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Texas Association of Telecommunication
Officers and Advisors(TATOA)
P.O. Box 1088, Austin, Texas 78767
January 22, 2008
Dear Tennessee colleagues:
I understand that you are considering legislation that would undo the current
system of local franchising for cable television services in favor of a state-issued
certificate for new entrants such as AT&T. Because Texas is frequently
referenced by proponents of this legislation(such as AT&T and “astroturf”
groups like TV4US) as a “success story” for state-issued franchising
legislation, we felt it would be important to correct some popular misconceptions
about our experience in the Lone Star State.
While there are those who suggest that usurping the traditional role of local
officials in approving local franchises (which include anti-discrimination
provisions, customer service standards and the carriage of public, educational
and governmental channels) has showered the state of Texas with benefits without
any costs whatsoever, the reality is in fact quite different.
For starters, video prices have not decreased anywhere near the 25 to 50 percent
suggested by telephone companies. In fact, nearly every video provider operating
in Texas has raised its prices in the past two years. This includes AT&T
and Verizon, the major proponents of Texas SB 5. AT&T has raised the prices
it charges for U-Verse, and Verizon has raised its rates for FiOS twice in
the past year and a half, including a most recent price hike of 11.6 percent,
leading one major analyst to comment that “the increase should serve
as a reminder (in regulatory circles) that the forces driving price increases
are not limited to a ‘lack ofcompetition.’”1
Furthermore, in May 2007 the Texas Association of Telecommunications
Officers and Advisors released a survey of cable rates from more than two
dozen municipalities throughout Texas. Our results showed that in the more
than two years since Texas passed SB 5,the vast majority of Texas residents
have witnessed only further increases in the rates they pay for video service
from both incumbent operators and new entrants like AT&T and Verizon.
Two and a half years since Texas passed SB 5, AT&T U-Verse service has
been deployed in only parts of San Antonio, Houston, Dallas and Austin. Within
those regions, we have little to no assurance that low- and middle-income
neighborhoods will ever receive service,
since state-issued franchise legislation exempted new entrants from anti discrimination
(or “build out”) obligations. We are not permitted to require
AT&T to serve all residents or all income categories, and have no access
to AT&T’s deployment plans. In short, we have little ability to
protect low-income residents from discrimination that would deny them the
benefits of competition to which their wealthier neighbors get access.
1 Bernstein Research, 11/20/2007
Texas Association of Telecommunication Officers and Advisors(TATOA)
P.O. Box 1088, Austin, Texas 78767
On top of these alarming trends, PEG channels have been put at risk of going
dark. On January 5, 2006, Time Warner under its state-issued franchise dropped
the City of San Antonio public access channel based on the argument that the
City failed to provide eight hours of daily programming as required by SB5.
It took 6 months of negotiations to get the channel back on the air. And when
customers suffer from poor customer service or technical problems and place
a call to their local municipality for help, state-issued franchise legislation
prevents local officials
from enforcing any customer service standards whatsoever.
As the first state in the nation to have state issued franchising, we have
perhaps the best vantage point to assess the legislation’s strengths
and weaknesses. Two and a half years later, there is little evidence of widespread
investment throughout the State, competition or price cuts, and much evidence
that the role of local officials in protecting consumers has been undermined.
Since day one, we have wholehearted endorsed the prospect of increased competition
from telephone companies entering into the video business. Grande Communications
has been
successful in providing competition to Time Warner since the 1990s and Verizon
received a franchise from the City of Keller and began offering its FIOS there
before SB5 was passed.
There is no evidence that local franchising is standing in their way of providing
competition.
Many thanks for your consideration of our experiences, and best of luck in
the 2008
legislative session.
Sincerely,
Margaret Somereve
TATOA President
How will AT&T's Legislation affect
Channel 9?
Dear Editor:
Your recent article regarding AT&T’s proposed legislation stirred a response from Paul Stinson, Manager of Regulatory and External Affairs for AT&T. On January 7th, a meeting was held with Mr. Stinson, Mr. Keidel, a concerned parent and me. After the meeting I sat down and composed a list comparing the status quo with what AT&T has proposed for Access channels like WBHS9.
