Despite cable bill, status quo likely in River parishes

Published 12:00 am Friday, June 20, 2008


Staff Reporter

LAPLACE – Louisiana lawmakers overwhelmingly approved a bill recently that will allow AT&T and other telecommunications companies to obtain statewide franchises to provide cable and video services to Louisiana residents without first negotiating rights of way with individual municipalities.

While the bill clears the way for AT&T to compete with local cable companies and offer its new U-verse video service, it remains unclear whether the River Parishes will see any immediate changes to the cable landscape and how significant those changes could be.

Several telecommunications officials in St. John the Baptist and St. James Parish said they did not expect to see any immediate influx of cable providers given the current competition and nature of the market.

Bill Ironside, president of Reserve Telecommunications, said there would not be “a tremendous amount of impact” in St. John from the bill. He said AT&T would be unlikely to introduce its video services in St. John and also seemed unfazed by the prospect.

“They would not be where they want to be,” he said referring to existing competition between RTC and Comcast in St. John. “If you’re going to pick a fight, you want to pick one you’re going to win. For [AT&T] to roll out service all over the state would be extremely expensive.”

Bill Oliver, president of AT&T Louisiana, in a telephone interview declined to discuss the company’s future plans for the River Parishes, saying it was still too early to divulge any deployment strategies. But he did say AT&T would first focus on densely populated areas it already services.

Altogether, AT&T plans to spend $400 million in Louisiana rolling out U-verse, an Internet protocol video service offered in 43 U.S. markets already. U-verse currently boasts more than 40 high-definition channels and allows consumers to record four digital channels simultaneously.

 Ironside also said he had not opposed the bill.

“I don’t see it as a downside,” he said. “I personally have always been a big believer in competition,” he added, pointing out that competition in St. John had led to prices “significantly” lower than other regions.

The bill, which is also known as the Consumer Choice Television Act, has been largely overshadowed by the fervor surrounding the legislative pay raise approved last week but was sent June 12 to Gov. Bobby Jindal for his executive approval.  

Jindal had not signed it as of Friday morning, but Oliver said he was “extremely optimistic” the bill would survive. Lawmakers also said Jindal would be unlikely to veto it.

Proponents have hailed the bill as the long-awaited streamlining of an outdated and tedious franchising process that has – often prohibitively – complicated market entry for cable companies, requiring them to spend months negotiating rights of way privileges.

Ironside said he also welcomed an easing of the franchising process.

“Companies have to agree to a lot to win a franchise agreement from governments,” he said, likening some of the agreements to “blackmail.”

But some local governments and municipalities across the state have opposed the bill and contend it restricts or eliminates their oversight and regulatory capabilities – not just in determining who can provide service but also in matters like customer service complaints, which they say could take longer to resolve at the state level.

Cable companies have for years negotiated individual franchise agreements with each area they service. The franchises, which can span more than 100 pages and take up to nine months to finalize, have often included other unattractive caveats for cable providers, such as build-out clauses that mandate service to entire municipalities.

Most municipalities collect at least a 5 percent tax from each cable bill – and still will under the new bill – and some have been accused over the years of enjoying extra revenue by standing by and watching as cable companies raise rates too frequently.

Tom Ed McHugh, executive director of the Louisiana Municipalities Association, said he was worried initially that, with less oversight, cable companies would overvalue other services in bundling packages to shortchange local governments on the 5 percent cable tax.

“We were concerned and it never got fully addressed,” he said in an interview. “But now it doesn’t look like they’re going to do that.”

McHugh said the LMA would also still fight to maintain some level of say for local governments.

“We don’t want to be obstructionists, but we would like to see some model guidelines put into place at the local level.”

When Oliver of AT&T listed some of the reasons he supported the new bill, he referred more than once to a “screaming for competition” throughout many areas in the state.

Indeed, the new bill comes at a time when cable rates in Louisiana and nationwide have been steadily increasing, and proponents say the eased regulations will lower or level off prices in some markets by enticing more cable providers to offer their services.

In 2006, the Federal Communications Commission released figures that indicate national cable prices increased an average 93 percent between 1995 and 2005. Cable rates in Louisiana have also soared over the years increasing by 67 percent since 2000 alone. But cable companies have attributed the most recent increases to damages incurred from Hurricane Katrina.

Former Gov. Kathleen Blanco in 2006 vetoed a similar bill – also designed to increase competition – after local governments voiced concerns about losing oversight. According to one study, Louisiana cable customers have paid nearly $227 million more than necessary since then due to uncompetitive cable service.