Monday, April 11, 2005

Michael: Please Stop The Cable Monopoly Enrichment Act

From FreePress.Net:

"Immediate action is needed in Arizona. Last month, big cable companies pushed two bills through the legislature designed to strip millions from local government budgets and cripple community media centers. Thanks to your phone calls and letters, one of these bills was defeated. But the other is still alive - and headed for the governor's desk.

"HB 2563" passed the House by three votes - and squeaked through the Senate last week by just one. At any time, the Senate-amended bill could be approved by the House and be sent Governor Napolitano. We need you to call the governor's office - right now - to ask for a veto.

The cable companies behind the legislation claim they're doing this to lower your monthly bills. Don't believe it. Cable prices only go in one direction - up and then up some more. Cable bills have skyrocketed an average of more than 40 percent nationwide since 1996, and cable giants are recording record profits.

This new legislation, even as amended, would slash "franchise fees" that cable companies pay to cities - the "rent" they're charged for digging up city streets and profiting from public rights-of-way. If they succeed, the cable companies will pocket millions that now go to city services, meaning less money for police, fire fighters and public safety.

The bill would also take away public access and educational channels - the last bastions of truly local programming - that the cable companies agree to provide to cities in exchange for their TV monopoly. Don't let the cable lobby line its pockets by shirking its public obligations.

Here's what to do:

1. Call the governor right away at (602) 542-4331. You'll likely speak to a staff assistant. Say:

"I'm calling to ask Governor Napolitano to please veto House Bill 2563, the 'Cable Tax Reduction Legislation.' Local voices and public safety are more important than the profits of cable companies. These companies have never lowered bills before, and they won't do so now. Don't allow them to profit by silencing local voices across Arizona. Thank you very much."

2. Next, call 1-800-352-8404 and ask for your state representative, as the House may still be in debate. (If you don't know who your state representatives are, go to and type in your address.) When you reach his or her office, say:

"Please vote no on House Bill 2563, the 'Cable Consumer Tax Reduction Legislation.' Local voices and public safety are more important than the profits of cable companies. These companies have never lowered bills before, and they won't do so now. Don't allow them to profit by silencing local voices across Arizona. Thank you very much.""

Allowing these cable operators to unilaterally dictate the terms of their future contracts instead of bargaining competitively is profoundly anti-free market and disrespectful of the sanctity of contracts. These are ideas that conservatives once respected, but which this Arizona legislature apparently don't find terribly compelling when lobbying money is in the offing.

Arizona's cities will be impacted in a non-trivial fashion by loss of revenues when their existing franchise agreements expire. Franchise fees will be capped at 5% of cable operators' revenue. Tucson's contracts expire in 2007. Tucson’s cable tax collections would decline by $940,000 in FY 2008, $1.5 million in FY 2009 and FY 2010. Scottsdale would see its cable franchise fees decline by an estimated $720,000 in FY 2008, $750,000 in FY 2009, and $777,000 in FY 2010. Phoenix's contracts expire in 2009. Phoenix would lose $5.0 million in cable revenue in FY 2010, which is as far forward as revenue estimates project. Most Arizona cities’ franchise agreement expiration dates range from May 2010 to October 2018, so the bill’s impact on them would occur further into the future than is projected by legislative analysis.

At the same time, this bill greatly reduces the channels of communication available to community groups (especially non-profit and religious organizations that make disproportionate use of such facilities) to excercise their First Amendment rights, and to local governments which provide vital public information at low cost with these channels. Tucson's cable operators, for instance, now provide, I believe, 9 channels for public and government use: this bill would cut that number to just 2 channels per operator. The potential new costs to local governments imposed by this bill include the value of current in-kind services that would require payment to the cable operator after passage of the bill. Public education and government (PEG) channels are the most significant of these potential expenses. At an estimated annual cost of $250,000 each, a city choosing to provide two PEG channels would incur an additional fiscal impact of approximately $500,000 per year.

Provision of the money and facilities to enhance the public's access to the television media and public information was a central part of the bargain between localities and cable operators for use of the public rights of way and monopoly market position. Allowing the cable operators to drop their end of the bargain so they can squeeze in a few more revenue-producing channels makes uncertain the freedome of contract and their enforcement. What's next? Will every contractee be at the legislature looking for the Republican majority to relieve them of their obligations next? Will road contractors be lobbying to be allowed only to build two lanes of new roads for the agreed price, instead of the four specified in their contract? Will private prison operators be shoving money at lawmakers in the hope of being allowed to release prisoners and keep charging the state for confining them?

Shame on the cable operators and shame on the Republican legislature for betraying their own ideals and their constituents' interests.


At 10:01 PM, Blogger Jack Benway said...

Nice post, Michael.

The notion of the city granting a contract to a single cable provider is insanity, and this bill is corporate welfare in its most obvious, evil form.

The only way to drive cable rates down is to allow for competition among cable providers. That's something the Rebublican legislators should understand.

At 11:03 AM, Anonymous Anonymous said...

Aw, come on, Republicans don't have ideals. Haven't we seen enough to know that by now?

Gail Davis

At 12:33 AM, Blogger Jack Benway said...

Politicians have no ideals. There's no reason to single out republicans.

The problem here is that economic decisions that should be made by market forces are being made by idiot politicians, regardless of the side of the aisle on which they park their soft asses.

At 2:09 PM, Blogger Michael said...

I agree with benway. Power is what tends to corrupt, regardless of one's philosophy. Luckily this bill has been stopped and been voted down narrowly in the legislature. Thanks to all who took the time to write or call their legislators, the market will have a chance to operate properly in the Arizona cable industry, preserving municipal revenues and the publics' access to the media.

At 5:56 PM, Blogger Bridget said...

Now all they have to do is eliminate all the (rediculous) taxes on cable (ane everything else) and the real competition can begin!


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