this before it passed. When I was there, I remember hearing the arguments on the radio about how this 'reform' wouldn't lower prices and would hurt consumers. They even showed studies from other states. They showed that this Franchise reform would not work. ...and it didn't. No ONE should be surprised. I'm certainly not.
old_wiz_60

join:2005-06-03
Bedford, MA

how much did they pay?

How much did the lobbyists pay to get the laws passed? Was it cash, drugs, hookers, or what?

Zen6

@rr.com

Re: how much did they pay?

Money well spent. Does anyone here actually believe legislators pass anything out of the goodness of their heart.

88615298
Premium
join:2004-07-28
West Tenness

1 recommendation

local franchise authority is con too

All my local franchise authority does is collect their fee. Every year fewer channels and higher prices. Places still waiting to get cable that should have had it YEARS ago. So exactly what has my local franchise authority been doing for my benefit exactly?

ArgMeMatey

join:2001-08-09
Milwaukee, WI
kudos:2
Reviews:
·voip.ms
·AT&T Midwest
·Time Warner Cable

Re: local franchise authority is con too

I agree that local franchise authorities don't do much of anything, and I know that here the money collected just goes in the general pot.

My point about local regulation is that if somebody does actually gives a damn, it's a lot easier to influence a local authority than to have any impact on a statewide authority. This is a particular concern with VRAD placement. Sure, there are NIMBY issues but for a profitable video service it's not reasonable that a handful of property owners should bear the brunt of placement of ugly cabinets that serve hundreds of customers. Not that I want to rehash that whole argument.

Maybe if there had been a more active role for local franchise authorities things would have been different.
--
USNG:
16TDN2870
Find your Lat-Long:
Geocoder

hdman
Flt Rider
Premium
join:2003-11-25
Appleton, WI

I live here....

Before this reform, each town, city or village negotiated contracts with each, any, and all providers who wanted to service their area. Cities added a tax which was simply passed on the public, villages and towns pretty much negotiated for ANY services they could get. For example, a town could say that if 13 homes existed in a mile piece of road, then those houses would be required to be serviced by the cable operator. With the "reform" that all went away. The monster, AT&T, simply attacked large markets with Uverse. They are doing little to nothing to service rural areas and Charter basically dissappeared never to be heard from again. There are no rules which require service in rural areas, so rural people ended up getting screwed by the democratic State legislature who allowed this stupid reform. PLUS, it allowed AT&T to "act" like they were supporting rural folks by offering a re-branded WildBlue.....yippee....
--
The proper way to break in a Harley: Grab a fist full of throttle, and ride it like you stole it!!!