Currently:
Comcast provides a fiber optic line for WBHS9 to send its signal to the Comcast distribution center. It also provides the modulator necessary to send and receive the signal. Comcast also provides a dedicated return line so that WBHS9 can monitor it’s signal to ensure it is being broadcast properly. Should there be an equipment failure or line failure, Comcast repairs or replaces this equipment with no expense to the high school.
AT&T:
WBHS9 would have to purchase new equipment in order to send its signal to AT&T’s distribution center. Mr. Stinson estimated that a “low end” version of the equipment would cost around $20,000 to $25,000. Additional equipment would be necessary and this would also fall to the high school to purchase. In addition, the school would be responsible for paying a monthly delivery fee to AT&T for sending its signal to the distribution center. That fee has not been determined. AT&T’s new cable system, according to Mr. Stinson, is not designed to provide for multi-use buildings and they do not intend to provide service to schools. In short, WBHS9 would have no way of monitoring its actual signal delivery on AT&T’s cable system, unless WBHS9 pays for a cable subscription to AT&T.
Currently:
Comcast provides not only the dedicated return line for WBHS9, but it also provides free cable service to Brentwood High School.
AT&T:
AT&T’s U-Verse system technology is very limited. A single line to a building can only handle two different channels at the same time, only one HD signal at one time.(it should be noted that Stinson claimed the limit was four, but research shows the limit is two) Because of that limited ability, the new legislation is being written so that Cable companies do not have to provide for service to schools. Brentwood High School will soon have to pay a subscription fee for each TV that has cable service.
Currently:
WBHS9 has begun to receive some limited funding from the owner of channel 9, the City of Brentwood. Typically, funds of this type come from the franchise fees collected by the local government agency that negotiates the cable contract.
AT&T:
Funds for channels like WBHS9 would have to be charged above the cable providers fee with the passage and approval of an additional tax passed on to users.
Currently:
WBHS9 is provided a single channel location, just like any other broadcast organization on Comcast. We are currently seen on channel 9 throughout Williamson County. Comcast provides a signal delivery system that makes our signal equal to all other channels.
AT&T:
The U-verse system being touted by AT&T would place all channels like WBHS9 on one channel. Currently in Michigan and California the system works like this. You go to channel 99 or 316. The screen stays black for between 30 and 40 seconds. Then you are offered a list of channels like WBHS9 to choose from. Then you select the one you wish to view. After your selection is made, the station appears on your screen, except it is not full screen. The channel signal would encompass roughly one-quarter of your screen size. You can then make the picture close to full screen, but the picture quality will degenerate, much like when you increase the picture size on your computer. It has been reported that in a demonstration of this system it took seven remote clicks to get to channel 99 and then finally reach your channel selection.
Currently:
Plans have been under way to make WBHS9 a High Definition channel. We have already purchased editing software and are moving to purchase HD cameras. This will make WBHS9 comparable to the other broadcast channels being offered on cable.
AT&T:
Does not have the technology in their system to provide High Definition signal delivery for WBHS9.
Overall, the simple conclusion from my research and meetings with AT&T is as follows:
With local control over cable companies, local people can provide what local consumers want. In our situation, that is local information, local sports, local news, local events. That is a major selling point of cable operations versus satellite providers.
AT&T sees channels such as WBHS9 as unwanted step children that take away from their earning potential. Burying all channels like WBHS9 on one channel, reducing their picture quality, not providing delivery systems, establishing a system that demands huge investments in funds, all point to that philosophy. Specific example, AT&T will certainly provide HD service for all other channels except WBHS9 and why is the AT&T system designed to reduce the picture size of our signal?
From a philosophy side, I struggle to get past the short sightedness of this approach by AT&T. The short term cash result for AT&T may well be more money revenue, but where does this company plan to obtain a skilled work force when it sets itself on a path of destroying the educational programs that currently provide employees? Clearly, AT&T is neither interested nor involved in the education of Tennessee’s children. It has designed a system to make money, and if that means some training programs in Brentwood get eliminated, so what.
Mark Madison