Cable-Style TV Regulation Proposal Could Change Service, Rates

Chapel Hill’s cable public access channel thrives on a shoestring $140,000 budget thanks to volunteers in a college town where conviction and creativity breed shows like “Free the Mind 101,” and “Speak Out!”

“First come, first serve, First Amendment,” said Chad Johnston, executive director of The People’s Channel, the nonprofit that runs Channel 8 for about 20,000 cable subscribers in Orange County. “This is one of the few places where a community has the chance to speak to itself through the media.”

But Johnston worries these opportunities could come to an end if the General Assembly agrees this year to a bill that would give the state – instead of local governments – regulatory authority over who can provide television through cable or broadband Internet in North Carolina.

Public access channels are often a product of negotiations between local leaders and cable television providers, so turning over franchise authority to the state could mean fewer such channels and less money for them, Johnston argues. But many cable television viewers say allowing companies to compete statewide would lead to more choices on the tube and lower monthly bills.

“Competition works every time,” said Joyce Krawiec of Kernersville with FreedomWorks, a political organization promoting fiscal and tax reform and seeking the changes. “As soon as we have competition, our rates will be improved and our services will improve.”

Krawiec and Johnston are among those seeking attention for their views as legislators negotiate the high-stakes fight between telecommunications giants BellSouth Corp., Time Warner Cable and others who want new rules for television providers.

Traditional phone companies such as BellSouth that are laying fiber-optic lines and looking for new revenue sources want to provide video over the Internet from over-the-air channels and cable networks such as CNN, ESPN and HBO in North Carolina and other states. But they say individual franchise agreements take too long to negotiate and thwart competition.

A bill being considered by a study committee as the General Assembly prepares to reconvene next month would phase out local franchise agreements and require charters issued by the state Utilities Commission.

BellSouth believes the change would boost competition, just like when looser regulations led to more competition and lower prices after cable companies began providing telephone service, said Krista Tillman, president of the BellSouth’s North Carolina operations.

“Competition has flourished,” Tillman said last week. “I believe a similar approach to open market competition is warranted and will be equally effective in the cable and video market.”

Time Warner and the state’s cable television industry group aren’t opposed to a streamlined franchise process but haven’t yet endorsed the measure. The bill would permit cable providers to get out of local franchise agreements when competitors arrive in their coverage areas.

“All that the cable industry asks is two things: one, that you regulate them the same way that you regulate their competitors, and that you tax them the same way you tax competitors,” said Wade Hargrove, a lobbyist for the N.C. Cable Telecommunications Association.

A 5 percent cable franchise tax paid to local governments would be eliminated, but the bill seeks to ensure local governments don’t lose money, proposing that they receive a portion of cable and satellite television sales taxes.

North Carolina’s local government associations sound pleased with the revenue trade off, but joined the chorus of consumer advocacy groups worried that the existing proposal wouldn’t prevent companies from picking and choosing from among the most profitable customers.

“Areas of designated services must be diverse so as to ensure that minority and low-income areas receive equal access and equal service,” said Jarvis Hall with the state chapter of the National Association for the Advancement of Colored People.

Supporters and opponents of the bill point to Texas, where a law passed last year created a similar statewide franchise.

A report by the American Consumer Institute found that half of the customers who switched cable TV providers in three Texas towns saw on average $22-per-month savings. But Johnston said he has seen figures showing cable costs rising and service confined to mostly high-income areas.

The bill does ensure all cities would receive at least two public access channels to air local or government programming. Each channel, however, only would receive $16,000 annually to help with operating costs. That’s not enough for nonprofits such as The People’s Channel, especially it has to upgrade equipment to connect to broadband networks, Johnston said.

Randy Fraser, a lobbyist for Time Warner Cable in North Carolina, which does business in 44 counties, said the measure is still a work in progress. He’s glad that everyone is getting a chance to speak out.

“When you’re considering making a change in a decades-old regulatory policy, it ought to be done in the (bright) light,” he said.

Become a Freedom Team Member

Make an impact in your community by becoming a Freedom Team member!

Join Us Today