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Newspaper Article

    Consumers Win With Competition

    BY Matt Kibbe
    02/16/2006
    by Matt Kibbe on 2/16/06.

    State Sen. John Griesheimer has introduced legislation that represents the next phase in the struggle between those who would modernize Missouri's telecommunications landscape through competition and those satisfied with the status quo of heavy handed local control.

    Before a telephone or power company can provide video service in Missouri, it must acquire a franchise from every city it will serve. This lengthy process includes endless rounds of hearings, studies, audits and negotiations. It takes months or years to get the rights to serve one city. At that pace, it could take five to 10 years to wire all of Missouri.

    Franchises don't come cheap — local bureaucrats ask companies to cough up 5 percent of their annual gross revenue. This hurts consumers, as would-be competitors pass this cost onto their customers.

    This is why we don't see competition in the video market. For years, cable has dominated the industry. The Federal Communications Commission compiles an annual nationwide study on cable prices that shows the industry has been hiking up rates every year at levels well beyond the rate of inflation. Phone companies want to enter the market, but the process costs millions of dollars in fees and would take years to complete.

    Local bureaucrats shouldn't be allowed to stand in the way. Several pioneering states have already taken steps to reform their broken franchise systems, including Texas, where cable rates dropped by 25 percent in the town of Keller after franchise reform made competition possible.

    Griesheimer's bill fixes many problems plaguing Missouri's telecommunications market by combining the local franchises into one statewide franchise. This will make the process simpler and more transparent.

    Telephone and power companies stand ready to infuse billions of dollars into Missouri's economy and telecommunications infrastructure. Consumers will be the ultimate beneficiaries. As telephone companies build high-speed optic cables, we will have access to new video programming that allows greater control of what we watch and when we watch it. Cable operators will face a critical choice: shape up or ship out.

    Matt Kibbe, Washington, D.C., is president and CEO of FreedomWorks, with 11,000 members in Missouri.