Digital Policy Institute

No wonder cable companies oppose this bill

No wonder cable companies oppose this bill
Article published Jan 23, 2006

By ALAN RICHARDSON MUNCIE AND the surrounding area are poorly served by Comcast, a company that has raised its rates more than any other cable company in theUnited States.

The Muncie Cable Commission, which is part of city government, was initially delighted that Comcast was taking over from Century Cable Co., and to their credit, Comcast's technical service has proven superior to Century's. But, that's where the praise must end.

During negotiations for the current franchise agreement, a Comcast executive promised Muncie's cable commissioners that a truly basic service would be provided in Muncie as it is in Indianapolis. We were persuaded, in the interest of a good-faith relationship, not to write the promise into the franchise with the understanding that it would occur soon, within a few months.

THAT PROMISE was made three years ago and we're still waiting. Comcast has proven it is unreliable, both with rates and with promises. It's only interest appears to be making more money.

Currently, the Indiana Legislature is considering Senate Bill 245, which would reorganize the way in which cable, telephone, and high-speed Internet service would be regulated. The bill would require telephone companies to provide high-speed, broadband service to at least 50 percent of the customers in a telephone exchange within 18 months of their next price increase of local service charges, whenever that occurred.

One consequence of telephone companies providing broadband service is that they could then deliver television directly to your home in competition with cable and satellite. Everyone knows that competition drives prices down, so is it any wonder that Comcast and other cable companies oppose this bill?

Did you realize that cable TV rates have increased 71/2 percent per year, which is more than prescription drugs, non-prescription drugs or medical supplies, primarily due to a lack of competition in the industry? Look at how your own cable rates have risen.

The American Consumer Institute just released a study showing that seniors pay a disproportionate share of their income to their cable TV company. Also, consumers in general pay far too much for overpriced cable. However, if competition increases for cable TV services, those figures will be much lower.

IT IS NO WONDER that cable companies oppose SB 245. They are trying to maintain the status quo. With no effective competition, who wouldn't want to be in their shoes?

Critics of the bill are playing the role of alarmists by warning that some local phone rates would increase, particularly among the elderly.

While that could occur, it would not be a dramatic increase and it would only affect a small number of individuals who could switch to standard or prepaid cell phones or to VoIP (telephone calls through the Internet). Further, those same individuals will just as likely save money on their cable bills as competition causes cable rates to drop.

Senate Bill 245 would elevate Indiana's place among the nation's leading states in the communications industry. Just as the automobile was a major catalyst for Indiana's economy a century ago, communications could do the same in the 21st century.

But only if we act to increase economic growth. If this bill passes, jobs will be created when companies move into Muncie and other Indiana communities searching, not for automobiles or cheap natural gas, but for the ability to communicate rapidly and inexpensively with their customers and vendors.

Telecommunications reform could cause more companies to come to Indiana, and that would be progress for all Hoosiers.

Alan Richardson is a telecommunications professor at Ball State University and served as chairman of the Muncie Cable Television Commission for 12 years.